Steve Ballmer hasn’t exactly shined as Microsoft CEO, but he’s confident enough in his business acumen to offer this stunningly bad piece of advice to IBM: It’s time to get back into the hardware business. This, despite the fact that focusing on high-profit businesses like services and consulting has turned IBM back into a money-making powerhouse.
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44 Responses
10.13.2009
Developers, developers, developers…but hardware for you, IBM!
10.13.2009
I don’t think IBM is on wrong track, but I still don’t think they should have sold off the Thinkpad. It supported solid brand identity for relatively little cost.
10.13.2009
Why is this a bad thing? IBM made awesome hardware. I got a shiny new HP 17" laptop for graduation a year ago and just months out of its 1 year warranty the motherboard failed and it cost at least the price of a new netbook to fix. I also have a 10 year old ThinkPad (from either 1999 or 2000) with a Pentium 3 that is still in near perfect condition, only thing that I’ve had to do is get a new battery and replace the hard drive (had to replace the HDD in the HP too but at least it was under warranty then). I can also pick my ThinkPad up by the screen and the hinges are solid enough to hold the bottom without moving too much (and this is a heavy old laptop)…doing that with my HP would probably rip the screen clean off the base. IBM ruled at hardware and I can honestly say that if they went back into the hardware (at least, laptop) business I’d gladly buy another IBM laptop. For once in his life, Ballmer may have said something that made a little bit of sense.
10.13.2009
Getting back into the hardware business? Does POWER 6 and the upcoming POWER 7 not count? The PowerXcell 8i, a weaker version of which appears in the PS3 as cell, a full version in the world’s fastest computer, as well as the world’s most efficient computer? The world’s fastest supercomputers, a booming server business? They sold off the Think line because Lenovo was willing to pay more than it was making at the time, and that money went into other investments; making the world’s fastest processors doesn’t come cheap. Their high end hardware unit is still going strong Ballmer obviously has an ax to grind, although I’m sure the CEO of IBM would have something to say about Microsoft that’s similarly biased.
10.13.2009
This was horrible advice on Ballmer’s part, but not nearly as horrible as this article. First of all, its essentially professional blog spam only picking bits out of the real article, actually a blog post, here: bits.blogs.nytimes.com/2009/09/28/ballmer-c … . Secondly, he makes some big and controversial claims about both companies using unsound, fallacy filled, armchair business analysis which might not have been so embarrassing if there were not a million more obvious and actually correct ways he could have justified the reason this advice was stupid.
10.13.2009
IBM to Ballmer: Thank you for your "concern" for our company’s well being. It will be noted and filed appropriately under "Yeah, right"
10.13.2009
Here’s the bottom line why he thinks IBM should be focusing on hardware:They are currently one of THE largest contributors to the Linux movement sitting at nearly 6% of the overall development code for the Linux kernel. MS wants Linux out of the picture, of COURSE they’re going to tell the largest Linux contributors that they should focus on hardware…I honestly don’t understand how you guys missed this. Because currently, none of the comments above me seem to have gotten this either.
10.13.2009
Lenovo paid them plenty, and they were able to use that capital to expand their higher margin operations. You might be right about the branding though; that’s impossible to price with absolute confidence. IBM does support all Thinkpads though; the link on Lenovo’s site goes to IBM ESC+. Great service BTW, I had a faulty Nvidia chip, from placing request to receiving laptop back, it took four days.
10.13.2009
The hardware IBM makes is still top notch. A IBM mainframe has up time of 99.999% They simply chose to leave a business that was capital intensive with low profits and spend their money on items with much higher profitability such as software.
10.13.2009
I remember reading an article about the ‘true’ winner of the next-generation consoles, and it was IBM.Xbox 360 – PowerPC Triple Core (IBM)PS3 – Cell (jointly developed by IBM, Toshiba & Sony)Wii – PowerPC (IBM)Maybe Ballmer isn’t completely nuts?
10.13.2009
IBM makes 1 processor for every modern game console sold. For every (real) supercomputer built, IBM makes tens of thousands of chips. For many high end servers, IBM makes everything. Their POWER architecture outperforms X86(_64) with many cores, plain and simple.
10.13.2009
Hardware is arguably what IBM does best; MS paid IBM millions of dollars to license the Xbox360 CPU, which Sony paid IBM several billion to develop. IBM makes the fastest processor in the world, the most energy efficient (read cheapest to operate) processor in the world, the fastest computers in the world, and has a large server business. Their software branch is also great, but their hardware is in a league of its own.
10.13.2009
Microsoft got ***** because they neglected the "brand-name" PC and gave software to the other companies cheaper in an effort to try to screw IBM. Ballmer is pondering "***** we messed up there is no such thing as a "brand-name" PC anymore". Well there is but its called Lenovo and hardly anybody in the US buys them because they don’t know what they are or don’t like them because they are chinese or they think they need a 17" monitor on their laptop even though it will make the bottom of their computer almost as hot as the surface of the sun. Steve Ballmer knows that all of those Apple commercials are correct. People are getting a bad impression of Windows and think Apple is superior not because Microsoft software isn’t as good but because the average PC hardware now-a-days is utter *****. Dell, HP, Gateway Laptops are trash but when the average idiot picks up a computer these days he doesn’t blame them for the computer running hot they blame Microsoft as they think damnit I should of gotten an Apple then my sperm wouldn’t all be dead because this laptop is way too ***** hot. I hate consumers.
10.13.2009
Just like any other Computerworld article/blogpost.
10.13.2009
Ballmer is a douchebag.
10.13.2009
No, they need to keep improving Linux because their POWER architecture only runs on Linux and AIX (though few use that, Linux is far more important). The world’s fastest computers demand a certain finesse in their OS (: By using Linux, IBM can focus on developing their hardware, as they don’t have to develop an entire OS for their architecture; they can improve what’s already there, toss in a POWER compiler, and save huge amounts of capital.
10.13.2009
youtube.com/watch?v=wvsboPUjrGcYeah, listen to this guy.
10.13.2009
Don’t forget the remix youtube.com/watch?v=KMU0tzLwhbE
10.13.2009
Quite the reach there pal.
10.13.2009
IBM got a large sum of money for selling off the Think brand to Lenovo; it was of such magnitude that it outweighed the short term profitability of their consumer unit. They invested said cash into other units and got a greater return than their consumer hardware unit would have given them. Also, IBM still supports most of Lenovo’s products; I had a defective Nvidia chip, and the support was through IBM. As such, I’m sure there is part of their contract preventing competing with Lenovo. Thinkpads are still fantastic by the way; they’re the best choice for a laptop if you’re spending anywhere in their range, and they have (large) discounts for some studentadvantage card thing, which also nets you 15% off amtrak.
10.13.2009
But as a consumer I don’t care how much money they make. I care about the quality of the products I purchase. Some reason many companies seem to be under the impression that consumers care about their profits. Newsflash…consumers don’t care, they want good products. If we have to pay extra for a good product, then we’ll pay extra, but selling out a good product line isn’t going to go over well with consumers. Luckily Lenovo’s still doing a great job with the ThinkPads but IBM had really earned a reputation with the ThinkPad and lost it when they sold the product line off.
10.13.2009
oh well i have a Lenovo and no matter how hard i push the thing it simply WILL NOT get hot it doesn’t even have warm spot my legs never get sweaty. Period. My girlfriends HP with its monstrous 17" screen and ***** plastic case however gets very very hot within 10 minutes of turning the bitch on….that surely has to effect the life of the computer…..
10.13.2009
I cannot believe that the idiot Balmer is still CEO of Microsoft. Do they actually have a board, or is it still just Bill’s crony company?
10.13.2009
They still support any Think branded product; that was part of the sale. Also, up until a year or two ago, the Thinkpads were still shipping with IBM logos; they had a substantial transitional period.
10.13.2009
"This was horrible advice on Ballmer’s part"I don’t think it was supposed to be good advice.
10.13.2009
Um, IBM doesn’t make hardware? Sure, they got out of the low profit products like consumer PCs and laptops, but they continue to make high-end servers. Most Fortune 100 companies have several multi-million dollar mainframes connected to intelligent, virtual hard drive arrays and virtual tape robot libraries, also made by IBM. If you keep money in a bank then the odds are your account information is kept on IBM mainframes. Even Microsoft has an IBM Z-series mainframe. Granted, IBM nowadays makes most of it’s money on services, but hardware is still a big chunk of their revenue.
10.13.2009
Also, it’s safe to consider the case where IBM makes a machine from IBM hardware: the PowerXcell 8i chip, also known as cell. It’s cheap (millions are made!), fast (theoretical performance is low, but it realizes most of that performance by what I’ll term magic and crazy-fast bandwidth), and Linux is the only OS that has a full POWER version; Apple has abandoned theirs, and MS only has Windows on POWER for the 360.
10.13.2009
You are epically misinformed.
10.13.2009
Balmer is a ***** – and the ugliest CEO ever.
10.13.2009
"IBM entirely overlaps Microsoft"?What exactly are you on? Last time I checked, Microsoft produced the dominant desktop and business operating system and office suite…
10.13.2009
I actually had a Vostro 1500 that I picked up new for 450$, and it compared quite favorably to a Thinkpad (T61p) I got for free from school last year. I’m sure there are some ***** models, but there are some decent values amongst the muck. The real problem is when 20 services for AIM, Itunes, Live messenger, some ***** AV program, quicktime, ipod support, sharing services,etc. are all loading themselves into memory, and with lets say Norton scanning every damn thing, crap gets slow. Also, the new MBP gets insanely hot with discrete graphics on; the aluminum does wonders for conducting heat. I think power adapters breaking (apparently a HUGE problem with Dell) would be a better example; Apple laptops have always gotten quite hot.
10.13.2009
Because IBM’s Linux development and their hardware go hand in hand; they help optimize things for their supercomputers and servers. Ballmer’s advice would actually be good if IBM had cash lying around and didn’t have POWER 7 to pour it into, but they have much more profitable things to invest in right now. If Ballmer was so terrified of Linux, he would most certainly not want IBM selling their consumer hardware with IBM software and Linux included.
10.13.2009
I see a slight flaw in your logic; if Ballmer wanted IBM to stop working with OSS, he wouldn’t want them deploying their hardware which they could install Linux and IBM software on to save on MS licensing fees…
10.13.2009
I think it’s a possible threat Ballmer sees a threat. Granted, some IBM software is straight dinglerberries from the dookie tree. But IBM just might one day decide instead of modifying OpenOffice into that whatever-the-hell thing it’s called they produce just to contribute directly, then that’d be a huge threat to MS. You’d have the giant that is IBM, complete with with savy marketing, contributing and promoting some decent opensource ware. Ballmer would rather see IBM just make the innards that average consumers don’t know too much about and keep MS in the spotlight.
10.13.2009
Agreed. IBM needs to stick to hardware.Lotus Notes? Rational? No, thanks. Google "IBM software" and look at the second result.
10.13.2009
Pro IBM propaganda veiled as an anti-Microsoft piece.IBM makes very little hardware these days. Hasn’t made PCs in years.75% of IBM employees are now non-US.
10.13.2009
Dominance isn’t the issue.IBM is capable of in house development of hardware, operating systems & applications. The three tiers that make a total package.Microsoft isn’t. That’s why there is no such thing as a Microsoft PC. Microsoft is reliant on taking other people’s computers and ‘value adding’ by attaching their software parts.In short, IBM is in all of Microsoft’s markets, but Microsoft isn’t in all of IBM’s.
10.13.2009
Microsoft is a platformless software parts supplier. It needs hardware OEM’s like IBM that can manufacturer computing devices right down to the processor level. In fact if there was no IBM PC which Microsoft managed to parasite onto by buying QDOS (which it was incapable of writing – a one person job – Tim Paterson) and licensing back to IBM – then there would be no Microsoft.Microsoft now kind of have a platform in the Xbox range. But still they rely on IBM’s processors to power it. The RRoD series still doesn’t any proficiency in hardware on Microsoft behalf despite using off the shelf parts that don’t design. Microsoft even managed to burn their bridges with nVidia during the Xbox classic phase. Microsoft is still very much a software parts supplier to the OEM’s which is a more vulnerable position than they care to let on.IBM on the other hand is a highly proficient company quite competent in both hardware and software. The whole package. It would be much easier for IBM to release a top to bottom solution for a new generation of computing than for a company like Microsoft which can only provides parts. I think that is a large part of the reason Microsoft wants IBM to become a hardware parts supplier. IBM entirely overlaps Microsoft but Microsoft doesn’t fully overlap IBM as things stand.
10.13.2009
IBM also handles Thinkpad support; in that sense, they are still in the consumer hardware market.
10.13.2009
Going to hardware has not been such a bad decision by MS. Aside from RROD issues, they have gotten some real success in round 2 of their console fight. And the reviews for the Zune HD show a lot of promise. (I have one – it’s a pretty cool device). It makes you wonder about if they learned something from these examples and might start making their own computers.
10.13.2009
At least it wasn’t as bad as the typical SJVN blogpost.
10.13.2009
IBM learned the hard way in the 1980s that standing still will bring down even the biggest of companies. This is why it is always buying and selling parts of itself. It tries to see what the long term financial trend is and tries to capitalize on the high margin business. Gone is the fatherly IBM of the past that took care of its employees like family when it was a virtual monopoly. That line of thinking only led to economic disaster in the long term. Keep that in mind as the government tries similarly to be a father to us.
10.13.2009
makes sense…after all, IBM hangs on Ballmer’s every word don’t they??
10.13.2009
They’re just eliminating all possible and/or future competition. Microsoft is all about illegal monopolies.