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IBM makes its money on the consulting anyway, they don't need to make money off the cloud services. They just need to sell lots of $200+/hr consulting services
by lnanek2 12y ago
IBM makes its money on the consulting anyway, they don't need to make money off the cloud services. They just need to sell lots of $200+/hr consulting services putting people on them.
- hvs 12y agoConsulting (and services in general) is a low-margin business. You can only increase revenue by tricking young college grads to work 80-hour weeks at low pay.
- scholia 12y agoMargins on services are much higher than margins on hardware. While they're much lower than margins on software, margins on consulting services are also much harder to attack.
- johnward 12y agoWhen they are paying someone $40 per hour and billing that person at $300 per hour there has to be a nice margin in there.
- scholia 12y agoSure, but software gross margins are typically above 80%. (And should be close to 100% in a serve-yourself online software business, where the manufacturing cost is zero.)