part of the issue was in the mid-80s, top IBM executives were predicting
that IBM revenue was going to double ... primarily based on mainframe
sales ... and there was huge internal building program to double
mainframe product manufacturing capacity ... even tho that business was
already starting to head in the opposite direction ... pointing that out
wasn't exactly career enhancing.
about that time, a senior disk engineer got a talk scheduled at a
communication group annual, world-wide, internal conference
... supposedly on 3174 performance ... but opened the talk with
statement that the communication group was going to be responsible for
the demise of the disk division. the issue was that the communication
group had corporate strategic ownership of everything that crossed the
datacenter walls and were fiercely protecting their dumb terminal
paradigm and install base ... fighting off client/server and distributed
computing. The disk division was seeing the effects with downturn in
disk sales as data was fleeing the datacenters to more distributed
computing friendly platforms. The disk division had come up with several
solutions to reverse the problem, but they were constantly vetoed by the
disk division.
a few years later, the company had gone into the red ... and the same
executives had reorganized the company into the 13 "baby blues" in
preparation for breaking up the company. time magazine stories from
12/28/92 ... including "fall of ibm" article "How IBM Was Left Behind"
http://web.archive.org/web/20101120231857/http://www.time.com/time/magazine/article/0,9171,977353,00.html
The board then brings in Gerstner to reverse the breakup and resurrect
the company ... by redirecting the company into services ... including
acquring lots of consulting & services companies ... all hardware
products now only accounts for something like 17% of corporate revenue
... and of that mainfame processor sales has been running only 4-5% of
the total.
after the initial flight from mainframe datacenters, what was left was
small core of mainframe customers with large, very high value legacy
applications ... mostly in the financial industry ... the risk of
convert/migrating them was higher than continuing to pay a large premium
for mainframe hardware
past posts mentioning gerstner
http://www.garlic.com/~lynn/submisc.html#gerstner
one might conjecture that the wallstreet financial industry was
instrumental in getting the board to bring in Gerstner (who came from
the financial industry) ... to keep those mainframe processors
coming. However, the resulting IBM was heavily oriented towards large
compensation for top executives ... heavily loaded with culture similar to
the too-big-to-fail
http://www.garlic.com/~lynn/submisc.html#too-big-to-fail
and private equity
http://www.garlic.com/~lynn/submisc.html#private.equity
recent threads with Gerstner history, too-big-to-fail, private equity
http://www.garlic.com/~lynn/2013i.html#20 Louis V. Gerstner Jr. lays out his post-IBM life
http://www.garlic.com/~lynn/2013i.html#26 Louis V. Gerstner Jr. lays out his post-IBM life
http://www.garlic.com/~lynn/2013l.html#60 Retirement Heist
for other drift there has been discussion in some IBM groups about IBM
using stock buybacks and other measures as propping up share price (and
boosting top executive compensation).
http://www.garlic.com/~lynn/2013l.html#60 Retirement Heist
http://www.garlic.com/~lynn/2013m.html#37 Why is the mainframe so expensive?
http://www.garlic.com/~lynn/2013m.html#84 3Q earnings are becoming the norm at IBM. What is IBM management overlooking?
http://www.garlic.com/~lynn/2013m.html#85 How do you feel about IBM passing off it's retirees to ObamaCare?
http://www.garlic.com/~lynn/2013n.html#1 IBM board OK repurchase of another $15B of stock
http://www.garlic.com/~lynn/2013n.html#60 Bridgestone Sues IBM For $600 Million Over Allegedly 'Defective' System That Plunged The Company Into 'Chaos'
http://www.garlic.com/~lynn/2013o.html#14 Microsoft, IBM lobbying seen killing key anti-patent troll proposal
http://www.garlic.com/~lynn/2013o.html#15 IBM Shrinks - Analysts Hate It
http://www.garlic.com/~lynn/2013o.html#16 IBM Shrinks - Analysts Hate It
Stockman in "The Great Deformation: The Corruption of Capitalism in
America" pg464/loc9995-10000:
IBM was not the born-again growth machine trumpeted by the mob of Wall
Street momo traders. It was actually a stock buyback contraption on
steroids. During the five years ending in fiscal 2011, the company
spent a staggering $67 billion repurchasing its own shares, a figure
that was equal to 100 percent of its net income.
pg465/10014-17:
Total shareholder distributions, including dividends, amounted to $82
billion, or 122 percent, of net income over this five-year
period. Likewise, during the last five years IBM spent less on capital
investment than its depreciation and amortization charges, and also
shrank its constant dollar spending for research and development by
nearly 2 percent annually.
... snip ...
other recent posts mentioning the "baby blues" reorg in preparation
for breaking up IBM:
http://www.garlic.com/~lynn/2013.html#76 mainframe "selling" points
http://www.garlic.com/~lynn/2013c.html#53 What Makes an Architecture Bizarre?
http://www.garlic.com/~lynn/2013d.html#11 relative mainframe speeds, was What Makes an Architecture Bizarre?
http://www.garlic.com/~lynn/2013d.html#20 Y2K hacks
http://www.garlic.com/~lynn/2013d.html#33 IBM Spent A Million Dollars Renovating And Staffing Its Former CEO's Office
http://www.garlic.com/~lynn/2013d.html#35 Ex-Bailout Watchdog: JPMorgan's Actions "Entirely Consistent With Fraud"
http://www.garlic.com/~lynn/2013d.html#76 IBM Spent A Million Dollars Renovating And Staffing Its Former CEO's Office
http://www.garlic.com/~lynn/2013e.html#17 The Big, Bad Bit Stuffers of IBM
http://www.garlic.com/~lynn/2013e.html#79 As an IBM'er just like the Marines only a few good men and women make the cut,
http://www.garlic.com/~lynn/2013f.html#46 As an IBM'er just like the Marines only a few good men and women make the cut,
http://www.garlic.com/~lynn/2013f.html#63 The cloud is killing traditional hardware and software
http://www.garlic.com/~lynn/2013g.html#43 The cloud is killing traditional hardware and software
http://www.garlic.com/~lynn/2013h.html#40 The Mainframe is "Alive and Kicking"
http://www.garlic.com/~lynn/2013h.html#76 DataPower XML Appliance and RACF
http://www.garlic.com/~lynn/2013h.html#77 IBM going ahead with more U.S. job cuts today
http://www.garlic.com/~lynn/2013i.html#2 IBM commitment to academia
http://www.garlic.com/~lynn/2013i.html#7 IBM commitment to academia
http://www.garlic.com/~lynn/2013i.html#14 The cloud is killing traditional hardware and software
http://www.garlic.com/~lynn/2013i.html#17 Should we, as an industry, STOP using the word Mainframe and find (and start using) something more up-to-date
http://www.garlic.com/~lynn/2013k.html#28 Flag bloat
http://www.garlic.com/~lynn/2013k.html#29 The agency problem and how to create a criminogenic environment
http://www.garlic.com/~lynn/2013k.html#31 China mulls probe into IBM, Oracle, EMC after NSA hack claims - report
http://www.garlic.com/~lynn/2013l.html#49 The Original IBM Basic Beliefs for those that have never seen them
http://www.garlic.com/~lynn/2013m.html#6 Voyager 1 just left the solar system using less computing powerthan your iP
http://www.garlic.com/~lynn/2013m.html#35 Why is the mainframe so expensive?
http://www.garlic.com/~lynn/2013m.html#46 50,000 x86 operating system on single mainframe
http://www.garlic.com/~lynn/2013m.html#66 NSA Revelations Kill IBM Hardware Sales In China
http://www.garlic.com/~lynn/2013n.html#17 z/OS is antique WAS: Aging Sysprogs = Aging Farmers
http://www.garlic.com/~lynn/2013n.html#78 wtf ? - was Catalog system for Unix et al
recent posts mentioning prediction that communication group was going
to be responsible for demise of disk division (and major factor in
the whole IBM and mainframe downturn):
http://www.garlic.com/~lynn/2013.html#75 mainframe "selling" points
http://www.garlic.com/~lynn/2013b.html#32 Ethernet at 40: Its daddy reveals its turbulent youth
http://www.garlic.com/~lynn/2013b.html#57 Dualcase vs monocase. Was: Article for the boss
http://www.garlic.com/~lynn/2013c.html#75 Still not convinced about the superiority of mainframe security vs distributed?
http://www.garlic.com/~lynn/2013d.html#76 IBM Spent A Million Dollars Renovating And Staffing Its Former CEO's Office
http://www.garlic.com/~lynn/2013e.html#17 The Big, Bad Bit Stuffers of IBM
http://www.garlic.com/~lynn/2013f.html#57 The cloud is killing traditional hardware and software
http://www.garlic.com/~lynn/2013f.html#58 The cloud is killing traditional hardware and software
http://www.garlic.com/~lynn/2013f.html#70 How internet can evolve
http://www.garlic.com/~lynn/2013g.html#17 Tech Time Warp of the Week: The 50-Pound Portable PC, 1977
http://www.garlic.com/~lynn/2013g.html#34 What Makes code storage management so cool?
http://www.garlic.com/~lynn/2013h.html#10 The cloud is killing traditional hardware and software
http://www.garlic.com/~lynn/2013i.html#2 IBM commitment to academia
http://www.garlic.com/~lynn/2013i.html#17 Should we, as an industry, STOP using the word Mainframe and find (and start using) something more up-to-date
http://www.garlic.com/~lynn/2013l.html#44 Teletypewriter Model 33
http://www.garlic.com/~lynn/2013l.html#49 The Original IBM Basic Beliefs for those that have never seen them
http://www.garlic.com/~lynn/2013m.html#5 Voyager 1 just left the solar system using less computing powerthan your iP
http://www.garlic.com/~lynn/2013n.html#78 wtf ? - was Catalog system for Unix et al
--
virtualization experience starting Jan1968, online at home since Mar1970