The New IBM in 2004

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Excerpts

When Palmisano's predecessor, Lou Gerstner arrived at Big Blue in 1993, the company had seen three years of declining revenues. Gerstner had taken over just as it was about to split itself up into 13 distinct, loosely affiliated entities...

IBM's research capabilities lay at the core of the new IBM, Palmisano was trying to shape. In the company's well known Thomas J Watson Research Centre, more than half of all of IBM's 3,000-plus research scientists traditionally worked in isolation, in cutting edge areas of physics, materials science, computer design and software theory, nanotechnology, advanced mathematics, and many other specialised disciplines...

Palmisano wanted to expand the business by pushing IT users toward radically different business models. For example, Palmisano believed many operations handled internally by companies could be outsourced to IBM, which had the resources to handle them more efficiently...

IBM (IBM) had aligned itself with once-rival software vendors and ceased development of many of its own applications. The strategy, once perceived as risky and shortsighted, was starting to pay huge dividends for IBM...

IBM's transformation into a services company had gathered momentum under Palmisano. The company's shift to services had been noticed by the leaders in the IT industry. As Intel's Andy Grove put it : "The key to IBM's success with its services business is that it wraps things around commodity products that differentiate them. Every other computer company has now adopted as its primary objective to be more IBM-like."...

Exhibit I: Industry Sector Growth Year to Year (2002-2003)
Exhibit II: Financial Highlights
Exhibit III: Results of Continuing Operations
Exhibit IV: Management System Segment View

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