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Microsoft Sees IBM as Biggest Threat

Posted by ryuzaki0 on from the steve-jobs-chuckles-quietly dept.

Anonycat writes "Bill Gates gave an interview at the Consumer Electronics Show, claiming that IBM is the rival company Microsoft has their sights set on. From the article: 'People tend to get over focused on one of our competitors ... We've always seen that ... I'm never going to change the press' view about what the cool company to write about is. That's Google number 1 and Apple number 2 ... [IBM has] four times the employees that I have, way more revenues than I have.'"

65 of 328 comments (clear)

  1. Microsoft's Biggest Threat? by ackthpt · · Score: 5, Insightful

    Begging Bill's pardon, but Microsoft's attitudes and practices are their own biggest threat.

    Over the years, Microsoft's biggest threats have been:

    • Apple Computer
    • Sun
    • Java
    • Netscape
    • Anyone who knows of a security hole in one of their operating systems.
    • Oracle/Larry Ellison
    • U.S. District Judge Thomas Penfield Jackson
    • Linux
    • The European Commission
    • Sony Playstation
    • Google

    I've heard Bill talk at a CES a few years ago and between the words, you could most definitely hear him placing Microsoft as not a technology partner to consumer electronics firms, but as a direct or indirect threat to their product lines and/or ways of doing business. While he waxed enthusiastic about how Windows CE would be some great enabling force, you could almost hear people break out in a sweat wondering what "Microsoft-tax" they would encounter to hop on or compete with the Redmond bandwagon, whether it actually added anything truly positive. I'm positive more than a few show exhibitors could almost see him in a pinstripe suit with a couple gunsels behind him and a moll on his arm.

    <James Cagney Voice>
    "We're the new business men in town, see? And you're going to like doing business with us, see? Because when you do business with us nobody gets hurt, see? Yeah. I think you do see. That's very good. Very good for business."
    </James Cagney Voice>

    Bill most likely sees threats to his company because he cultivates them. Microsoft has profited at IBM's expense for the past 20 years. Why shouldn't IBM be competing with Microsoft?

    "We have met the enemy and he is us." -- Pogo

    --

    A feeling of having made the same mistake before: Deja Foobar
    1. Re:Microsoft's Biggest Threat? by dc29A · · Score: 5, Insightful

      Begging Bill's pardon, but Microsoft's attitudes and practices are their own biggest threat.

      While that's true to an extent, I think it's open source and innovation. Google innovated with search engines, now it's a word. IPod is almost a word, a huge trend. Open Source is an ideology. You can't fight ideologies and words from dictionnary. Open Source + Microsoft's reluctance to change their business model + lack of innovation on their part will be it's ultimate undoing.

      Then again, that won't change jack in the big scheme of things. Yesterday was IBM, the big Monopolistic Empire of Evil(tm), today is Microsoft, tommorow it will be (fill in the blanks).

    2. Re:Microsoft's Biggest Threat? by ackthpt · · Score: 2, Interesting
      While that's true to an extent,

      Microsoft never had to work hard for the money. Everyone jumped on the Windows/Office bandwagon. Not necessarily the best product, but everyone else was doing it, like a bunch of lemmings.

      Look at Windows. How it is set up, how you install software, what safeguards there are. If you ever had worked on a mainframe computer and knew the kernel inside out, and knew good shop practices, you would be shocked and appalled that businesses have so readily adopted this ridiculous platfrom which is effectively a black box. All the security flaws and exploits are just a symptom of what an absurd aggregate the Kernel/OS/UserInterface/Environment has become. Perhaps Vista will be better, but I don't hold my breath.

      The core problem at Microsoft is the market and the money all came easily. Where giants Unisys, IBM, DEC et al used to slug it out week to week for market share, support contracts, etc. some outfit just threw the stuff on store shelves and everyone bought it. Do you think they learned anything this way? There may be some very bright people up there in Redmond, but to constantly expect they can just waltz into new markets and own them or expect a T. Rex like IBM to just whither away is naive at best.

      Is there such a thing as a Microsoft Fellow?

      --

      A feeling of having made the same mistake before: Deja Foobar
    3. Re:Microsoft's Biggest Threat? by Pxtl · · Score: 5, Interesting

      Speaking of Words, you notice the inverse relationship? Word, Excel, Windows... MS turns dictionary words into trademarks, while their competators do the opposite.

      And of course Microsoft's enemies will be talked about - that's what Microsoft does, they fight. They move into an industry with established technology companies with the expressed purpose of taking it over by dumping wads of development cash into it and making their product tightly interoperable with the rest of the MS family. Microsoft moving into a new niche is a full-fledge onslaught to everyone else in that niche. No wonder they're famous for their enemies.

    4. Re:Microsoft's Biggest Threat? by srock2588 · · Score: 2, Funny

      This reads more like a "People to Kill List"

      Boy am I glad I called that guy!

      --
      Ehh...this is the life we chose.
    5. Re:Microsoft's Biggest Threat? by Anonymous Coward · · Score: 2, Insightful
      Yesterday was IBM, the big Monopolistic Empire of Evil(tm), today is Microsoft, tommorow it will be (fill in the blanks).
      Google.
    6. Re:Microsoft's Biggest Threat? by AKAImBatman · · Score: 5, Interesting

      Microsoft never had to work hard for the money. Everyone jumped on the Windows/Office bandwagon.

      That's just simply not true. Microsoft has worked it ass off to convince the public it needs what its selling. That's been particularly difficult as Microsoft products have traditionally not been very innovative. So Microsoft has taken the tack of marketing the heck out of their product, and crushing the competition in the process.

      Take the matter of the VisiOn GUI. Microsoft had nothing to compete. Zip, Zilch, Nada. So they see this VisiOn and realize that they'll soon be irrelevant. To counter this threat, Microsoft annouces that they will be releasing a product known as "Windows" Real Soon Now(TM). Everyone then puts off purchasing VisiOn while Microsoft goes and makes something up. Microsoft is late shipping (since they didn't actually have a product), and ends up bleeding Visi-Corp out of the market. Microsoft then delivers a steaming pile of software known as "Windows" which gains absolutely no foothold on the industry up until the point where it copies the Macintosh. Poorly.

      Windows was then scheduled for demolition right up to the point where a couple of smart guys saved the company by getting Windows to run in 32 bit mode. Microsoft throws their marketing muscle behind this new version of "Windows", and the rest is history.

      So in summary, Microsoft may be a lot of things. But lazy isn't one of them. Always give the devil his due, or you may get complacent.

      --
      Javascript + Nintendo DSi = DSiCade
    7. Re:Microsoft's Biggest Threat? by warsql · · Score: 3, Insightful
      and making their product tightly interoperable with the rest of the MS family.

      That is exactly the strategy of IBM, at least in the java world.

      Look at the Websphere family - portal, content management, business integrator, etc. They are all supposedly standards compliant, but try to use any of them with any other standards compliant software. And have fun trying to get them to support Websphere running on any jvm besides theirs.

      --
      878659 - yep its prime.
    8. Re:Microsoft's Biggest Threat? by ackthpt · · Score: 2
      Microsoft never had to work hard for the money. Everyone jumped on the Windows/Office bandwagon.
      That's just simply not true. Microsoft has worked it ass off to convince the public it needs what its selling. ... So in summary, Microsoft may be a lot of things. But lazy isn't one of them. Always give the devil his due, or you may get complacent.

      I never said they were lazy, I said they never had to work hard for what they got. They issued Windows 95 and the rest is history.

      "you make a grown man cry"

      Indeed they did. They said it would work fine on 4MB of memory, which was just enough to start it up but realistically a user had to have a minimum of 12MB to actually do anything otherwise paging to disk brought it to its knees. With (comparatively) less expensive memory the Windows PC market grew by leaps and bounds. Microsoft may have spent a lot of advertising dollars, but it was a pittance compared to what they raked in.

      Keep in mind, to get and hold 1,000 minicomputer/mainframe customers DEC alone had an army of software and field service people, whose salaries, fringes, office space, transportation, etc. the company had to foot. Along come PC's which you could put DBase or RBase or any of the latter database servers on and you suddenly cut $100,000 a year in support to a couple thousand. Microsoft didn't even send us sales reps. People where I worked ordered PCs from the local clonemakers, RadioShack, some startup by a couple college students in Austin, TX, etc. When we had problems we, as the first line of tech support sat and listened to elevator music as Microsoft was swamped by calls and we could spend up to 4 hours waiting to talk to a trained parrot.

      Success came so fast to Microsoft on the heels of Windows 95 they were ill equipped to support their rapidly growing customer base. Customers which DEC, IBM, Sperry/Univac, Burroghs, etc. all worked dilligently (well, maybe not in the case of Burroghs) to keep and fully support were leaving them for a bunch of businessmen in Redmond who couldn't believe their luck.

      Microsoft, now is having to work for success. Further, they have to work hard to mop up the mess they have created on their way to today. Much of it is simply swept under the carpet. Burroghs was regularly the target of lawsuits when their systems failed to deliver on promises in contracts. Microsoft just points to the EULA.

      --

      A feeling of having made the same mistake before: Deja Foobar
    9. Re:Microsoft's Biggest Threat? by ackthpt · · Score: 2, Interesting
      You and others here misunderstand MS's primary role. It it not to advance the state of technology or improve consumer's lives. Those are two potential paths to the goal, which is to optimize the financial return to it's stockholders. On that count they are extremely successfull. If you've been holding MS stock for a number of years you got huge stock price run-ups followed by record setting dividends.

      You don't know Bill.

      Bill is like the world's most competitive businessman. He doesn't just sit on his laurels and secure his market, he attacks every other market in sight. Now Microsoft wants to be the technology behind everything, cars, cell phones, PDAs, workstations, television, music, movies, medical devices, etc. If there's software and a processor doing some work somewhere then it is in a market Microsoft wants to move into. Why? Because it's there and therefore can be taken.

      Bill already has everything anyone could ever want. Ask yourself, what drives some like that onward? I have an Ex-Brother-in-law who started on a shoe-string. Today he's a millionaire, but somewhere along the way to financial success he already had home, financial security, family, etc., but couldn't take a rest and delegate, he kept on driving. It cost him his wife, my sister, because she was fed up with his relentless drive for success over time at home with the family. Obsessive/Compulsive something, but Bill strikes me as nearly the same thing. He doesn't need the money, now he just drives the thing along because he likes to and if he's going to keep driving the business then it needs new directions to go.

      --

      A feeling of having made the same mistake before: Deja Foobar
    10. Re:Microsoft's Biggest Threat? by pizzaman100 · · Score: 2, Interesting
      PowerPoint is your only legit one on the MS side.

      Actually, they bought Powerpoint too - from a company called Forethought, back in 1987.

  2. Could be true by bblazer · · Score: 3, Insightful

    I can see Gates' point. If IBM continues to flex its muscle with OSS and releasing IP for OS use, it could have a very negative affect on Microsoft. But on the other hand, dismissing google is just FUD.

    --
    My .bashrc can beat up your .bashrc!
    1. Re:Could be true by KJE · · Score: 4, Funny

      Do you know what FUD actually means?

  3. Hey, look over here!!! by AKAImBatman · · Score: 5, Funny

    Really! See the big shiny thing! Yes, ignore those other things. They're new, small, and boring. The Gigantasaurous Rex over there is the REAL threat! What's that? It's not moving you say? That's because it's... um... conserving its energy. Yea, that's it! It's like a crocodile. The moment you get too close, SNAP!

    So look over that way. And pay no attention to the man behind the curtain.

    (Sure Bill, we're all going to listen to you. *rolls eyes*)

    --
    Javascript + Nintendo DSi = DSiCade
    1. Re:Hey, look over here!!! by ackthpt · · Score: 3, Insightful
      Sure Bill, we're all going to listen to you. *rolls eyes*

      That's the thing. When Bill speaks at these shindigs, everyone listens. I was lucky to get a seat when I was there. I don't think people go to see what great marvels he and his people behind the curtain have rigged up (and whether or not it will fail most spectacularly at the worst moment [blame it on cell phones, nobody in a real business environment is going to have those] *snicker*) They go to hear whether or not Microsoft is going to make a move on their turf.

      So look over that way. And pay no attention to the man behind the curtain.

      Yes, because the man behind the curtain has a chair and he's going to f**king kill you!

      --

      A feeling of having made the same mistake before: Deja Foobar
    2. Re:Hey, look over here!!! by mysticgoat · · Score: 2, Interesting

      So Bill identifying IBM as his chief competitor is really a part of a smoke and mirrors game? Yeah, that's consistent with his past behavior.

      So who IS Microsoft's most significant competitor? The Apache group? They've been encroaching on Microsoft turf for years, and just seem unstoppable. The Firefox people? They've only recently made any kind of dent in Microsoft's market share, but it has been a pretty big dent, and it is still getting bigger. How about OpenOffice.org? I've not seen any figures about market share, but with big corporations and governments going the OOo route I'm guessing that has to be making one of MS's chief officers want to throw a chair.

      Funny thing, all these competitors that have measurably reduced Microsoft's turf are FOSS.

      Could it be that FOSS is Microsoft's chief competitor?

      Could there be some reason why Bill wouldn't want people to look at that?

    3. Re:Hey, look over here!!! by mysticgoat · · Score: 2, Interesting

      Like I said, they [Microsoft] are their own greatest threat. All the things you mentioned are now serious threats to them because of the way they have done business.

      I couldn't agree more.

      In my considered opinion, based on watching them since the days of MSDOS, Microsoft's management has never made the transition from thinking like a small scale entrepreneur to the deliberations that drive big business. That is a transition they should have made at least a decade ago. For it has been that long at least since Microsoft joined the ranks of major multinational corporations. Yet they take pride in not having properly diversified their holdings; they celebrate their inability to move billions of dollars of reserves from low yield liquidities into long term investments; they make stupid public remarks about being able to afford to be in contempt of court. They have at least one key officer whose foul-mouthed violent behavior would not be tolerated in high level management in any other corporation of comparable size.

      Their strategies wrt XBox and software licensing agreements are the moral equivalent of kneecapping the competitor. They are certainly big enough now that as a corporation they should have risen above these behaviors.

      I think the only hope for Microsoft's long term survival is to change its upper level management team. But of course that won't happen.

    4. Re:Hey, look over here!!! by javaxman · · Score: 2, Insightful
      Could it be that FOSS is Microsoft's chief competitor?

      Given IBM's use of FOSS and policies regarding OSS, if FOSS is the biggest MSFT threat, then IBM might just be their biggest competitor. People are thinking it was Google that was the threat, but they're keeping just enough of what runs Google Mail, Maps and Search private that they're not as big of a threat as a company that's not only constantly improving and adding to FOSS, but also marketing FOSS-based services and solutions to Microsoft's clients.

      I think Bill may actually be speaking honestly, here. Possibly downplaying threats and competition from other companies as well, perhaps, though. I mean, think of Sony vs. Xbox ? Apple vs Urge? What business exactly is IBM stealing? Server OS licenses! Oh, I guess that's big, too. Perhaps he's being kind of truthful, but playing up what he wants the CES-centric folks ( read: real tech heads ) to think : that MSFT is focused like a laser on providing you with all of your IT datacenter needs, and that IBM is 'stealing' that market. We should ignore all the other stuff MSFT is involved in, an pretend they've focused their resources on *our* issues.

      Because they need to keep selling OS server licenses to help fund their other less-profitable ventures, perhaps.

  4. Revenue by GoatMonkey2112 · · Score: 4, Insightful

    They also have way more expenses than Microsoft from what I've heard.

  5. Does Bill think Everyone is a Fool ? by majjj · · Score: 5, Insightful

    I mean... how can he expect anyone to believe this. Just a month ago in an Television interview he accepted google as its main RIVAL in the coming times because of its high number and quality of innovations. He also vowed to beat google out of search engine market... I guess Bill is having Nightmare... amnesia these days.

    1. Re:Does Bill think Everyone is a Fool ? by abertoll · · Score: 2, Insightful

      When you're Microsoft, everyone is your main rival.

      By the way, why is Bill Gates still so involved? I thought he left Microsoft a long time ago.

      --
      "he drew his sword Ringil that glittered like ice... and he wounded Morgoth with seven wounds..."
    2. Re:Does Bill think Everyone is a Fool ? by undeadly · · Score: 2, Insightful
      When you're Microsoft, everyone is your main rival.

      When you are Microsoft, everyone are your enemies, including your customers.

    3. Re:Does Bill think Everyone is a Fool ? by EraserMouseMan · · Score: 4, Informative

      Google is it's biggest rival in the Search Engine field. That's the only place. Google does not currently offer MS any competition in any of Microsoft's main software businesses (Operating Systems and Office Productivity).

    4. Re:Does Bill think Everyone is a Fool ? by T-Ranger · · Score: 2, Informative

      The browser can run on any OS. Any of the Mozilla products are cross platform, as is Opera.

  6. For a company that hates IBM... by Anonycat · · Score: 5, Informative

    From page 2 of the article: Also, IBM -- along with Toshiba Corp. (6502.T: Quote, Profile, Research) and Sony -- has developed the Cell microprocessor that will power Sony's PlayStation 3 video game console, a competitor to the Xbox 360, Microsoft's next-generation gaming unit. Who makes the chips for the Xbox360, again?

  7. Oh noes! by BlueScreenOfTOM · · Score: 3, Funny

    (Sorry, this is required by law) ...meanwhile, Steve Ballmer as vowed to Fucking Kill (TM) IBM and all its partners.

  8. Why would he tell the truth? by dubl-u · · Score: 2, Interesting

    Is there any reason to think that there's a correlation between who he says is the biggest threat and who he thinks is the biggest threat? I can see a lot of reasons to lie about this.

  9. Services and consulting by Anonymous Coward · · Score: 4, Interesting

    After you sell the big iron to run those enterprise apps, all those consultants are used to do that seemless integration and support. And those are billable long after the box is paid for. I suspect a significant number of IBM employees and revenues come from that. Is MS planning on becoming a service organization or selling big iron?

    1. Re:Services and consulting by argoff · · Score: 4, Insightful

      Agreed,
      IBM is a hardware and services company, Microsoft is a proprietary software vendor. If you want to maximize your profits from service standpoint, the best route to go is to have a non-proprietary infrastructure ( like Linux .... hint ) so you don't bet bogged down with license costs while you get the maximim value for your service expenses. The consultants who got nailed during the dot com crash have already learned that lesson the hard way. Both Linux and MS professionals got nailed hard, but the Linux experts recovered while the MS ones never really did.

  10. IBM the biggest threat... by CodeShark · · Score: 4, Insightful
    Reasons?
    • Perhaps because IBM has already successfully defended Linux from SCO?
    • perhaps because IBM plays nice and has donated massive amounts of code to the OSS world?
    • perhaps because IBM is comfortable with Novell, offering the only real competitor to Win NT networking?
    • Perhaps because IBM offers a strong competitor to SQL Server, AKA DB-2, with a full stack including the web sphere stuff, etc. that doesn't need any MS components to run?

    In other words, where Microsoft's bullying business tactics don't have a way in? What think ye all?
    --
    ...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
    1. Re:IBM the biggest threat... by LOTHAR,+of+the+Hill · · Score: 2

      IBM is untouchable. They have the largest patent portfolio and and one of the best IP Law programs around. You can't threaten it with a lawsuit.

      IBM is very focused on what it wants, and what it doesn't want. I can't say that of Microsoft. IBM is also very disruptive in that is gives away lots of tech to customers, and even some competitors, in markets that IBM doesn't play in.

      IBM is established, deeply, in one of Microsoft's main target markets, the Enterprise server space. IBM provides HW, SW, and services and has done so for better than 80 years (anti-trust limitatons nowithstanding). It's hard to compete with that with software products that come in a shrink wrapped box.

  11. IBMa threat, no... by Ucklak · · Score: 5, Funny

    Bills biggest threat is Chuck Norris.

    --
    if you steal from one source, that is plagiarism, if you steal from many, well, that's just research.
  12. AND IBM is a prime mover behind Linux by darkonc · · Score: 5, Insightful
    This makes them something of a double threat. IF MS takes out IBM, they're probably gonna trash Linux with the bundle. IBM's support gives Linux a good deal of respect in the business world.
    Then there's google.... Also a Linux user/proponent.
    And apple insists on using Open Source (BSD) too....

    So Microsoft's top-3 opponents are Open Source friendly companies.

    See a pattern there?

    --
    Sometimes boldness is in fashion. Sometimes only the brave will be bold.
  13. Envy by oGMo · · Score: 4, Interesting
    "[IBM has] four times the employees that I have, way more revenues than I have."

    And people wonder why we have a problem with happiness. This sort of envious greed is the main problem with Microsoft, and it looks like it goes all the way to the top.

    --

    Don't think of it as a flame---it's more like an argument that does 3d6 fire damage

  14. Is bill gates an ego-driven individual? by inertialmatrix · · Score: 5, Interesting

    "The biggest company in the computer industry by far is IBM. They have the four times the employees that I have, way more revenues than I have. IBM has always been our biggest competitor. The press just doesn't like to write about IBM."

    I find it fascinating how he uses the term "I" when referring to the company he founded. I wonder how much of his motivation to succeed is pure ego driven. I always found it interesting how all these iconic leaders in silicon valley all know each other, and have all had personal interactions going back 20 years. The old question of whether or not bill and steve really dislike each other, and if that dislike stems from some initial interaction at a computer show in SF back in the 70's.

    Strange indeed.

  15. Bill knows all by digitaldc · · Score: 2, Insightful

    "People tend to get over focused on one of our competitors. We've always seen that, said Gates...Too bad for Nokia, Sony and all those others...IBM has always been our biggest competitor. The press just doesn't like to write about IBM....reading everything online and new devices that enable that -- in five years, that will just be common sense...We're pretty simple, because 30 years ago we said we were a software company and five years, 10 years from now we will say we're a software company."

    Does it annoy anyone else that as you read what Bill Gates says it tends to sound rather whiny and condescending? And what's with the waving of his hands in the air?
    Why can't he just say that they have several strong competitors but they always try to do their best to create good products that will do A, B, and C?
    Is there anything that Microsoft can't do, hasn't thought of, or has something in the works that is better than everyone else? Come on.

    --
    He who knows best knows how little he knows. - Thomas Jefferson
  16. actual interview went like this: by circletimessquare · · Score: 5, Funny

    Reporter: Hi, Mr. Gates, I'd like to talk about the latest windows exploit...
    Gates: [waving hands] You don't want to talk about that.
    Reporter: I don't want to talk about that. Then how about your hottest competitors, Google, and Apple, and Linux is making inroads in...
    Gates: Those aren't the companies you're looking for.
    Reporter: Those aren't the companies I'm looking for.
    Gates: Microsoft is a rock solid business. IBM is our competitor.
    Reporter: Microsoft is a rock solid business. IBM is your competitor.
    Gates: Move along. Next reporter.
    Reporter: Move along... move along.

    --
    intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
  17. Give me a break. by Pendersempai · · Score: 2, Insightful
    You guys actually think he is telling the truth?

    What if he had said something simpler but equivalent: "We have nothing to fear from Google." Would you believe that?

    In other news, the Information Minister of Iraq claims that there are no Americans in Bagdad...

  18. Size matters... by hhr · · Score: 5, Informative
    Wow. You have to wonder what all those people at IBM do and marvel at how efficient MSFT and Google are.

    Google: Number of employees.. 4183 http://www.google.com/intl/en/corporate/facts.html
    Net earnings: $1.297 billion.
    Revenus $5.25 billion

    IBM: Number of employees...369277 http://www.networkworld.com/news/financial/ibm.htm l
    Net earnings: $7.797 billion.
    Revenues: $94 billion

    MSFT: Number of employees... 57000 http://www.networkworld.com/news/financial/microso ft.html
    Net earnings: 12.867 billion.
    Revenues $40.340 billion

    1. Re:Size matters... by lawpoop · · Score: 5, Interesting
      You're comparing apples to oranges.

      Google and MS are software companies. All they need is a few programmers to write some software, and they can duplicate that software and minimal cost and sell it millions of times over.

      IBM is a consulting, maintenance, and support business. If you're hired to consult for someone, you actually have to send people there. Problem is, people can only be at one place, or do one thing at a time. Unlike software, you can't copy or clone or consultants, or have them in two places at once. If you get a new support contract, you have to hire additional support staff. If you get a new maintenance contract, you have to hire additional maintainers.

      IBM sells people's labor. If they sell additional product, they have to hire addtional people - the cost is almost directly proportional.

      Google and MS sell software. If they sell more software, they just print up a few more copies, or purchase additional bandwidth for downloads. The additional costs are minimal.

      --
      Computers are useless. They can only give you answers.
      -- Pablo Picasso
    2. Re:Size matters... by Jason+Earl · · Score: 4, Insightful

      Microsoft has a pair of businesses that currently yield ridiculous profit margins, Windows and MS Office. IBM has quite a few businesses, some of which are also ridiculously profitable, but most of which are merely very profitable. The most important of these businesses, in recent years anyway, is IBM's service and support business. Service and support will never generate the profit margins that Windows and MS Office provide, but it's a good business nonetheless, and it is a business with critical strategic importance. Here's an example of why IBM is truly Microsoft's biggest threat.

      Let's say, for example, that you are the CIO of a really big company or a large government institution, like a U.S. State, and you are concerned about what it is going to cost to upgrade 50,000 machines from Windows 2000 and Office 2003 to Windows Vista and MS Office 12. What's more, you would really like to have one central repository for all of your documents. Something that integrates with email, has a web portal, and is easily accessible to thousands of workers at the same time. So you talk to your service and support vendor (IBM), and you ask your rep what he can do for you. Well, it turns out that IBM has this nifty new portal software called IBM Workplace and it can be used with OpenOffice.org for a fraction of the cost of upgrading to Office 12. What's more, the software is compatible with Linux thin clients and so if you have desktops that don't need a lot of bells and whistles you can replace those expensive PCs with easy to manage thin clients and save a bundle. Not only do you end up with a better system overall, but you save millions of dollars in Microsoft upgrades in the process. What's more, IBM has the resources to guarantee that you don't have to worry about whether the system will work or not. The system is going to work slick. In fact, IBM is probably going to be willing to cut you a deal on the software so that IBM reps can use your installation as a showcase.

      Part of the reason that Microsoft can make such ridiculous profit margins is that Microsoft relies on its partners (like IBM) to carry the expense of actually selling and supporting Microsoft software. Microsoft made a conscious choice to stay out of the sales, service, and support businesses for its software because these low margin businesses would have lowered Microsoft's aggregate profit margins dramatically. Microsoft could have become like IBM and built its own service and support arm, but instead it concentrated on the much higher margin business of selling software licenses. That worked fine in the past, but IBM makes software as well. Now IBM has every incentive to cut Microsoft out of the picture in every single one of IBM's many service contracts. Thanks to Microsoft's ridiculous profit margins there is even plenty of fat to cut.

      That's why Microsoft has been concentrating so heavily on its service, support, and sales arms. Microsoft has finally realized that its primary customers (OEMs and sales and service organizations) all would be better off if there was a little more competition in the operating system and office suite markets. So now Microsoft wants to start dealing directly with end users. Unfortunately for Microsoft it can't move too quickly because if it does it risks alienating partners that it needs very badly. If Microsoft is successful the finished Microsoft product will look a lot more like the IBM of today. If Microsoft is unsuccessful then it will probably die.

      Google is really in the same boat. It currently can demand high profit margins because of the amount of traffic that it can drive. However, Google's success is predicated entirely on Microsoft not using its desktop and web browser marketshare to drive more search results its way. To compete successfully with Microsoft (and Yahoo) in the long run term Google is going to have to invest plenty more.

  19. Re:awesome by cperciva · · Score: 5, Insightful

    The lack of splits is why the price of any individual share is so high; but it doesn't excuse the inflated total capitalization. According to the market, Google is worth 132.5 billion dollars; but is it really worth more than IBM or Coca-Cola, and almost three times as much as Disney?

    --
    Tarsnap: Online backups for the truly paranoid
  20. IBM makes for a convenient top competitor by teslatug · · Score: 3, Insightful

    So anyone think that if Google or Apple were the top competitors Gates would acknowledge that and give a boost to the underdogs? It's more beneficial for MS to play the underdog itself and acknowledge IBM as the top competitor.

  21. Why? by Yahweh+Doesn't+Exist · · Score: 2, Interesting

    Why are MS's policies and strategies always based around "enemy lists" rather than actual products or services?

  22. Are you thinking what I'm thinking? by thaerin · · Score: 2, Insightful

    "[IBM has] four times the employees that I have, way more revenues than I have.'"

    I can understand Bill being envious of the revenue stream of IBM, but the number of employees? My word he must be planning on world domination by being in every aspect of your life and to do so he's gonna need a lot larger of a workforce. I can just see Steve sitting in Bill's office with a conversation that hails from the days of the Animaniacs:

    Bill: "Stevie, are you thinking what I'm thinking?"
    Steve: "I think so Bill, but what are we going to after we Fucking Kill(TM) IBM?"
    Bill: "The same thing we do every day Stevie. Try to take over the world!"
    Steve: "Narf! Good one Bill."

    --
    If big boobed women work at Hooters do one legged women work at IHOP?
  23. Wrong threat model by ka9dgx · · Score: 2, Insightful
    Microsoft's biggest threat is whoever solves the security problem. This involves researching improved security models to replace ACLs, such as capabilities.

    ACLs don't cut it in an age of mobile code and 10,000,000 line programs. You can't trust applications, no matter how careful you are. You shouldn't have to, either.

    --Mike--

  24. Actually, he's probably right. by ErichTheRed · · Score: 4, Informative

    IBM today isn't the IBM it was in the 90s or 80s. They're still a technology company at the core, but they're doing a smart thing by becoming more of a services company. Lately, they've been turning themselves into another one of the "buzzword-compliant" consulting firms. Those companies (EDS, Accenture, BearingPoint, whatever) make boatloads of high-margin deals and huge profits...more than selling servers and mainframes could ever produce. Companies routinely cut multimillion-dollar checks for "strategic advice" from an army of new graduates who don't mind travelling 360 days of the year!!

    Other things going for them:
    - They killed their low-margin PC business. Love it or hate it, it definitely boosted their profit margin.
    - IBM is one of the only companies still doing pure scientific/technology research. Microsoft is one of these companies too, but it's definitely time for the "next big thing." The PC revolution started in 1980, and it's 2005 now. If I were a technology company, especially one who wanted to keep their competitive edge, I'd be betting BIG on research. The only other big reseatch operations outside of universities that I know of are IBM, AT&T Labs and Microsoft. I'm sure there are other smaller operations, but not on the same grand scale.
    - They still have one of the best server lines out there.
    - They're big proponents of open source stuff. No matter how the whole OSS movement shakes out over the next few years, they're ideally positioned. Almost all their proprietary products can run on both closed- and open-source systems.

  25. He is right by FishandChips · · Score: 4, Interesting

    If you look at the totality of what Microsoft does, Gates is surely right. IBM is the 800lb gorilla of services (as distinct from software though IBM is huge in that too). Despite his claims about Microsoft just being a lil' old software house now and in future, my guess is that Gates sees services as the big one in the coming years. Yes, Google can hurt Microsoft a bit on the consumer desktop, and so can Apple and others, but the big money is in enterprise business.

    If this is correct, then it follows that Microsoft may well have concluded that their cosy world of pay-for software has peaked and will now start to decline no matter what they do, so they are preparing to reposition themselves. Admittedly the great man's sour tone and strange diction don't help.

    --
    Las qué passoun
    tournoun pas maï
  26. Naah.... by everphilski · · Score: 2

    IBM is getting into the whole software as a service thing http://news.com.com/IBM+doubles+down+on+software+s ervices/2100-1014_3-5553386.html or http://www.infoworld.com/article/05/05/26/HNibmsof twareasservice_1.html which walks on Microsofts turf. IBM isnt all about open source and big mainframes anymore ... stuff like this squares them off as a direct competitor to where Microsoft wants to be in the near future.

    This article http://www.forbes.com/technology/2005/09/26/ibm-so ftware-investments-cz_qh_0926ibm.html states "In effect, giant IBM hopes this loosely allied swarm will overwhelm application offerings from the likes of Microsoft, Oracle and SAP. "This is about building out an ecosystem of partners to compete" ... IBM also figures watching the little guys is a good way to spot future trends early, he said..."

    -everphilski-

  27. Re:In all seriousness, his biggest threat is... by gwait · · Score: 2, Interesting
    Exactly. Item 3 is what they want to avoid:
    1. "Nobody ever got fired for buying IBM" (1980s)
    2. "Nobody ever got fired for buying Microsoft" (1990s)
    3. "You should be fired for using Microsoft.." (Present virus infected atmosphere)

    Microsoft's security hype is not solving the problem with real corporate down time due to the latest virus/worm/trojan. I think nobody seriously beleives Microsoft can solve their security issues, but so far they've managed to convince customers that this is the way computers are, that there are no better options.
    --
    Bavarian Purity Law of Rice Krispie Squares: Rice Krispies, Marshmallows, Butter, Vanilla.
  28. Microsoft is being hit by a triple threat. by jocknerd · · Score: 4, Interesting

    That triple threat consists of Google for Internet, Linux for servers and Apple for Desktops and Home Entertainment.

  29. Biggest threat? Lack of diversification... by HockeyPuck · · Score: 4, Interesting

    Look at how diversified IBM is... They survive disruptive technologies and paradigm switches. Switches like going from mainframe to client/server, windows to linux, even token ring to ethernet.

    Also they bring in revenue from many many areas... when mainframes were threatened... they looked to PCs, as400, rs6000. How did they look to resurrect mainframes and as400? Introduce linux into their respective LPARs.

    When customers talk about moving from one platform (windows) to the next (linux).. IBM says "no problem, use our hardware, and leverage our services." Getting rid of big iron unix boxes to go with hundreds of tiny 1U servers "how about using our blades..." Getting rid of your old SSA storage? "We'll help put in fibre channel switches..."

    And don't forget about their microelectronics division... it's not just powerPC, but many companies send their designs to IBM for fabrication of custom ASICs.

    IBM has always been a 'soup to nuts' company, MSFT on the other hand... is having trouble diversifying..

    Their core business is windows and MSFT applications (office, SQL), but they are having trouble diversifying... They've gone to advertising (MSN), and home entertainment (Xbox), but they haven't had to survive losing one of their primary technologies (remember: IBM used to live off of mainframes). They do have services, and certifications, but I would guess those are pennies compared to OS and applications.

    MSFT needs to diversify (yet we blame Google for not diversifying)...

  30. If they TAKE OUT IBM??? by hellfire · · Score: 2, Insightful

    IF MS takes out IBM

    This is an interesting statement. Not only is it absurd to think that anyone will "take out" IBM any time soon (IBM has weathered lots of storms, and has adapted to every one of them) this mentality is very common when talking about Microsoft.

    Balmer wants to kill Google. darkonc talkes about taking out IBM. This is legal business, not the mafia. Microsoft is out to go after competition and kill it in order to win all the chips. Others might think about wanting to kill their competition, but no where is this sentiment more discussed when talking about Microsoft.

    Killing competition! You know... what monopolies do??

    And no one currently in the justice department wants to get the giant sized clue that is constantly being handed to them.

    --

    "All great wisdom is contained in .signature files"

  31. Edward G. Robinson by xtermin8 · · Score: 3, Informative

    Ed G Robinson was the classic gangster voice of the movies. Cagney did a gangster in "White Heat" (Look ma...Top of the world) But Robinson was the one imitated in Bugs Bunny cartoons that most people are familiar with.
    http://en.wikipedia.org/wiki/Edward_G_Robinson

  32. Attention Google Fanboys by vectorian798 · · Score: 5, Insightful

    I think most of you are failing to recognize that Google is competing against only a tiny sliver of Microsoft. Note that a large majority of Google's employees are devoted to their search engine technology, whereas Microsoft operates in MANY different markets, and MSN Search is only one of them with less than a tenth of Google's corresponding group in employee count. Seeing as how all the rumors about Google planning for their own office suite etc. have been debunked, I don't think Google is as big a threat as people think it is.

    IBM on the other hand, is the largest service sector company and the largest IT company. IBM's rock solid line of servers provide a much larger push for Unix-based systems (not just IBM's AIX, but really any of them) than does Google's use of FOSS in their products, or Summer of Code. Furthermore, IBM is by far the strongest presence in the HPC market, which as Bill indicated previously, is something MS wants to get into. We've also seen that IBM consistently produces great software (DB2, Business and Commerce software, OS, Application Server, and much more) as well as hardware (their hardware line includes complete server solutions, processors, storage systems, etc.) and is capable of using only its own products end-to-end.

    Thus, it is appropriate to say that IBM is a bigger threat to MS than is Google.

    PS: Google's market cap is not a reflection on its strength or presence so don't bring that up as a figure plz.

    1. Re:Attention Google Fanboys by robertjw · · Score: 2, Interesting

      I think most of you are failing to recognize that Google is competing against only a tiny sliver of Microsoft.

      I would say that Microsoft isn't effectively competing with Google at all. MSN search is pretty much a joke that, as you said Microsoft doesn't even take seriously. Conversly Microsoft is only competing against a tiny sliver of IBM. Microsoft's main market is in two areas, desktop OS and Office Suite. Apple and Linux are the only desktop OS's out there to compete against Microsoft and Open Office is the only serious threat to the Office Suite. Microsoft doesn't have a prayer of competing against IBM in the server or consulting market. Gates is, as ususal, blowing smoke. This is typical Microsoft nonsense. They are running around chasing their tail with no real focus or idea where they are going.

      Looks to me like right now their main competitor should be Sony and the Playstation 3. Microsoft has sunk so much money into the Xbox they should be doing everything possible to make sure it's a success, rather than spouting off about how they are going to compete with IBM.

      --
      Find coupons in Greeley
  33. all out war by javiercr · · Score: 2, Interesting

    Microsoft aims for world domination, therefore they are a fierce competitor to every other company. -Google is a competitor because they want to play the targeted ads game -IBM is a competitor because MS wants to get into more serious enterprise sofware -Sony is a competitor because they want to get into the games console game -Firefox (although not a company) pisses them off because they want to dominate the web browser market although there are only limited benefits in actually domination that market (if i was MS I would stop wasting money developing IE and ship Firefox with Windows) - Apple is a competitor because of iTunes because MS also wants to sell music. -Linux and Apache (although not a company) is a competitor for the medium size company market and seem to be able to scalate lo very large companies much better than windows (and this is going to go on for a long time, because Vista is not going to run a top of the line mainframe) MS wants to fight every battle and take no hostages, every battle has a biggest competitor.

    --
    Mac toys and accessories blog
  34. Re:threat to MSFT by dwayner79 · · Score: 2, Insightful

    Do you really think Dell is paying the $80 for a home license... no. There is very little price power in the MS license. The only thing that will make home users drop MS, is when they stop using it at work.

    --
    Religion and politics, without the flame. godgab.org
  35. Of course IBM is the biggest threat ... by DrJimbo · · Score: 3, Insightful
    They became so when they didn't fall for the bait and buy out SCO to stop the anti-Linux lawsuits and FUD.

    The threat became apparent when IBM and/or Novell began asking for discovery regarding the Microsoft purchase of an "Unix" license from SCO to the tune of tens of millions of dollars.

    If IBM can prove that Microsoft funded the frivolous SCO lawsuits then Microsoft is in deep, deep trouble. It could easily cost them billions of dollars and some executives could see jail time.

    --
    We don't see the world as it is, we see it as we are.
    -- Anais Nin
  36. Re:Microsoft's Biggest Threat? - Others! by Markvs · · Score: 2, Insightful

    Erm... Apple and Sun come to mind as non-MS companies doing the same thing... at least MicroSoft is itself a non-dictionary name!

    IBM has the "Chicklet" keyboard on the XT, which was funny if you like the Adams Gum.
    DEC made the Rainbow.
    Apple also made a PEAR. Not to mention the Lisa.
    Coleco made the Adam.
    Commodore is a naval rank... plus the Amiga is a friend. Hmm.
    My cousin had an Odyssey video game system growing up.
    How about Oracle?
    Java?
    Acrobat by Adobe?
    Opera??
    Oh, and bever mind the Palm Pilots!

    It's hardly a one way street, IMHO....

    --
    46. The Hobo smiles, his eyes glaze over, and he burps. "Beware the man who has lived longer than the Wasteland."
  37. Evil Impersonated by hitokiri82 · · Score: 2, Interesting

    It always strikes me whenever I read any post on the internet that relates in any way to Bill Gates of Micrsosoft, that they are always depicted as the quintessence of evil on earth. It even amazes me when i read comments like "The only real problem with Microsoft is that they have a dumb CEO". I mean, come on. How many other companies have you heard of, that went from being run in a small garage by a bunch of college droputs to being the number one Software Company in the world, whose founders were both in top ten list of Individual wealth before they were 50 years old, and did this in less than 20 years of operation. Excuse me, but if that could be accomplished by dumb people, america would be busting with multibillionaires. My point is, you can say whatever you want about the quality of their software or their business practices. But you cant deny, that Microsoft almost singlehandedly propelled the informatics business to the point where it is today (that is, in almost every minute, everyday of your life), and they managed to do this while at the sametime implementing a ridiculously succesful business model that allowed them to force their way to the top on every market that they have ventured in. If you consider BG and MCSFT your mortal enemies, you should at least be well informed, and recognize that no one gets to where they are by chance. Keep one thing in mind, we are talking business here, and businesses are measured only by their financial success. IBM has proved that it has the muscle to be measured with MCSFT in this field, and its up to GOOGLE to prove that theyre more than an overvalued bunch of new ideas with no real world value once the dust settles.

  38. Re:Xbox by javaxman · · Score: 3, Insightful
    Didn't microsoft have IBM build all the cpu's for their Xbox360 platform? Those are powerPC chips in the xbox, so they must have come from IBM. Seems odd they would partner and claim them as an enemy as the same time.

    Does MSFT make chips? No. Does MSFT make most of thier money from XBox? Any, even?

    That brings me to another point, shouldn't IBM be suffering pretty hard now that Apple is moving to Intel for its chips? That must have been a large source of income for IBM

    Not according to IBM, and it's probably true. They didn't even make all of the chips Apple uses/used... Freescale ( formerly of Motorola ) still makes the G4s that are in all Mac minis, iBooks and Powerbooks. IBM only supplied the desktop iMac and PowerMac G5 chips. IBM screwed up targets for the G5 badly enough ( remember they were supposed to be at 3 GHz *when*??? ) that they might not have been making much at all depending on what the Apple contract looked like. For whatever reason, volume or contracts, IBM by all accounts won't notice Apple is missing, at least not until Apple sells a lot more high-end desktops that might have used IBM chips.

    MSFT properly sees IBM's software business as supporting it's chip business, not the other way around, and would be all too happy to see IBM shift toward the chip business... as a client of MSFT. They're not a competitor in that field. MSFT will not, however, be buying consulting services and Linux blade servers from IBM - they compete in the software and services fields. Apple needed a chip supplier motivated to create great laptop and desktop chips; buying from suppliers who are primarily invested in small devices ( like routers ) and room-warming servers ( like Power blades ) wasn't getting them what they wanted. By all accounts, IBM and Freescale lost a difficult customer and a little bit of clout, but not a lot of revenue, when Apple left ( or well, leaves, it hasn't actually happened yet ).

  39. BillG used to be *nice* at IBM by paj1234 · · Score: 2, Informative
    According to the book, "Barbarians Led By Bill Gates", Gates used to be horrible to everyone except IBM.
    "Bill would go to a very senior person at these other OEMs, DEC or Tandy or Compaq or whoever, and yell at them or tell them it had to be this way, or if you don't do this we'll make sure our software doesn't run on your box. What do you do if you're one of these OEM guys? You're screwed. You can't have Microsoft not support your hardware, so you better do what they say.'

    Ironically, McGregor also remembered the remarkable transformation of William Gates III in front of IBM.

    'Bill was very humble and would speak softer (with IBM). There was a definite difference in the tone of his voice. You'd go in the meeting and it was just a fascinating contrast to see Bill at IBM versus Bill at any of the other companies.'"

    How times have changed!
  40. Re:Microsoft's Biggest Threat? - Others! by BitchKapoor · · Score: 2, Insightful

    IBM has the "Chicklet" keyboard on the XT, which was funny if you like the Adams Gum.

    The chiclet keyboard was on the PCjr; the XT had a real keyboard. Moreover, it was a colloquial discriptive term of the time for that sort of crappy keyboard, not an official IBM moniker. See the Wikipedia article.

  41. Re:awesome by clanky · · Score: 2, Insightful

    it doesn't matter what people think google is... it's about how they make their revenue. And they make their revenue through advertising. And they are wildly, wildly successful. Why? Beacause they have taken advantage of the internet to adopt a fundamentally different strategy than microsoft. Rather than relying upon customers to purchase software time and time again, leading to bloated unusable crap (i.e. virtually everything microsoft peddles to corporate users) Google writes incredibly useful and elegant web software which drives people towards its site, and then sells the fact that they are there (and the information it collects about them while they are there) to advertisers. That's great for two very important reasons -- the users (us) get great, useful tools for our day to day lives, and the advertisers reach, very effectively, the audiences they want to reach without pissing those audiences off in the process (er, banner ads/flash ads/ "click to skip this ad and continue to your article" anyone? Googles great innovation has been to put the consumer first, invest in talented developers to create great tools for the consumer, and in the process of actually generating revenue from all of this, not selling out to advertisers who, left to their own devices would shoot themselves in the foot by diluting the very tools which pull customers in (er, about.com anyone?)