IBM recently released their annual report for 2008 achieving record revenue, record pre-tax earnings, record earnings per share and record free cash flow. IBM has grown tremendously and now does USD 103 billion in annual revenue (up 5 % from last year) with almost 400,000 employees around the world. Despite the record-breaking numbers Big Blue seems a bit lost when it comes to enterprise portals, web content management and enterprise search.
I’ll leave it to other industry analysts and observers to speculate about the potential impact of IBM’s rumoured upcoming acquisition of Sun. Rather, I want to share my findings from simply looking at the numbers and talking to curious customers who -just like myself- are wondering where IBM might be taking their many web products in the future.
IBM do not detail specific product line revenue, but they do share many interesting details in the 128 page annual report:
- Revenue for the very large WebSphere family of products grew 6.2 % from last year.
- Roughly 21 % of over-all revenue comes from software and more than half of this is from the middleware division where WebSphere belongs.
- IBM have several and overlapping answers to web content management, including WebSphere Portal, FileNet and Lotus Web Content Management. The acquisition of FileNet in August 2006 is briefly mentioned in the report
- Global Services, the IBM division which primarily does consulting and outsourcing, contributed with USD 58 billion revenue. In other words Global Services is a very significant part of IBM.
Interestingly, IBM are very optimistic about the future. To quote a chapter called “We Will Emerge Stronger” in the annual report: “…we will not simply ride out the storm. Rather, we will take a long-term view, and go on offence.”
Perhaps the good numbers and the bright take on the future, means that IBM are not feeling any pressure from Microsoft SharePoint? So far, the biggest single piece of news in 2009 with IBM WebSphere Portal and Lotus Web Content Management has been the February announcement of a new “pay-as-you-go” model via cloud computing with Amazon Web Services. I have still not found any customers that have gone in this direction, so to me this is still left in the marketing folder.
Customers of IBM’s portal, web content management and enterprise search solutions might want to take note of the fact that these are barely mentioned in this year’s annual report. For me this is a useful reminder that IBM is a vast company and these solutions represent but a fraction of overall revenue. This is very similar to Google and their tiny Enterprise business.
While there is no indication that IBM is planning to discontinue any of these solutions, I recommend that existing and prospective customers have a conversation with their usual IBM executives to get details on local adoption by other organisations and product roadmap plans. If you are concerned about taking unnecessary risks, make sure to also talk to several system integrators that are able to support your projects and have experience with the same IBM product that you are using.
“Where do you want to go today?” was the title of Microsoft’s famous advertising campaign back in 1994. My concern is that IBM, on the face of it, has very overlapping web products that do not seem strategic to IBM. Unfortunately they do not openly communicate where they are going and that’s usually a sign of bad news to come, at least for existing for customers.
UPDATE – March 25, 2009: The Wall Street Journal reports IBM Set to Cut More U.S. Jobs
