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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.'"

35 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 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.

    3. 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
    4. 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.
  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
  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 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).

  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. 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.

  9. 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...
  10. 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.
  11. 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.
  12. 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

  13. 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.

  14. 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
  15. 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.

  16. 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
  17. 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.

  18. 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.

  19. 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
  20. 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.

  21. 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)...

  22. 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

  23. 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.

  24. 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
  25. 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 ).