IBM fires small-town workers (opens in new tab)

Ex IBMer here. They're not cutting the fat anymore, simply because there isn't much fat left to cut. It's mostly cutting into muscle and bone these days.

Spot on regarding their cloud offerings. The thing is, just owning Softlayer and Cloudant etc. doesn't magically make then a compelling player in that space. While they do have mindshare in corporate IT, they have less so with developers and hackers on the bleeding edge, and even less so in the startup scene. If you think "Database in the cloud" for example.. what comes to mind. DB2? Informix? Nope. More like DynamoDB, Redis, MongoDB, CouchBase and the like.

IBMers doing competitive analysis attending Amazon's re:Invent 2013 conference must've been virtually shitting their pants during every keynote speech.

>> They are only just getting their act together with cloud offerings whilst a bookshop has become a market leader.

Nice one. I can say similar things about SAP.

Interesting, possibly related fact - SAP was started by former IBM employees.

> The culture in IBM seems to be if you are a sales person or a project manager you are the well-treated elite, and anyone else (i.e. the researchers, the developers, designers, consultants - basically anyone who actually makes anything that IBM sells) can go fuck themselves and are treated as dispensable/replaceable assets.

That's a somewhat-sensible philosophy for a services company/consultancy (whose brand-name is its biggest asset) to take, though, isn't it? The only people IBM has to keep, to keep the lights on, are the salespeople (who introduce new customers) and project managers (who liase with current customers.) Everyone else is a black box that customers won't notice the replacement of. They could outsource everything but those people to subcontracting firms, and "IBM the services company" would persist.

Corporate executive greed is a cancer that no one seems willing to cure.

> with proper resource management, layoffs can be greatly minimized.

This is a pretty bold assertion. We're not talking about a few jobs at the margin, eg. one report speaks of 25% of the hardware business.

IBM's Q4 revenue was $27.7 billion. The consulting branch, Global Technology Services brought in $9.9B of that revenue. The software group, SWG, brought in $8.1B in revenue. (IBM is only making ~33M per year on Watson right now)

IBM is a bit more than a consulting company. They are in the midst of trying to reinvent themselves as more of a software company because the margins are so much greater than hardware.

IBM is screwing it's hardware employees, but the writing has been on the wall for a very long time. IBM employees got used to the idea that they could work at IBM for life, and retire with the company. They've either missed the signals or felt like layoffs couldn't happen to them. Many of the groups affected by the layoffs in IBM had a furlough last August. I don't know about you, but the moment a company says don't come to work for a week with reduced pay is the moment I start looking for a new job. (I do realize that many people at IBM stay loyal because they are on a pension program and they lose significant income if they voluntarily leave).

Reports of IBM's death are greatly exaggerated. People have been saying this for four decades when minicomputers rose, when the PC rose, when the server rose, when Linux rose.

IBM is a market maker and there is no other company quite like it. It always feels unintuitive when they shift, but I expect them to keep on chugging along and continuing to innovate.

Lol at GE being a dead company. How's the weather in lalaland?

So GE is also a dead company?

The current CEO has been at IBM for 33 years while the previous one had been there for 39 years... So no, these CEO don't move on to the next company.

Without knowing the breakdown of which units are being laid off, how do you or the shareholders have the information to know if management is indeed "shedding the dead weight" or is instead tweaking the numbers to meet Wall Street expectations?

You don't. Increased opacity makes it harder to make any judgements. For example, IBM is quoted as saying they have "more than 3,000 job openings", but those could be pro forma openings which aren't expected to be filled, and exist mostly to promote the idea that IBM is hiring. The real test would be the number of people hired, but IBM does not publish that information.

The article does not say, as you believe, that IBM is "investing billions in new business areas". It says IBM "committed $1bn to its new Watson unit and $2.2bn to expand its cloud offerings". Those appear to be an expansion of existing business areas, and not an investment in new ones.

It also says IBM has "investments in areas such as nanotechnology which will bring hundreds of new jobs to New York State." IBM has been in nanotechnology for over 20 years, so you can't conclude from this article that this is a new business area.

You are probably thinking of Lenovo laying off the employees in the server division they bought from IBM.

Layoff is a blunt instrument that swings in one direction, and cannot be undone. It's easy, but it results in too much unnecessary casualties.

When you've been with a company for 10, 15 years, you accumulate wealth of business knowledge that can always be re-deployed in other areas through careful planning.

That takes more skill than just swinging hammer. But with the absurd money we're paying the executives, shouldn't we expect a little more than just a hammer in their toolbox?

Might as well fire everyone and sell everything then. Maximum shareholder return!