IBM’s World View

In a single phrase: on-demand computing. writes:

IBM CEO Sam Palmisano postulated that large corporate customers are no longer interested in investing in PCs or the latest servers. Instead, these companies want to obtain software, consulting services and back-end hardware in a holistic manner to help them automate business processes and make their overall operations more efficient–in other words, in the manner in which [IBM] specializes in.

“It has been product-centric, gizmo-driven growth, but that is not going to happen again,” Palmisano said. “This industry continues to be a growth industry, because it solves a very important problem: productivity.”

As a consequence of these trends, consulting and software for weaving together these organic systems will become a larger part of the profit pool in the industry. By 2005, these categories will account for 65 percent of the technology industry’s profits, up from 46 percent today. Servers, storage systems, PCs and components, meanwhile, will decline from 54 percent of the profit pool to 35 percent.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.