4 ms·

share price matters to a shareholder in the short term, but doesn't come close to telling the whole story. IBM is not performing well. In 1990, IBM's market ca

share price matters to a shareholder in the short term, but doesn't come close to telling the whole story. IBM is not performing well. In 1990, IBM's market cap was $27B and Microsoft's was $5B. In 1999, IBM's was just under $100B and Microsoft's was just under $400B. For the last decade+, IBM has hovered (rather wildly) around $160B, while Microsoft has grown from $250B (post dot com crash) to $2,500B. so yes, IBM really has been a declining giant relative to their market share in the strong technology sector IBM selling off more and more businesses might be "the right move" for shareholders and props up the share prices, but it shrinks the overall business and in terms of value creation (where wealth comes from) indicates a shortage at IBM

browningstreet 2y ago
Honest Q, why compare MS to IBM? MS has (mostly) products and licensing, and as far as I understand, IBM has consulting and licenses. Pretty different in this day/age.
- fsckboy 2y ago
  Honest A, an investor and/or the financial market does not care what the similarities or differences are between companies, but how investments in those companies do. Microsoft and IBM were major players in the personal computer business, and subsequently both have had a heavy presence in enterprises and data centers. IBM is gone from personal computers, although Microsoft's products probably figure heavily in IBM's consulting. could easily compare IBM with other companies; google didn't have a presence prior to 2000, Apple pre 2000 and post iphone are entirely different businesses, nothing else came to my mind. Amazon? they were around in early days of the dot com (1994!) but I'm not really that familiar with where they stood back around 2000 and didn't want to sample apples and oranges. IBM's other competitors like Digital disappeared, but not because IBM gobbled up their share. IBM compared to itself has not grown. Other companies have grown, through survivorship bias if no other reason.
- atmavatar 2y ago
  At the beginning of the comparison period, IBM was also pretty heavy into products. For example, in the late 80s and even into the early 90s, the market for PCs was broken up into IBM PCs and compatibles. IBM was the PC. IBM invented many of the technologies that went into the early PCs but pissed away their lead with every single one until we find ourselves today where they no longer manufacture anything that can be found in a modern PC as far as I can tell.
- shiroiushi 2y ago
  IBM has products too: the Rational tools. Anyone who's used them knows they're amazing pieces of software engineering. /s
nine_zeros 2y ago
This kind of relative comparison is the correct analysis. Companies with 100B+ market cap don't die away. They just fail to continue to innovate and stay relevant - thus robbing their shareholders of even more returns. This is why companies like sears were considered failures despite lasting for 100 years. Somewhere along the line they lost the plot and forgot how to stay relevant.

browningstreet 2y ago

Honest Q, why compare MS to IBM? MS has (mostly) products and licensing, and as far as I understand, IBM has consulting and licenses. Pretty different in this day/age.

fsckboy 2y ago
Honest A, an investor and/or the financial market does not care what the similarities or differences are between companies, but how investments in those companies do. Microsoft and IBM were major players in the personal computer business, and subsequently both have had a heavy presence in enterprises and data centers. IBM is gone from personal computers, although Microsoft's products probably figure heavily in IBM's consulting. could easily compare IBM with other companies; google didn't have a presence prior to 2000, Apple pre 2000 and post iphone are entirely different businesses, nothing else came to my mind. Amazon? they were around in early days of the dot com (1994!) but I'm not really that familiar with where they stood back around 2000 and didn't want to sample apples and oranges. IBM's other competitors like Digital disappeared, but not because IBM gobbled up their share. IBM compared to itself has not grown. Other companies have grown, through survivorship bias if no other reason.
atmavatar 2y ago
At the beginning of the comparison period, IBM was also pretty heavy into products. For example, in the late 80s and even into the early 90s, the market for PCs was broken up into IBM PCs and compatibles. IBM was the PC. IBM invented many of the technologies that went into the early PCs but pissed away their lead with every single one until we find ourselves today where they no longer manufacture anything that can be found in a modern PC as far as I can tell.
shiroiushi 2y ago
IBM has products too: the Rational tools. Anyone who's used them knows they're amazing pieces of software engineering. /s

nine_zeros 2y ago

This kind of relative comparison is the correct analysis. Companies with 100B+ market cap don't die away. They just fail to continue to innovate and stay relevant - thus robbing their shareholders of even more returns. This is why companies like sears were considered failures despite lasting for 100 years. Somewhere along the line they lost the plot and forgot how to stay relevant.