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Take this "sober" analysis with a big pinch of salt. IBM have totally missed the AI boat, and a large chunk of their revenue comes from selling expensive consu

Take this "sober" analysis with a big pinch of salt. IBM have totally missed the AI boat, and a large chunk of their revenue comes from selling expensive consultants to clients who do not have the expertise to do IT work themselves - this business model is at a high risk of being disrupted by those clients just using AI agents instead of paying $2-5000/day for a team of 20 barely-qualified new-grads in some far-off country. IBM have an incentive to try and pour water on the AI fire to try and sustain their business.

evanjrowley 11mo ago
Is this true in 2025? Asking because the biggest IT consulting branch of IBM, Global Technology Services (GTS), was spun off into Kyndryl back in 2021[0]. Same goes for some premier software products (including one I consulted for) back in 2019[1]. Anecdotal evidence suggests the consulting part of IBM was already significantly smaller than in the past. It's worth noting that IBM may view these AI companies as competitors to it's Watson AI tech[2]. It already existed before the GPU crunch and hyperscaler boom - runs on proprietary IBM hardware. [0] https://en.wikipedia.org/wiki/Kyndryl https://en.wikipedia.org/wiki/Kyndryl [1] https://www.prnewswire.com/news-releases/hcl-technologies-to-acquire-select-ibm-software-products-for-1-8b-300761682.html https://www.prnewswire.com/news-releases/hcl-technologies-to... [2] https://en.wikipedia.org/wiki/IBM_Watson https://en.wikipedia.org/wiki/IBM_Watson
- mattlondon 11mo ago
  I know people who still work there and are doing consultancy work for clients. I am a former IBMer myself but my memory is hazy. IIRC there was 2 arms of the consultants - one was the boring day to day stuff, and the other was "innovation services" or something. Maybe the spun out the drudgery GTS and kept the "innovation" service? No idea.
- vmh1928 11mo ago
  The part that was spun off was "Infrastructure Services" (from the Wiki article.) Outsourcing and operations, not the business consulting organization that provides high level strategy to coding services. https://www.ibm.com/consulting https://www.ibm.com/consulting
- DebtDeflation 11mo ago
  Yes. GTS was infrastructure services and was spun off. What's left is the old GBS - business services and systems implementation services.
- jldugger 11mo ago
  My go-to analysis for these sorts of places is net income per employee. Back in the day, IBM was hovering around $5,000. Today, Kyndryl is still around $5,000 (2025). But the parent company seems to be now at $22,000 (2024). For comparison: Meta is at $800,000, Apple is at $675,000, and Alphabet is at $525,000. And Wal-Mart, the nation's largest private employer, is around $9,250. Now, probably part of that is just that those other companies hire contractors so their employment figure is lower than reality. But even if you cut the numbers in half, neither side of that spin off is looking amazing.
tw04 11mo ago
Missed the boat? Have you been living under a rock? Watson AI advertising has been everywhere for years. It’s not that they aren't in the AI space, it’s that the CEO has a shockingly sober take on it. Probably because they’ve been doing AI for 30+ years combined with the fact they don’t have endless money with nowhere to invest it like Google.
- dspillett 11mo ago
  > Missed the boat? […] Watson AI advertising has been everywhere for years. They were ahead of the game with their original Watson tech, but pretty slow to join and try get up to speed with the current GenAI families of tech. The meaning of “AI” has shifted to mean “generative AI like what ChatGPT does” in the eyes of most so you need to account for this. When people talk about AI, even though it is a fairly wide field, they are generally referring to a limited subset of it.
  - Lapsa 11mo ago
    "GenAI families of tech" lulz
  - theYipster 11mo ago
    The death of IBM’s vision to own AI with Watson was never due to an inability to transition to the right tech. In fact, it was never about tech at all. As an entirely B2B company with a large revenue stream to defend, IBM was never going to go and scrape the entirety of the Internet. Especially not after the huge backlash they ignited with their customers over data rights and data ownership in trying to pitch the Watson they had.
- CamouflagedKiwi 11mo ago
  Advertising for it has been everywhere, but it's never seemed like it's at the forefront of anything. It certainly wasn't competitive with ChatGPT and they haven't managed to catch back up in the way Google have.
  - whizzter 11mo ago
diggyhole 11mo ago
Right. Just like Intel completely shitting the bed on GPUs then their CEO tweeted a prayer. Old tech companies are going to be left behind.
- pulse7 11mo ago
  IBM was founded in 1911 and it survived many things...
  - CursedSilicon 11mo ago
    Yeah but this time it's different! Hey have you seen my tulip collection?
  - N19PEDL2 11mo ago
    So did GE…
belter 11mo ago
> IBM have an incentive to try and pour water on the AI fire to try and sustain their business. IBM has faced multiple lawsuits over the years. From age discrimination cases to various tactics allegedly used to push employees out, such as requiring them to relocate to states with more employer friendly laws only to terminate them afterward. IBM is one of the clearest examples of a company that, if given the opportunity to replace human workers with AI, would not hesitate to do so. Assume therefore, the AI does not work for such a purpose...
- jujube3 11mo ago
  If they could use THEIR AI to replace human workers, they would. If they learned that Claude or ChatGPT was better than an IBM consultant, they'd probably keep that to themselves.
  - xocnad 11mo ago
    I would argue they may have and are not keeping it to themselves. Announced partnership with Anthropic: https://newsroom.ibm.com/2025-10-07-2025-ibm-and-anthropic-partner-to-advance-enterprise-software-development-with-proven-security-and-governance https://newsroom.ibm.com/2025-10-07-2025-ibm-and-anthropic-p...
deepGem 11mo ago
I would any day take chatGPT/Claude over an IBM consultant. I worked at IBM.
- QuercusMax 11mo ago
  I'd rather be slapped in the face than kicked by a horse, but that doesn't mean either is a good thing
  - fleroviumna 11mo ago
    [dead]
  - deepGem 11mo ago
    Precisely.
- KronisLV 11mo ago
  You could have both worlds: an LLM model by IBM https://huggingface.co/ibm-granite/granite-4.0-h-small https://huggingface.co/ibm-granite/granite-4.0-h-small It wasn't very promising when it came to benchmarks though, go figure: https://artificialanalysis.ai/leaderboards/models https://artificialanalysis.ai/leaderboards/models
TheCondor 11mo ago
How do you see the math working out? The numbers are staggering.
- whiplash451 11mo ago
  The fair answer is that nobody knows. Even Ilya answered he does not know on his latest podcast with Dwarkesh. Both top line and bottom line numbers are staggering. Nobody knows. Let's not try to convince people otherwise.
Ragnarork 11mo ago
> a high risk of being disrupted by those clients just using AI agents instead of paying $2-5000/day for a team of 20 barely-qualified new-grads in some far-off country Is there any concrete evidence of that risk being high? That doesn't come from people whose job is to sell AI?
MDGeist 11mo ago
IBM was ahead of the boat! They had Watson on Jeopardy years ago! /s I think you make a fair point about the potential disruption for their consulting business but didn't they try to de-risk a bit with the Kyndryl spinout?
ratelimitsteve 11mo ago
they have incentive but what's the sustainable, actually-pays-for-itself-and-generates-profit cost of AI? We have no idea. Everything is so heavily subsidized by burning investor capital for heat with the hope that they'll pull an amazon and make it impossible to do business on the internet without paying an AI firm. Maybe the 20 juniors will turn out to be cheaper. Maybe they'll turn out to be slightly better. Maybe they'll be loosely equivalent and the ability to automate mediocrity will drive down the cost of human mediocrity. We don't know and everyone seems to be betting heavily on the most optimistic case, so it makes an awful lot of sense to take the other side of that bet.
- ohyes 11mo ago
  20 juniors become some % of 20 seniors. and some % of that principals. Even if it lives up to the claims you’re still destroying the pipeline for creating experienced people. It is incredibly short sighted.
vultour 11mo ago
Do you expect Sam Altman to come on stage and tell you the whole thing is a giant house of cards when the entire western economy seems to be propped up by AI? I wonder whose "sober" analysis you would accept, because surely the people that are making money hand over fist will never admit it. Seems to me like any criticism of AI is always handwaved away with the same arguments. Either it's companies who missed the AI wave, or the models are improving incredibly quickly so if it's shit today you just have to wait one more year, or if you're not seeing 100x improvements in productivity you must be using it wrong.
- KptMarchewa 11mo ago
  > entire western economy seems to be propped up by AI? It's an example of alternative cost or Copernicus-Gresham's law, rather than some axiom.
OhMeadhbh 11mo ago
Are you suggesting IBM made up the numbers? Or that CAPEX is a pre-GAI measure and is useless in guiding decision making? IBM may have a vested interest in calming (or even extinguishing) the AI fire, but they're not the first to point out the numbers look a little wobbly. And why should I believe OpenAI or Alphabet/Gemini when they say AI will be the royal road to future value? Don't they have a vested interest in making AI investments look attractive?
HacklesRaised 11mo ago
Isn't he one of the first ass clowns to start laying people off, replaced by AI. Another empty suit.

evanjrowley 11mo ago

Is this true in 2025? Asking because the biggest IT consulting branch of IBM, Global Technology Services (GTS), was spun off into Kyndryl back in 2021[0]. Same goes for some premier software products (including one I consulted for) back in 2019[1]. Anecdotal evidence suggests the consulting part of IBM was already significantly smaller than in the past. It's worth noting that IBM may view these AI companies as competitors to it's Watson AI tech[2]. It already existed before the GPU crunch and hyperscaler boom - runs on proprietary IBM hardware. [0] https://en.wikipedia.org/wiki/Kyndryl https://en.wikipedia.org/wiki/Kyndryl [1] https://www.prnewswire.com/news-releases/hcl-technologies-to-acquire-select-ibm-software-products-for-1-8b-300761682.html https://www.prnewswire.com/news-releases/hcl-technologies-to... [2] https://en.wikipedia.org/wiki/IBM_Watson https://en.wikipedia.org/wiki/IBM_Watson

mattlondon 11mo ago
I know people who still work there and are doing consultancy work for clients. I am a former IBMer myself but my memory is hazy. IIRC there was 2 arms of the consultants - one was the boring day to day stuff, and the other was "innovation services" or something. Maybe the spun out the drudgery GTS and kept the "innovation" service? No idea.
vmh1928 11mo ago
The part that was spun off was "Infrastructure Services" (from the Wiki article.) Outsourcing and operations, not the business consulting organization that provides high level strategy to coding services. https://www.ibm.com/consulting https://www.ibm.com/consulting
DebtDeflation 11mo ago
Yes. GTS was infrastructure services and was spun off. What's left is the old GBS - business services and systems implementation services.
jldugger 11mo ago
My go-to analysis for these sorts of places is net income per employee. Back in the day, IBM was hovering around $5,000. Today, Kyndryl is still around $5,000 (2025). But the parent company seems to be now at $22,000 (2024). For comparison: Meta is at $800,000, Apple is at $675,000, and Alphabet is at $525,000. And Wal-Mart, the nation's largest private employer, is around $9,250. Now, probably part of that is just that those other companies hire contractors so their employment figure is lower than reality. But even if you cut the numbers in half, neither side of that spin off is looking amazing.

tw04 11mo ago

Missed the boat? Have you been living under a rock? Watson AI advertising has been everywhere for years. It’s not that they aren't in the AI space, it’s that the CEO has a shockingly sober take on it. Probably because they’ve been doing AI for 30+ years combined with the fact they don’t have endless money with nowhere to invest it like Google.

dspillett 11mo ago
> Missed the boat? […] Watson AI advertising has been everywhere for years. They were ahead of the game with their original Watson tech, but pretty slow to join and try get up to speed with the current GenAI families of tech. The meaning of “AI” has shifted to mean “generative AI like what ChatGPT does” in the eyes of most so you need to account for this. When people talk about AI, even though it is a fairly wide field, they are generally referring to a limited subset of it.
- Lapsa 11mo ago
  "GenAI families of tech" lulz
- theYipster 11mo ago
  The death of IBM’s vision to own AI with Watson was never due to an inability to transition to the right tech. In fact, it was never about tech at all. As an entirely B2B company with a large revenue stream to defend, IBM was never going to go and scrape the entirety of the Internet. Especially not after the huge backlash they ignited with their customers over data rights and data ownership in trying to pitch the Watson they had.
CamouflagedKiwi 11mo ago
Advertising for it has been everywhere, but it's never seemed like it's at the forefront of anything. It certainly wasn't competitive with ChatGPT and they haven't managed to catch back up in the way Google have.
- whizzter 11mo ago

diggyhole 11mo ago

Right. Just like Intel completely shitting the bed on GPUs then their CEO tweeted a prayer. Old tech companies are going to be left behind.

pulse7 11mo ago
IBM was founded in 1911 and it survived many things...
- CursedSilicon 11mo ago
  Yeah but this time it's different! Hey have you seen my tulip collection?
- N19PEDL2 11mo ago
  So did GE…

belter 11mo ago

> IBM have an incentive to try and pour water on the AI fire to try and sustain their business. IBM has faced multiple lawsuits over the years. From age discrimination cases to various tactics allegedly used to push employees out, such as requiring them to relocate to states with more employer friendly laws only to terminate them afterward. IBM is one of the clearest examples of a company that, if given the opportunity to replace human workers with AI, would not hesitate to do so. Assume therefore, the AI does not work for such a purpose...

jujube3 11mo ago
If they could use THEIR AI to replace human workers, they would. If they learned that Claude or ChatGPT was better than an IBM consultant, they'd probably keep that to themselves.
- xocnad 11mo ago
  I would argue they may have and are not keeping it to themselves. Announced partnership with Anthropic: https://newsroom.ibm.com/2025-10-07-2025-ibm-and-anthropic-partner-to-advance-enterprise-software-development-with-proven-security-and-governance https://newsroom.ibm.com/2025-10-07-2025-ibm-and-anthropic-p...

deepGem 11mo ago

I would any day take chatGPT/Claude over an IBM consultant. I worked at IBM.

QuercusMax 11mo ago
I'd rather be slapped in the face than kicked by a horse, but that doesn't mean either is a good thing
- fleroviumna 11mo ago
  [dead]
- deepGem 11mo ago
  Precisely.
KronisLV 11mo ago
You could have both worlds: an LLM model by IBM https://huggingface.co/ibm-granite/granite-4.0-h-small https://huggingface.co/ibm-granite/granite-4.0-h-small It wasn't very promising when it came to benchmarks though, go figure: https://artificialanalysis.ai/leaderboards/models https://artificialanalysis.ai/leaderboards/models

TheCondor 11mo ago

How do you see the math working out? The numbers are staggering.

whiplash451 11mo ago
The fair answer is that nobody knows. Even Ilya answered he does not know on his latest podcast with Dwarkesh. Both top line and bottom line numbers are staggering. Nobody knows. Let's not try to convince people otherwise.

Ragnarork 11mo ago

> a high risk of being disrupted by those clients just using AI agents instead of paying $2-5000/day for a team of 20 barely-qualified new-grads in some far-off country Is there any concrete evidence of that risk being high? That doesn't come from people whose job is to sell AI?

MDGeist 11mo ago

IBM was ahead of the boat! They had Watson on Jeopardy years ago! /s I think you make a fair point about the potential disruption for their consulting business but didn't they try to de-risk a bit with the Kyndryl spinout?

ratelimitsteve 11mo ago

they have incentive but what's the sustainable, actually-pays-for-itself-and-generates-profit cost of AI? We have no idea. Everything is so heavily subsidized by burning investor capital for heat with the hope that they'll pull an amazon and make it impossible to do business on the internet without paying an AI firm. Maybe the 20 juniors will turn out to be cheaper. Maybe they'll turn out to be slightly better. Maybe they'll be loosely equivalent and the ability to automate mediocrity will drive down the cost of human mediocrity. We don't know and everyone seems to be betting heavily on the most optimistic case, so it makes an awful lot of sense to take the other side of that bet.

ohyes 11mo ago
20 juniors become some % of 20 seniors. and some % of that principals. Even if it lives up to the claims you’re still destroying the pipeline for creating experienced people. It is incredibly short sighted.

vultour 11mo ago

Do you expect Sam Altman to come on stage and tell you the whole thing is a giant house of cards when the entire western economy seems to be propped up by AI? I wonder whose "sober" analysis you would accept, because surely the people that are making money hand over fist will never admit it. Seems to me like any criticism of AI is always handwaved away with the same arguments. Either it's companies who missed the AI wave, or the models are improving incredibly quickly so if it's shit today you just have to wait one more year, or if you're not seeing 100x improvements in productivity you must be using it wrong.

KptMarchewa 11mo ago
> entire western economy seems to be propped up by AI? It's an example of alternative cost or Copernicus-Gresham's law, rather than some axiom.

OhMeadhbh 11mo ago

Are you suggesting IBM made up the numbers? Or that CAPEX is a pre-GAI measure and is useless in guiding decision making? IBM may have a vested interest in calming (or even extinguishing) the AI fire, but they're not the first to point out the numbers look a little wobbly. And why should I believe OpenAI or Alphabet/Gemini when they say AI will be the royal road to future value? Don't they have a vested interest in making AI investments look attractive?

HacklesRaised 11mo ago

Isn't he one of the first ass clowns to start laying people off, replaced by AI. Another empty suit.