IBM Says its Future is in Services, Not Goods

TFGeditor writes "An article at Technology Review quotes IBM exec Paul Horn saying that the company's business model is shifting from goods and products to software and services. From the article: 'Horn's challenge, then, has been to take a $6 billion research organization dedicated to work that advances technology products and get it to do work that benefits service businesses. IBM is thus in the process of answering an important question for all technology companies: can corporations perform useful research in the services arena?'"

Comments

Necessity

[MyLongNickName]

As products mature, it becomes more and more difficult to diferentiate yourself from your competitors. That translates to lower profit margins. IBM is simply recognizing that. The question becomes, will their services fall into the same trap? Or can they continue to specialize and keep profit margins up.

What about this question?

[slapout]

Who's going to do R&D and develop new products? Seems like everyone is getting out of the development business and going into the patent holding/suing one.

They're just announcing this?

[Jeff Hornby]

Hasn't IBM been earning more than half its revenues from services for over a decade? And they're just getting around to announcing it now?

More news: Microsoft has announced they're going to be a software company. GM is showing some interest in making cars. Walmart is going to start selling stuff.

Technology "review" is right...

[Skyshadow]

IBM has been pursuing this for a couple of years now. I mean sure, their consultants pushed their own technology, but they were always willing to push it to the side in a heartbeat if they thought it would get them a single penny more. The fact that this is news in 2005 is a little bizarre.

Of course, if IBM has decided to full-on push their consultants, it might help them to find a few who aren't complete morons. Based on my experience, IBM is well on their way to becoming the new Anderson.

Google!

[xiphoris]

Google has been conducting its research extensively in the services area. Google labs contains a plethora of useful services Google's researching, with new ones coming almost every month. A few ones that interested me: Google sets allows users to enter a few items (apple, banana, orange) and Google will find more from that set (pear, kiwi). Google ride finder allows you to find taxis and limousines by tracking their positions in realtime. All of these services are available to the public so Google can get feedback on their "research".

A reaction to Jack Welch leaving GE?

[The-Perl-CD-Bookshel]

I think that this is a good move by IBM because after Jack Welch left GE there are some doubts about GE as a consulting firm. IBM could jump in and push technology (to help processes and quality) over restructuring and quality focus seminars as the panacea for a company's problems.

Also, if anyone watched the Masters golf tournament they saw at least 10 commercials for IBMs consulting services. After seeing them buy up all of that expensive advertising time the conclusion is simple: IBM believes that services are the future and they are getting a jump on the competiton with advertising dollars, marketing generalizations and dare I say "slashvertising."

Re:International Business MACHINES

[nacturation]

And, in other news, the 3M (Minnesota Mining and Manufacturing) Corporation announces that it doesn't really do much mining these days either.