"The 103-year-old IBM has a market capitalization of $185 billion. But IBM is having as it struggles to adapt to the cloud era, in which clients large and small rent technology cheaply over the Internet instead of buying costly fixed arrays.
The cold-sweat scenario for IBM is that it does catch up to Amazon and other cloud providers—only to find that competition has driven margins toward zero. In March a price war broke out among Amazon, Google, and Microsoft, as each announced cuts of as much as 35 percent on computing; 65 percent on storage; and 85 percent on other services. Rometty has made two promises to investors: to lead corporate IT into the cloud and to deliver lustrously thick margins. Those goals may be irreconcilable, as long as IBM faces competitors willing to make the cloud a place of ever-diminishing returns. In a March 25 blog post that surely sent shivers through Armonk, Google declared that cloud pricing should follow Moore’s law, falling as the cost of hardware inevitably declines.
Financial engineering, is a catchall used by critics for the variety of ways IBM has made earnings per share go up even as revenue goes down. The spectrum of maneuvers starts with common practices like dividend increases and share buybacks, and extends to more esoteric tactics like designating major costs as “extraordinary” and devising ways to pay lower tax rates. The most transparent companies present their performance according to generally accepted accounting principles, or GAAP. IBM’s 2009 annual report didn’t use the phrase “non-GAAP” at all; the 2013 report used it 125 times."
Can IBM and other big IT companies compete in cloud?:
Google Aligns Cloud Pricing With Moore’s Law:
http://blog.zorangagic.com/2014/04/google-aligns-cloud-pricing-with-moores.html
Gartner:
http://www.gartner.com/technology/reprints.do?ct=140528&id=1-1UKQQA6&st=sb
"IBM will continue to be a hosting-scale provider, which may make it difficult for it to match the cost economics of the hyperscale market leaders.
IBM is "cloudwashing" SoftLayer's dedicated server business, applying a "cloud IaaS" label to what is actually simply dedicated hosting. While SoftLayer has significant automation, as well as a customer-accessible API, for this portion of its business, customers should be sure to understand the technical and business differences between SoftLayer's dedicated hosting (customized bare-metal servers by the month) and cloud IaaS (fully automated, by-the-hour compute in the form of VMs or bare metal)."
Update 18/7/2014. IBM Q2 2014 results came out:
http://www.zerohedge.com/news/
http://www.ibm.com/investor/
Gartner:
http://www.gartner.com/technology/reprints.do?ct=140528&id=1-1UKQQA6&st=sb
"IBM will continue to be a hosting-scale provider, which may make it difficult for it to match the cost economics of the hyperscale market leaders.
IBM is "cloudwashing" SoftLayer's dedicated server business, applying a "cloud IaaS" label to what is actually simply dedicated hosting. While SoftLayer has significant automation, as well as a customer-accessible API, for this portion of its business, customers should be sure to understand the technical and business differences between SoftLayer's dedicated hosting (customized bare-metal servers by the month) and cloud IaaS (fully automated, by-the-hour compute in the form of VMs or bare metal)."
Update 18/7/2014. IBM Q2 2014 results came out:
http://www.zerohedge.com/news/
http://www.ibm.com/investor/
Whilst the market is growing to new highs IBM is faltering...
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