18 ms·

We divested networking back in the ‘90s, we divested PCs back in the 2000s, we divested semiconductors about five years ago Is it just me or does anyone else f

• chromatin 6y ago
  Yes, this quote stuck out for me immediately as I thought of the custom network hardware run at Google, AWS, etc.
• all_blue_chucks 6y ago
  IBM is just a conglomerate of neglected acquisitions that share branding ("watson" etc.). It hasn't been a single coherent company in decades.
• deleted 6y ago
  [deleted]
• momokoko 6y ago
  IBM has not been a “company” in decades. It is a financial engineering project. When you see it through that lens all of this makes much more sense.
  • boris 6y ago
    Exactly, IBM is a company run by finance, not technical people. They survive despite, not because of what they do.
    • Sylamore 6y ago
      can confirm, IBM (GTS at least) has more people dedicated to ensuring you project your future billable hours and will directly reduce your performance rating for not providing the projections every 2 weeks than if you miss client deliverables consistently.
      • sushshshsh 6y ago
        good thing its much easier to project future billable hours compared to actually delivering value quickly in 2020 ^.^
      • 1MachineElf 6y ago
        You're absolutley right about GTS, but it's clear that the services offerings from IBM aren't what top level commenter here is praising.
    • cmsj 6y ago
      Not to nitpick, but the current CEO has a PhD in Electrical Engineering and started working at IBM Research in 1990.
      • Supermancho 6y ago
        I'm sure lots of people at IBM have EE degrees throughout it's existence. That hasn't caused the company to behave any differently. When approached by IBM to help my company build out our cloud infrastructure, we had salient measured targets and the reps (and subsequent "technical people to answer our questions") who presented were woefully inept. I was the Director of Engineering, what did they think they were doing pitching me butterflies and rainbows? What IBM has done for decades, like all the other parasitic remnants of industry (Oracle, Yahoo, arguably Apple, etc), and no CEO is changing that culture.
        • pishpash 6y ago
          They are indeed incompetent, since a large chunk of competent people won't go there any more. But what kind of financial voodoo is keeping them afloat? Is it another Sears in waiting?
  • edem 6y ago
    Can you elaborate on that? I worked for IBM for a little more than a year and it was deeply disturbing, but I don't really understand what's happening under the hood.
    • Minor49er 6y ago
      Can you elaborate on what was deeply disturbing about your experience? Your comment has me curious.
      • edem 6y ago
        They bought the company I was working for. They turned everything upside down. Tried to force us to sign contrats that would make them the owner of our public contributions which lead to an outrage so they backed down. Later they did "patent minig" sessions where they tried to extract good ideas from people for free. They also shut down all projects and pushed their Watson shit on us. They didn't give a shit about company culture, and people in general so 90% of the employees who had even a tiny bit of ambition left for a startup that was created by people who left IBM after the acquisition.
        • bitsnbytes 6y ago
          That pretty much sums up my experience with IBM when they bought our company as well. I had a colleague who quit immediately finding out they bought us out because he had worked for them before. I gave them the benefit of the doubt but he was right and I left once they started to integrate us into the borg. Just about everyone ended up leaving not to long after either.
          • laurent92 6y ago
            Don’t you have golden cuffs? Aren’t you heavily incentivized to stay, at risk of not getting the money you’ve worked on for years?
            • edem 6y ago
  • setpatchaddress 6y ago
    That's a real shame. Most large, old American companies have fallen into that trap. Notably RCA (gone) and GE (going). I hope Apple doesn't eventually succumb. Tim Cook's successor matters.
    • mulmen 6y ago
      Apparently GE sold off trains which seems like a pretty good business to own?
      • jonas21 6y ago
        Out of all the business lines GE has sold off over the years (computers, appliances, financial services, lighthing, television, etc.), why trains?
        • senko 6y ago
          GE was a slow-mo train wreck for years (pun intended). Recently read "Lights out", about their problems in the last ~20 years, fascinating read, heartily recommended.
          • cultus 6y ago
            And yet Jack Welch somehow came to be looked upon as a management guru instead of someone who gutted the long-term viability of GE in favor of financialization.
            • loganfrederick 6y ago
              Luckily I think history is doing its job in changing how Jack Welch's legacy will be remembered. I don't think students or upcoming businesspeople are really learning Welch's approach anymore.
            • lotsofpulp 6y ago
              Jack Welch has definitely fallen out of favor considering the results obviously illustrate his failures.
  • mathattack 6y ago
    Yes. They aren’t in the innovation business. They are in the Marketing (Watson), audit and share buyback business.
• SkyMarshal 6y ago
  That was my first impression too. It was extraordinary that that comment was said positively by the CFO, rather than critically by a shareholder or journalist. Apple, Google, Amazon are all proving the value of vertically integrated product lines, while IBM chooses short-termism.
• lsllc 6y ago
  Like Boeing there are too many MBAs and not enough engineers in charge!
  • ethbr0 6y ago
    Yeah! Why differentiate in quality, when we can blame all holders of a type of degree?!
    • skolsuper 6y ago
      It's perfectly fair. If they had hired all chefs into upper management, one could say "too many chefs and not enough engineers!", regardless of the quality of the chefs.
      • jodrellblank 6y ago
        Only if you think "Master of Business Administration" and "Chef" convey equal amounts of business administration skill. The exective board page linked above is 22 people, even if all of them held MBAs could it really be that 22 expert business administrators is too many for a global company with 350,000 employees?
        • wokwokwok 6y ago
          It's not about skills, it's about priorities. Their job is to make money; they don't care, and they are not paid to care about anything else. Now... the question is, does someone with a different background care about the company vs making money in different proportions to the set of 'expert business administrators'? I posit that yes, someone with a different background will have different priorities to simply 'make as much money as possible right now'. Maybe even a chef.
        • AlphaSite 6y ago
          As a % top leadership, yeah it totally can be too much.
    • wahern 6y ago
• btilly 6y ago
  They really had no choice about divesting PCs. IBM was on Microsoft's bad side so was being charged more for Windows than competitors, and PCs already had razor thin margins. After they sold off their PC business, Microsoft had no reason to charge extra for Windows and that became a viable company.
  • seunosewa 6y ago
    > IBM was on Microsoft's bad side so was being charged more for Windows than competitors I thought the DoJ investigation stopped Microsoft from doing such things. What am I missing?
    • btilly 6y ago
      It was a slap on the wrist. https://www.justice.gov/atr/case-document/file/503541/download https://www.justice.gov/atr/case-document/file/503541/downlo... has the judgement. Read the following phrase and consider the size of the truck you can drive through it. Nothing in this judgement shall prevent Microsoft from providing Consideration to any OEM with respect to any Microsoft product or service where that Consideration is commensurate with the absolute level or amount of that OEM's development, distribution, promotion, or licensing of that Microsoft product or service. When IBM was competing with companies that got such "Consideration" and it couldn't, guess how that worked out?
  • ansible 6y ago
    IBM killed their own PC business by going with the MCA bus, and not allowing 3rd parties to make expansion boards without a license. And the PS/2 series was quite expensive at the time.
• lizknope 6y ago
  IBM still designs their own silicon. They still make chips in the POWER architecture and the Z architecture for mainframes. https://en.wikipedia.org/wiki/POWER9 https://en.wikipedia.org/wiki/POWER9 https://en.wikipedia.org/wiki/POWER10 https://en.wikipedia.org/wiki/POWER10 https://en.wikipedia.org/wiki/IBM_z15_(microprocessor) https://en.wikipedia.org/wiki/IBM_z15_(microprocessor)
  • pm90 6y ago
    Additionally, the article doesn't mention IBM research, which I assume will continue to stay with IBM.
  • mywittyname 6y ago
    IBM is a very capable company when it comes to technology R&D. But they've always seemed to struggle to develop those capabilities outside of high-end consulting work. IBM had the technical chops to create the likes of ARM, nVidia, or any number of big tech companies. They just never seemed to have the leadership capabilities to get out of their comfort zone. I understand the idea of keeping a business focused, but Alphabet and MS don't seem to struggle with managing a diverse portfolio of companies.
    • mulmen 6y ago
      I wonder how IBM looked at 22 and 45 years old.
      • rusk 6y ago
        At 45 I guess they were expanding into Europe.
        • deleted 6y ago
          [deleted]
        • GnarfGnarf 6y ago
          Yep, selling Hollerith card equipment to Germany in the 30's and 40's.
• dralley 6y ago
  >I see the other big players going the opposite direction. e.g. Google and Amazon are building their own silicon for an edge in Cloud and AI. IBM still designs chips - what they divested was their semiconductor manufacturing (fab) business.
  • Accujack 6y ago
    They actually design tech that goes in other companies' chips.
• rafaelturk 6y ago
  Couldn't agree more! I actually believe that only the divested business unit, NewCo, will survive
• agumonkey 6y ago
  Let's call them Elppa Corp.
  • segfaultbuserr 6y ago
    I prefer HAL Corp.
    • agumonkey 6y ago
      anecdotally, my nick is an application of the HAL shift to my previous company
• bluedino 6y ago
  It's funny how back in 2005, IBM sells their PC/server division to Lenovo. Lenovo is currently the largest PC maker. During this time Dell has been bought and sold and re-bought.
  • JohnL4 6y ago
    Lenovo is chinese, right? How many other (big) chinese companies have been through Dell's cycle as you describe it?
    • marmaduke 6y ago
      Where is Dell making its computers? When I track shipments they seem to be coming from China.
      • rbanffy 6y ago
        I don't think they make their own hardware. They design it and then farm out manufacture.
        • symlinkk 6y ago
          What do they even design? All of the components inside their computers are off the shelf products from other companies.
          • vel0city 6y ago
            Speaking of their servers, their motherboards and chassis seem to be of their own design. Often times these layouts are pretty proprietary and designed exactly around the design of the chassis. They do some level of customization of firmware on the devices they go with, as there's usually Dell firmware on things like hard drives which integrates more with their own management tools. Arguably their software stack of actually managing fleets of their hardware is something they design, along with the actual remote access controller systems they put on the boards.
          • 6y ago
• 1MachineElf 6y ago
  As a former IBMer, I completely agree with that sentiment. Little of what IBM is good at is sexy but that doesn't change the fact that they lead on many vertically integrated things. Turning back on those things will hurt them in the long run.
  • rbanffy 6y ago
    IBM still has plenty of sexy hardware stuff - mainframe and POWER (AIX not so much) are pretty impressive. That z/OS has tens of millions of lines of code surprised me the other day. It's not like it needs to support 23 brands of mouse and dozens of GPU architectures.
    • devdas 6y ago
      It's backwards compatible to really old versions. It wouldn't surprise me if 70% of that code was emulators for previous versions of the OS.
      • segfaultbuserr 6y ago
        Even IBM S/360 is still being emulated.
      • trasz 6y ago
        There’s not much compatibility for old versions of the OS - IIRC anything older than the hardware itself is not supported at all. Backwards compatibility is for user code.
• dreamcompiler 6y ago
  IBM used to be an engineering-first company. But people are expensive and engineers are some of the most expensive people there are. So when the bean counters took over IBM, they decided to get rid of their expensive people and replace them with cheap, fungible labor. Then IBM embarked on a series of experiments about how they could continue to make money with said cheap labor. This is the result.
  • Accujack 6y ago
    Very well put. The same management philosophy happened to Boeing, and I think more quietly to many companies thought too big to fail in the last 50 years.
    • kelnos 6y ago
      The difference on impact is interesting. Boeing is an important company because they are one of a tiny number of companies that makes the world's commercial airplanes. Arguably their transformation into a useless junk-heap of a company that can't build good products has been underway for a while, and that's a huge problem for aviation. IBM is one of many, and their decline wouldn't really matter all that much in the grand scheme of things.
      • bleepblorp 6y ago
        Since IBM bought RedHat, the parallels between IBM and Boeing here are too close to comfort. RedHat is potentially as vital to the Linux ecosystem as Boeing is to the (pre-pandemic) civil aviation sector. If IBM falls apart and RedHat vanishes, the impact on the Linux sector could be almost as bad as Boeing collapsing. Since Linux runs everything that's not a desktop computer or an iOS device, IBM-RedHat failing would be a very major problem for everyone.
        • jacques_chester 6y ago
          I think Suse and Canonical would pick up the slack.
• Accujack 6y ago
  IBM is going to fade away. They're divesting lower performing (but not money losing) ventures in order to not hide the performance of their higher performing pieces. This is so they can show the unsustainable growth that stock holders (still) demand from corporations. They'll look great on paper for a while as you say, at least until their cloud business fails for some reason. When you average growth over a whole company, you do mask high performing parts with low performing ones... the same is true of cash flow and revenue. If you get rid of parts of your company that are solid performers but aren't doing as well now, then you're getting rid of some of your safety net in the hope you won't need it. IBM's most impactful business (in terms of wide use) is probably their research labs. Many, many chips today use SOI and copper interconnect technologies. That sort of research doesn't apply much to the cloud, but maybe they're hoping their AI stuff will.
• heimatau 6y ago
  > A company with vertically integrated...seems like it could have such an edge Yes but I guess it was the IBM board whom decided that they could better invest in the money with various initiatives. IMHO, they are now (and for ~15 yrs) only choosing a safe route, not an innovative route.
  • deleted 6y ago
    [deleted]
• tupputuppu 6y ago
  The pieces they've divested haven't been valuable as part of IBM. They've fit their new owners businesses better. Thus they've been more valuable with their new owners, which is why IBM sold them.
• stefan_ 6y ago
  That sentence struck me as well, mostly because people continue to make tons of money in networking, "PCs" and semiconductors. It's not that they didn't "fit the integrated value proposition", it's that IBM has terrible leadership. No bets needed for what band of clowns will lead the hip, "value proposition" part of the company of course.
  • grouseway 6y ago
    How about this then: IBM realized they're a bunch of clowns and can't compete in these industries so they made the smart move and got out.
• justapassenger 6y ago
  Vertical integration is a hot term, but unless you have long term monopoly in the market, it’s more likely to be a losing strategy. If you bet on wrong direction, you’re in much deeper troubles, as you cannot switch to other vendor that went other direction (switching vendors is also hard, but much easier than rebuilding and catching up on your internal R&D). And you lose power of market and economy of scale. Vendors can focus on developing their tech to be better, for everyone, as they get bigger R&D budgets, and you can just focus on improving things that are your true market advantage, not fighting in commodities market. Note, that doesn’t mean that IBM is doing right thing. But vertical integration is extremely overhyped.
  • gigatexal 6y ago
    Yeah. Mainframes are arguably the most vertically integrated products there are and yet they’re a dying breed in a rent-maximizing at best industry than a growing one.
• kevindong 6y ago
  Vertical integration is high risk, high reward in that if each component in the stack is a market leader in their industry, the overall company becomes exponentially more valuable. On the other hand if any component is non-competitive, the other components in the stack are still obligated to give that unperformant component their business. Which reduces the pressure to perform and causes the overall company to gradually become less competitive. I think a good example of this would be Intel designing chips and also owning the fabrication plants. It's no secret that Intel has been to fabricate their chips for a while now.
• ansible 6y ago
  > We divested networking back in the ‘90s, we divested PCs back in the 2000s, we divested semiconductors about five years ago Motorola followed that path. They sold off their computer business in the early 1990's. Analog electronics (On Semi), and then the semiconductor business (Freescale, now NXP). Finally, they split the government biz (Motorola Solutions) from the phones, and that was first sold to Google, and what remained then went to Lenovo. Motorola was a gigantic powerhouse, and through mismanagement, is a shadow of what it was. Such a shame.
• jacobwilliamroy 6y ago
  Vertically integrated monopolies are inefficient because practically, what you really have in a vertically integrated monopoly is a bunch of separate companies, all following a single, centralized entity and paying tribute to that entity. There is an opportunity for profit here, for shareholders, but very little room to actually improve technology, provide utility to users. Every product in that monopoly becomes less of a computer, more of a mouse-trap to keep people in the ecosystem. If your monopoly has even a single component which can interoperate with other monopolies, then you're basically subsidizing a whole layer of infrastructure. Plus this practice paints a huge target on your back for anti-trust action, as you are seeing now with the other monopolies. The bigger your monopoly gets, the more potential profit there is for whatever government agent can bust you up. This could result in promotion, christmas bonus, maybe even a corner office with a window. Very high stakes.
• app4soft 6y ago
  > Is it just me or does anyone else feel over the decades they've been divesting some of the best (long term) building blocks? Staying at home, the best thing I found to play with is built "digital lego" MOCs using LeoCAD app + LDraw Parts Library.[0] Seems like IBM CEOs, stayed at home for a long term, just found own "lego-like" game to joy ;) [0] https://github.com/Symbian9/AWESOME-LDraw https://github.com/Symbian9/AWESOME-LDraw
• AnthonyMouse 6y ago
  > Is it just me or does anyone else feel over the decades they've been divesting some of the best (long term) building blocks? IBM is old enough to understand the pitfalls of that approach. In year zero it sounds great. Integration! Efficiency! And that works for a bit. Then internal politics causes you to pass on opportunities that competitors take because taking them yourself would cannibalize sales in one of your other lines of business. Then somebody else comes up with a better microprocessor than you, or better software, or lower cost manufacturing, and it's going to take your internal team five years to catch up. In the meantime all your systems are integrated with your in-house solution, so you can't switch, but the deficient in-house alternative makes you less competitive, so you lose all the customers who can switch easily. Then you have to cut R&D because of the lost revenue and fall even further behind the competition, which leaves you in a death spiral where the most profitable strategy is to lock-in your existing customers and milk them as hard as possible as you circle the drain. Or you can concentrate on doing one thing and doing it well, so that you don't risk sinking your entire operation as soon as you fail to execute flawlessly in any one of the six different major fields you've created an internal dependency on.
  • est31 6y ago
    Yeah, successfully vertically integrated companies like Apple choose very carefully which things they integrate vertically and which things they don't. Apple silicon for example isn't truly apple silicon. They still cooperate with a company for the manufacturing. Apple still buys gorilla glass from Corning, etc. And in the areas where they do compete, they pour in top dollar to make actually competitive products.
    • AnthonyMouse 6y ago
      It's way too early to tell how Apple is going to end. They've only been where they are for a small number of years. What happens if Zen3 turns out to be significantly faster than Apple Silicon, or next year Intel gets 7nm right? Do they abandon it or do they fall behind? What do they do if Google gets worried about their market share and decides to start selling a top of the line phone for cost and marketing it on google.com? And the opposite failure mode is just as bad -- you actually succeed in monopolizing the market and then get smashed by antitrust.
• blueyes 6y ago
  The parts of IBM are worth more than the whole, and many of the company's board members and investors realize that. They are getting the value of these deals, even if "IBM" is not.