The bigger they are, the harder they fall

No, this isn’t about Kim Dotcom.

Over the decades I’ve observed that very few tech companies are able to sustain their dominance.  In the past, who could have imagined the disappearance of Wang and NCR?   HP is but a shell of it former self.

Yet IBM and Microsoft seemed invulnerable.

As we have seen, Microsoft is slowly being whittled away by Google, and IBM… well, they’re facing one of the worst times in their history.

More than 110,000 jobs could disappear worldwide in a major restructuring at the once-dominant computing goliath – nicknamed ‘Big Blue’.

The jobs will be cut as IBM undergoes a massive restructuring in a ‘desperate’ attempt to revamp its business, according to a report on the US Forbes website.

But IBM poured cold water on the article, calling the reported scale of the job cuts ‘ridiculous’ and ‘baseless’.

The website said the company was preparing to merge its three main arms – hardware, software and support – into a single operating business. It will break down the ‘Chinese walls’ between the divisions and reorganise staff into teams based on their jobs, such as sales or research.

This is because of the growing demand from businesses to use companies such as IBM as a ‘one-stop shop’ for technology needs. It is expected to restructure its entire global workforce – some 430,000 people – under a programme known as Project Chrome.

IBM has struggled to shift from its traditional strength of making computers to offering IT services and information storage.

IBM already faced this in the early 90s when selling of their PC business to Lenovo, and getting back to their original knitting of large systems for large companies.   But that too is on the way out as client driven cloud computing removes the need for big iron and drives the need for cloud warehouses.

IBM are wanting to join Google and Amazon in the cloud storage business.

The company set aside  800 million for redundancies last week, which it described as ‘workforce rebalancing’, after three-month sales figures came in 900 million lower than expected.

If it axes one in four staff, as reported, it will be the largest corporate layoff in history. The previous largest redundancy programme was also from IBM, when it cut 60,000 staff in 1993.

Robert Cringley, from Forbes, said: ‘To fix its business problems and speed up its “transformation,” next week about 26 per cent of IBM’s employees will be getting phone calls from their managers.

I’m sure New Zealand won’t be exempt.  Certain government projects, especially those that were “renegotiated” after already drifting targets, costs and objectives will be at increased of further problems as key IBM stall will be made redundant.


– Mail Online


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  • The Whinging Pom

    How the mighty are fallen…

    Back in the day when I was ‘on the tools’ I was an IBM midrange (S/38, AS/400) programmer.

    I remember reading an article on the front of ‘Computer Weekly’ in 1987 (I know the year because of the site (a brewery) I was working on at the time.

    The article contained a table giving the top 10 computer companies in the world by revenue. IBM was number 1. And had revenues in excess of the next 9 put together.

    Those were the days, I suppose they’re now singing at Big Blue.

  • Randy Thaddeus Prosepon

    IBM sold its HDD business to Hitachi in 2002.
    It sold its Personal Computing division to Lenovo in 2005.
    The company’s major problem is it is unable to respond anywhere near as fast as new competitors do. It may be known as ‘Big Blue’ but it is beset with Red Tape.

  • conwaycaptain

    It happens in all industries. Where are P&O and Cunard now?? P&O was once the largest shipping co in the world.
    One must ask when will AP Moller and MSC disappear and other companies

  • John1234

    IBM have already debunked these reports of ‘100,000’ redundancies – I think some reporter has made it up or got it wrong.

    • jcpry

      It is a fact. Met a young Aussie who was put off last Tuesday based in Melbourne. He was one of many.

      • John1234

        Sorry, but anecdotal “Aussie and one of many” does not equate to a “fact” that 100,000 are being laid off.

        • jcpry

          So the guy working for IBM who along with a whole tranche of other staff is made redundant is anecdotal? It is real.

          • John1234

            It’s anecdotal as is any “I know a guy that…” story. And as I said, one anecdote does *not* make 100,000 redundancies a fact.
            Have you any idea how much of a media storm 100,000 redundancies would create?

  • knight

    IBM flatly denied the claims made by the Forbes blogger.
    Perhaps you could point this out in your post above.

    • ex-JAFA

      “Robert X. Cringely” is (to those who’ve been in IT for decades) a well-known gossip in IT media circles, and – like The Stig – has been a number of people over the years. Nobody in the business takes anything “he” writes seriously.

  • metalnwood

    I read a book about 20 years ago title ‘Big Blue’, I quite liked it at the time it was a good read about the history of the company.

    I have worked quite a bit with IBM and their consulting/services. They were hard work to deal with I must say, mostly because of the concrete contracts that while they might look good on the surface dont allow for too much agility in practice and can be crippling.

    • exactchange

      I also worked with IBM, which was the main supplier to my organisation back in the day. Agree they were hard to deal with, yes partly due to the contracts.

      But also because they knew best so didn’t feel the need to report more than the minimum, and certainly not interested in passing on knowledge.

      And because their method was to deal mainly with very senior management, get an OK at a high level, then just push stuff through with minimum consultation lower down. Arrogant and expensive.

      I recall asking for a price for a reporting tool to interface with some big iron. Hundreds of thousands of dollars for a custom built solution which IBM would be supporting for its lifetime. When I asked about off the shelf Crystal Reports as a bolt on alternative, they got very quiet very quickly.

      • Randy Thaddeus Prosepon

        Missed the commoditisation boat, which is also why they have retreated from hard drives, personal systems and now also x86 servers.
        And yes, that red tape and high handedness.

      • NoEyeDeer

        I’ve had the same experience with IBM over the years. NZ just doesn’t have the size business that IBM predominantly targets. They live on contracts here and typically Government Agencies as their core clients.

        They had a policy in the 80’s to patent everything which will be worth a tidy income stream now, so I would not put too much stock in talks about being close to failure.
        As you stated they put a lot of effort into winning service contracts on product that is hard to replace; mainly cause you spent so much on it and it was signed off by senior management therefore too political to change.

        They might get out of remote countries like NZ, but they will make some astute purchases and revitalise in a more streamlined service profile.

  • Kiwimurray

    In the early 90’s IBM came very close to the wall. It took them a long time to realise that the time of mainframe dominance had ended. When they restructured, they offered every staff member world-wide a redundancy deal with phenomenal payouts (for the time). In many cases their best people took the deal and frequently contracted back to IBM. The outcome was a very thin pool of competent resources that took many years to build back up.

    • Barnacles2

      That’s always the risk when these restructures come around. The good people know they can get jobs so jump early, and the company invariably ends up with the dregs.

  • I wouldn’t write-off IBM or Microsoft just yet. You’re talking about companies which have business offerings which remain very good and are continually improving. Google is going for ‘cool’, with lots of toys (same with Apple). By comparison, IBM and Microsoft are designing software and hardware which actually improves businesses. For all that people complain about Microsoft, they tend to be the people who pop out their iPhone and then end up asking you how to fix some stupid problem.

  • HR

    Remember “It’s a Kodak Moment”? They were the biggest of the big and thought this digital fad was just that; a fad. And the biggest and baddest of them all disappeared. There is a lot of info on it on the internet, books have been written about it, very interesting.
    So they can be the biggest and best, but failure to move with the times will render you to the history books.
    Remind you of anything close to home?

  • Keanne Lawrence

    There is another elephant in the room with growth of expanded tablet capabilities that seem a lot less problematic than a PC. OS systems are updated free and with cloud storage there is little limit to hinder further erosion of the PC market that require too frequent “new” software to be purchased. Plus the tablet runs on a trimmed down OS that is not slowed down by so much bloat ware included or things somebody thought would be smart to include in a software package and is just another drag on performance. The option how many apps clutter your tablet is a matter choice but it can also be quickly used for kids games or education on short term basis while quickly cleaned up after the grandchildren have had enough.
    The dominant options are Android and the I range which is being rapidly hauled by the former. The tablet can do it all when traveling and makes even more essential.

    • Randy Thaddeus Prosepon

      Tablet computers have nothing to do with IBM’s present problems.