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IBMs revenue comes from consulting but a lot of their profit comes from software https://www.quora.com/What-is-the-split-between-IT-and-consulting-revenue-for-I

by sytse 8y ago

IBMs revenue comes from consulting but a lot of their profit comes from software https://www.quora.com/What-is-the-split-between-IT-and-consulting-revenue-for-IBM https://www.quora.com/What-is-the-split-between-IT-and-consu... In their latest quarter https://www.ibm.com/investor/att/pdf/IBM-3Q18-Earnings-Charts.pdf https://www.ibm.com/investor/att/pdf/IBM-3Q18-Earnings-Chart... $4.1b of revenue came from Cognitive Solutions (mostly solutions software) at a 76% gross profit while their global business services with the same revenue had a gross profit of only 29.8%. By the way, they spend $1.3b on RD&E while their net income is $2.7b. I previously commented in https://news.ycombinator.com/item?id=18322772 https://news.ycombinator.com/item?id=18322772 with a bit more context on how I view this deal.

halflings 8y ago
Is "Cognitive Solutions" mainly their AI efforts? [1] If that's the case, and given the terrible feedback they've received from many of their Watson customers (and anecdotes from people working on it)... I am tempted to say that the future is bleak for IBM, and that people will ultimately discover that they were paying a fortune for something that does not match what's advertised (they've put millions into advertising Watson with nonsensical ads)... ...but then again, many enterprise solutions that are incredibly over-engineered, slow and costly are still alive and kicking, so who knows. [1] https://www.ibm.com/watson/advantage-reports/getting-started-cognitive-technology.html https://www.ibm.com/watson/advantage-reports/getting-started...
- pinewurst 8y ago
  Cognitive Solutions is nominally their AI solutions but actually includes a lot of legacy enterprise stuff put in that basket to make the numbers look better. Wall Street analysts don't dig enough to publicize any of this fiddling.
pas 8y ago
Software income is because those fine consultants pushed the IBM Solution on unsuspecting customers.

by sytse 8y ago

halflings 8y ago

Is "Cognitive Solutions" mainly their AI efforts? [1] If that's the case, and given the terrible feedback they've received from many of their Watson customers (and anecdotes from people working on it)... I am tempted to say that the future is bleak for IBM, and that people will ultimately discover that they were paying a fortune for something that does not match what's advertised (they've put millions into advertising Watson with nonsensical ads)... ...but then again, many enterprise solutions that are incredibly over-engineered, slow and costly are still alive and kicking, so who knows. [1] https://www.ibm.com/watson/advantage-reports/getting-started-cognitive-technology.html https://www.ibm.com/watson/advantage-reports/getting-started...

pinewurst 8y ago
Cognitive Solutions is nominally their AI solutions but actually includes a lot of legacy enterprise stuff put in that basket to make the numbers look better. Wall Street analysts don't dig enough to publicize any of this fiddling.

pas 8y ago

Software income is because those fine consultants pushed the IBM Solution on unsuspecting customers.