Sunday, July 24, 2005


Today, I had an interesting discussion. Where does technology stand today and whats in the future?

The talk started with IBM and at some point I simply blurted out, "IBM is going down". And here's why. During and after the tech boom, IBM entered into the consulting market, beefing up by aquiring the consulting arm of PwC and then going head to head with the likes of Accenture.

But now, its shreeding its fat. First came the mass lay off in its engineering division followed by the IBM Global Service. Few months back, it sold its PC/Laptop to Lenovo. Now, IBM's main source of revenue is Consulting, Lotus, Application Hosting (onDemand), Middleware and Server.

IBM Global Serivce is already losing the race. The fundamental problem here is IGS's solution to every problem is IBM. With cheap consulting fee, IBM make their customers implement all IBM propriety hardware and solutions, after which they charge an arm and leg for hardware/software/upgrades.

Few years back, every page on eBay displayed an IBM logo saying eBay runs on IBM. Now you can't find it anywhere. Looks like eBay learnt its lesson. :)

Lotus lost out to Microsoft Exchange a while back. Now its competing in the application hosting marketplace against hp, Unisys and RackSpace. Middleware (DB2, WebSphere) is already fighting with other open source products.

In the server market, they pitched to customers about Linux, especially RedHat Linux. When RedHat gained dominance and eventually going public, they turned around and started recommending Dell and hp to run Redhet since they are the market leader. Customers are finally realizing that they are getting locked into RedHat which only recommends certain hardware (althought the choice of hardware is more), but after installing RedHat, when the customer wants to go with cheaper Linux (yes, Linux is not free. Upgrades/fixes are only available through Service Plan which cost money), they realize their existing servers are not certified for other Linux. IBM is now pushing Suse. In short, customers are moving from IBM to commodities like Dell and hp.

I am not saying IBM will go bankrupt. Just that in 4-10 years, IBM will be just another company with market recognition as much as what hp has now. It won't be Big Blue any more. Just Blue.

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