IBM blamed weak hardware sales for the poor start to its year. The company turned in the lowest first-quarter revenue for five years. Sales were US$22.5 billion.
Significantly IBM hardware sales fell 23 percent to US$2.4 billion. IBM has struggled with hardware as it attempts to move into more lucrative markets such as cloud computing and big data. The company’s Systems and Technology business unit, the division responsible for most hardware sales, has now been in decline for more than two years.
The news is a worry for the wider technology industry. IBM is an industry barometer, where it goes, others follow.
IBM hardware not only victim
Most of the enterprising computing old guard trailing in IBM’s wake, including Hewlett-Packard, Oracle, Cisco and EMC face equally difficult transitions away from depending on now-commoditised hardware towards cloud and similar services.
Enterprise computing spending continues to spiral down as companies shift more and more workloads to software-as-a-service and other cloud-based technologies as they wind-down in-house IT. When they make the shift, many of the larger companies choose newer partner companies.
There’s also a move away from big projects towards smaller upgrades showing a quicker return on investment.
During the first quarter, IBM sold its low-end server business to Lenovo and talked openly of selling its software-defined network operation, although that didn’t happen. It also talked of investing US$1.2 billion in cloud computing.