John has always been interesting and very gracious to me (while I was just a flack) whenever we spoke. He should get a kick out of this..
Nice Call There On The Need For A Mouse Dvorak
April 21, 2012
apple, technology apple, dvorak, macintosh, mouse 1 Comment
Is Steve Mills Running IBM?
April 19, 2012
apple, ibm, predictions, technology earniings, economy, EPS, growth, ibm, mainframe, mills, software, watson 6 Comments
To start out this article, IBM just reported the smallest earnings growth since late 2009. IBM should be scouring the land for the next Lou Gerstner. I know there are a few internal executives getting in line for the next changing of the guard, but they are a mediocre crop at best. My experience is that they are bunch of screamers and schemers with large ego’s (except around Steve). I don’t know how they are going to make the 2015 earnings commitment, but I will project pain for employees getting there. They will also have to buy back a shedload of shares (which just happened after I wrote this) to make the numbers or kill employee morale as noted in the turnover rate getting there
WHO IS REALLY RUNNING THE PLACE?
While Ginni Rometty is the new President it still seems like she is a front (wo)man while the person that holds the keys to the company’s operations is Steve Mills. He of fame for building the software business, the part of the company that keeps it profitable. If she can just keep the company from getting in trouble circa the Akers years, she’ll stay out her welcome. Any hiccups won’t allow her to finish at 60. One of the hiccups is that it will be hard to do it without Mills. She fit the diversity model (which really isn’t that great at IBM when you consider how many who abuse the system) and she is polished and was fit. The internal grapevine mentions her name in triviality that never was even thought of in the Gerstner/SJP years with her name being thrown around in vain to get something done.
I have witnessed Mills at work personally, watching him dust off General Manager’s who thought they were important, address Wall Street, IT analysts, reporters and various other constituencies, it was clear who is holding things together. It appears he lost out in the age game for the President position, but he was the right guy.
He runs both the most profitable division and is now trying to save the dinosaur businesses for IBM, those being Software Group and Systems Group (servers mostly, and mainframes mostly).
SERVICES
First, let’s take Services out of the equation. Not to mention that IBM is blowing it by firing the wrong employees.
Services is low margin/high volume was essentially flat in first quarter so while it is important to IBM (if you include Global Financing and you have a much worse number), it is almost a legacy now and is not the growth engine it once was. It provides a needed pipeline of business to service (sorry) HW and SW sales, options competitors don’t have or try to copy with varying degrees of success…. too bad that ship sailed years ago. It is neither the mainframe model nor future for the company as the industry changes, but it does provide top line numbers crucial to financial statements.
SOFTWARE AND HARDWARE
Software was up as usual as that is the model and umbrella for the future. It is a high margin business as long as you remember a caveat. Let’s be clear that upwards of 80% of the IBM software is sold for the System Z or “The mainframe”. Conversely, the mainframe business (let’s quit messing around with the Systems Group moniker here) is down a lot. Guess who is going to catch hell and budget cuts this quarter. Because the economy is down around the world, these numbers are down. I’ve got news for the industry, it will not turn around next quarter or next year. Growth is 5-10 years away and who knows which company will be in the drivers seat for that timeframe.
As stated earlier, Mills is approaching 60 which as far as I can see was the deal breaker for him becoming the next president. No one other than Palmisano understood the company as well and as long as Mills does. He also knows where the company should be. He’ll get to go out on his terms, but IBM should make him stay on for another 5 years to keep things going until the world economy and job market turn around. He is the glue that keeps things together and would be a bigger loss to IBM than even Palmisano was, because that one was so orchestrated.
EARNINGS
IBM has laid out a plan for investors which makes it a top IT company. Much of this based in belief of the endless story of Big Data (and cloud, but who cares about software delivery, we’ve been doing that in different ways and will continue this trend by calling it something new soon). It has much upside, but will not save a company by itself (diversifying is something IBM has done better since almost committing hari kari in the 80′s-90′s). However, there is always a bigger fish in the IT sea. Will Watson be the next big thing? Name me any huge sales of a Watson unit. It is an ingenious marketing plan that shows IBM can do something others can’t. In reality, only the top Data consumers can afford a real Watson and the army of IBMers to keep it running as it is already a product with the name System P and fancy software (see an Analyst Group who defines IBM Here).
MAKING MONEY
You make money by increasing sales and/or reducing expenses. Guess what, revenue was just discussed and sales are going to be tough for a while. 300-400K employees are tough to keep employed in this situation. This means new rounds of layoffs, travel restrictions, expense cuts and other austerity measures are on the way before 2015. Keeping them happy will be next to impossible without turnover. It appears that the employees are mocking the new system too with the 2015 projections internally code named Road Kill 2015.
These are tough times and even if you’ve cornered a portion of the market such as Apple right now, you are just another fish in the sea, and never the biggest.
The man who has been tested for these tough times is Mills. Underneath, I think he’s running most of the company which for their benefit he should be doing rather than planning his retirement.
Bottom Line: There will be a big hole to plug when he leaves and life is going to be a lot harder for Rometty as the Mills replacements are OK at best.
Why IBM Layoffs Are Not Rebalancing
February 28, 2012
apple, ibm, microsoft ibm employees jobs outsourcing 6 Comments
IBM just announced that they are laying off people to “re-balance” the workforce. This is a code name to get as little negative press as possible.
As predicted, IBM is cutting more jobs after the announcement date. Also, more layoffs are rumored to be planned.
What is really going on here? There are a number of issues.
EVERYONE KNEW MONTHS AGO DUE TO A GOOD GRAPEVINE
The worst thing that could happen is that people know months before this happens which is always the case for this layoffs. I don’t work there anymore, yet I knew it was coming. This paralyzes the work force putting everyone in self preservation mode by having to make themselves look good, often at the expense of others as I’ve witnessed over the years. The real result of this work stoppage will show itself later in the year when groups have to reorganize and jobs and work done by the affected will be assumed by others. As I’ll explain later, these people won’t be replaced, rather survivors now will have to assume more responsibility for no extra pay resulting in rock bottom morale, extra stress, longer hours, less productivity and lack of loyalty.
EARNINGS PER SHARE, OR BOILING THE FROG SLOWLY
There are two ways to make money, increase revenue or cut expenses. Inevitably, payroll is one of the highest costs on a financial statement. IBM is self insured, so benefits weigh heavily on this issue. IBM has promised $20 per share dividend by 2015. With the economy being hindered by oil prices, government regulation and uncertainty, making this on revenue alone is unlikely. Therefore, instead of laying off thousands as you near the date, cutting it little by little is a way to keep it under the radar as much as possible. In other words, they are putting the proverbial frog in a pot of cold water and warming it up instead of throwing it into a pot of hot water. The count keeps rising. The count is now almost 4 times the announced number.
I already know that travel has been put on hold (all you have to do is go out to dinner and listen to the next table to hear everything you need to know, just like the PC days in Boca Raton when I worked for the competition and wanted to know something about IBM) except for customer visits. Layoffs were just the next step.
The original numbers won’t reflect the actual layoffs as IBM is cunning about how to spin this by laying off more after the announcement date raising the actual figure to far more than what people focused on at news time. They wait for the news cycle to move along and then keep swinging the axe.
IBM has an incredible spin machine and can keep some stories out of the major press due to it’s size and power. By calling it re-balancing, it can manipulate and tranquilize the media into thinking that this is just the normal course of nature. The tragic news for employees is that this will continue for a while, disrupting continuity and attitude.
With the jobs going overseas, calls at midnight or 5:00 AM are required just to get some work done with others. This disruption in your life is unnecessary as are about 50% of the meetings at IBM anyway (IBM – I’ve been in a meeting). Spouses loathe this increasing demand. Burnout is already happening.
MOVING JOBS OVERSEAS
What is being whitewashed is that some jobs where possible are being outsourced to cheaper labor overseas. IBM has been waiting to do this for a while, but due to pressure from Washington it was held off (insider sources say a call came directly from the Whitehouse to hold off outsourcing). A recent shift in CEO’s didn’t get the message not to do this, and/or the pressure to make quarterly numbers was just too much to hold off any longer. If you go by the name of the company, it really is international now as it surely is not a made in America company by majority of workforce anymore.
According to WRAL (link above), here are the layoff numbers:
Shrinking US Work Force
IBM laid off some 10,000 people in the U.S. in 2009 and several thousand more in 2010.
Over the last several years, IBM has reduced its work force in the United States by nearly 30 percent, according to figures published by IBM through 2009 and estimated since by the Alliance based on a variety of information.
The numbers by years:
- 2011: 98,000
- 2010:101,000
- 2009: 105,000
- 2008: 115,000
- 2007: 121,000
- 2006: 127,000
- 2005: 133,789
Strategy wise, it does spread the risk should countries become more unstable. This is the case in the USA right now as it suffers from the highest corporate tax rate in the world, so IBM has moved to protect itself currency wise. Note that this comes at the expense of employees.
Is it any wonder that we have a jobs problem in the US that is being highlighted in this election cycle with such outsourcing?
LIQUID EMPLOYEES AND CONTRACTORS
The workforce strategy now is shifting to what is being described as liquid employees and contractors to move around to the job or need of highest need at the time. There is so much going on at IBM, it requires employees who specialize in the specific areas due to the complexity in the many areas of critical products. With this liquid pool of employees, you will now have a group of people semi-educated on the products, thus removing one of the core competencies that IBM has provided over the years and introduce average ability to the customer. As described below, it can fool the masses in messaging, but execution and delivery will continue to suffer.
Along with the above stated complexity are the overarching campaigns. If you recall e-Business, no one really knew what e-Business (except 3 people in Armonk) really was, just that you had to brand whatever your product was with this logo and go along for the ride. It worked as other companies had to jump on the bandwagon to try to catch up, but confusion reigned internally as there were multiple definitions for what it really meant. This exacerbated behavior for later campaigns.
The same can be said for Smarter Business. Everything is Smarter something now, but ask multiple divisions and you can get multiple answers and few experts who can really define the overarching strategy. The talking heads can spin it, but if you ask to buy a smarter widget, it is not a product number in the ordering system. It’s really just the same old products they always have sold, re-badged or grouped together with other existing products (occasionally with an acquisition).
WHO SUFFERS?
First of all, not the shareholders (yet) of which many of them are the executives and the BOD. One wonders if there is any conflict of interest here? Ultimately it is the customer. Many times I wondered how the doors of the company stayed open some days with who was left. The disruption in continuity will show itself over time. IBM is on a roll due to mis-management at HP, Apple handing it to the others and other market conditions. No one can stay on top forever. There will soon be a time to short the stock as it is at unsustainable levels given the moves that it is currently making.
There are other very competent employees who are not the executive favorites that get the axe with less competent (albeit more politically savvy) employees remain. Many of these are nincompoops at the helm. Brown nosing works at times like this.
IS THERE ANY UPSIDE?
This is an opportunity to get rid of some dead wood. Many employees time their exit to Resource Actions, the code name for layoffs. They stop working in an effort to get caught up in the benefits of a layoff. Unfortunately, they have been sand in the gears of progress for a long time. Those trying to do their job know that this is a hindrance they could do without, and the products suffer because of this.
IBM has been plagued by this for a long time, and some paring of these employees who work the system instead of helping the company is a benefit.
In summary, this is a work of art for a spin machine, but knowing what is behind the scenes will reveal the success or failure of this move in later EPS.
RIM – RIP
December 25, 2011
Analyst, apple, iphone, Lotusphere2009, predictions, Work iphone, RIM, Rob_Enderle, technolgy Leave a comment
Update: RIM at a new low, sort of proving the following is on track.
Rarely do I write about the technology that I replaced because I’m usually so excited about the replacement. In this case I’ll make an exception. I already wrote about my new phone, but as much as I wanted the new phone, getting rid of my blackberry was more important. Rob Enderle reminded me of this in his tech trends blog.
At a Lotusphere show not too long ago, we did an announcement with RIM and Notes (it was an announcement of a product we were going to release at a later date). Not only was I underwhelmed by the product, the hardware and software technology from RIM was as cool as mud huts compared to new construction. On top of this, when I offered to help the RIM executives for gratis, they had an attitude that belied the fact that they already had iPhone daggers fatally in their hearts and didn’t even know it. It now looks like it’s going to cost them their jobs. I was treated as if I was dust (I’m being nice to them) by their executives. Notes was almost impossible to use on a blackberry at first. It made it to a D- at best.
I knew then that not only was RIM in trouble as a company, I disliked the blackberry as a piece of technology almost more than any I’ve had in 30 years. I saw the crackberry addiction it caused in some folks which I didn’t like. I also saw that if you had a blackberry (before iPhone days), you just signed up for a 24/7 availability.
The first one I got for free, and promptly got rid of in a month as it was more trouble than it was worth. The last one I’ll ever have is because my then company had me get one when I wanted a real phone/data device instead.
My problem is solved. Too bad about RIM…their once leadership position is now only a memory with recent market share decline.
It looks like I’m not the only one who believes they are in trouble. Their Board is not helping out either.
Sales figures show the same decline. It was not even nice knowing you.
So throw the Blackberry on the technology rubbish pile along with the Palm, OS/2, Token Ring, Newton and a host of others.
Is the PC Dead Or Is It Marketing Hype and Spin?
September 23, 2011
apple, ibm, iphone, iPod, microsoft, technology, Uncategorized apple, hp, ibm, PC's, technology Leave a comment
Update: Apple is more nails in the PC coffin with the new announcement of Post PC devices.
- 362 Apple stores
- 315 million iOS devices sold through last year, including 62 million in the last quarter
- 585,000 apps created
- 25 billion app downloads
- 1080p movies and TV shows for iCloud and the new Apple TV
- 15.4 million iPads sold in the fourth quarter of 2011
- 200,000+ iPad apps
- 2048 by 1536 pixels displayed on the new iPad, with 264 pixels per inch
- 44 percent greater color saturation than the old iPad
- 5 megapixel sensor on the new iPad camera
- A maximum of 73 mbps downlink with 4G LTE on new iPad
- New iPad specs: 10 hours of battery life, nine hours with 4G; 9.4 millimeters thick, 1.4 pounds
- Same pricing as last iPad: Wi-Fi models are $499 for 16 gigabytes, $599 for 32GB, $699 for 64GB; $629, $729 and $829, if you want 4G
- Old iPad now starts at $399 and $529
The Real Meaning in Marketing Speak
In the mid 2000′s, Sam Palmisano of IBM declared the era of the PC is over. This was somewhat of a marketing move since IBM had just sold the PC Division to Lenovo. What he really meant was that IBM is getting out of consumer products. IBM also sold other consumer divisions that were not the margin kings that Software and Services were. Disclaimer, after working either for/with/against/partnering with IBM for 31 years, I can say that a lot of what they do is incredible spin on pretty good technology. I had better knowledge of what was going on than what was told to the outside.
PC’s are Toasters Now
This is a bit of a history lesson. There was a time that PC’s were special and had value. They still can be found on almost every desk or backpack at an airport, but in reality they are now (and have been for a while) a consumer product. There gets to a point in time in every product’s life cycle that economies of scale and parts availability drive this value (and therefore the price) down when you can’t differntiate. It is compounded by newer technologies (tablet computers and mobile devices) to where you can get them at any consumer store that sells toasters, video games and TV’s. Any improvement is just a little bit better (except Windows which usually is worse), not an era better which was the case when they were new.
PC’s have done this to themselves over the years. Remember when all you could get was a bulky desktop? Technology moved on to the luggable computer to the laptop. Now you can get a wafer thin Macbook Air (for a premium price), but the technology curve will drive cost down here when every manufacturer offers it. Margins are razor thin and there is minimal hardware differentiation on the Wintel platform.
The Effect of iPad and Mobile Phones
Ultimately, the world is driving your communications and computing device to be in your hand. The end game of input is not a keyboard, but voice. This addresses the need for instantaneous that we have required as we’ve shifted from email to IM and texting, and from blogging to tweeting. I envision a vision screen that is projected by your small handheld that lets you see what a huge monitor is required for now in the near future. For more on this, see Project Blade Runner as an example of what the future could look like.
PC’s are already under fire from Tablet computing and smartphones. While at some point you still need a PC for complicated input/output such as the dreaded Powerpoint and the more mundane payroll/HR applications, they soon will be adapted to tablets as we easily morphed from immobile desktops to laptops.
Many analysts have shown that more phones and tablets are sold than PC’s. More texts are sent than emails and we certainly have more tweets than blogs.
The Cloud
Powering a lot of this of course is the overhyped Cloud model. While conceptually it has been around for a long time (we have called it client/server and other names), it is a software delivery model that will make the end device irrelevant. Perhaps you could get your email on your toaster or refrigerator. You could make phone calls by dialing in the air at some point. The issue is that we are driving the connecting device smaller, cheaper and more powerful (and less relevant) so that we can get what we want, when we want it and wherever we want it.
Lenovo and HP
Companies are jumping out of this market as evidenced by IBM and HP willing to sell their PC businesses worth billions in revenue, mostly because of low single digit profit margin. They realize that there isn’t much money to be made anymore, again putting them in the toaster category. Similar components by most, similar operating systems, market driving memory and storage costs and overhead to sell. HP is now particularly vulnerable as companies negotiating long term contracts will throw HP out as a viable vendor not knowing what their future will be either in terms of ownership or viability. HP has completely lost their way starting with the purchase of Compaq years ago, then dumping their tablet, announcing the sale of their PC division and switching CEO’s like underwear.
The Apple Factor
Everyone eventually builds a better mousetrap. The Mac has been around for a long time, but the entry way to the door to Apple changed with the iPad/iPhone. A new processor, operating system visibility, technology paradigm, profit potential and the coolness factor make Apple a different model than the PC. Prior to that, Mac’s were a niche player in the creative, advertising and education world. This has changed partly because the OS is better, Windows is not a great platform and Mac’s are headed in the direction of iPads.
So Is the PC Dead?
Ultimately yes, but not this year or in the near future. I’ve seen models of computers called bricks the size of your phone that you can drop in a kiosk and work anywhere. You can even use them like an iPhone if needed, but until the voice input issue is resolved, keyboard input is an inhibitor.
No one thought we’d ever see the end of typewriters, faxing or even the 360, but technology advances at an increasing rate economically speaking. What will be interesting is which social mores we’ll break like talking to ourselves (on a cellphone) in public (or worse in a bathroom or driving).
Is the iPad the next endgame? Likely also not. Companies are trying to out do themselves and we’ll wind up like the Jetson’s one day.
Microsoft, Being Chipped Away by Google, Apple, Everyone
June 18, 2011
apple, competitors, Google, predictions apple, competition, google, microsoft Leave a comment
Every time a company comes up with a good idea, another company finds a way to one up it. Patents, trademarks, copy-writes or any other legal means don’t stand in the way of a better idea.
This also works when you don’t have a better idea, but your product still dominates the market, mostly due to better marketing. Yes, there is a good percentage of people don’t think Windows is a good product. Most have experienced the Blue screen of death. Booting takes forever, drivers, compatibility, price and any number of factors make it a product that is only doing well because of marketing and the force of Microsoft.
Apple OS, Linux and even OS/2 were or are better operating systems. Now the Chromebook is out. I won’t pontificate as to whether it is better or not, but it will take share away from Windoze as the OS of choice. There are many Google lovers or users out there and for the price of a Chromebook, you could only get Windows 7 from Microsoft.
I’ve often said that Microsoft will have to pull an IBM by re-inventing itself, but their phone OS, gaming, MP3 players and Office haven’t really done the trick. They are are the quintessential one trick pony.
Time will tell what will happen, but the introduction of the Chromebook is just another layer of the onion being peeled away. Good thing they have a lot of cash in the bank, because they will need it to buy a better product. They sure haven’t invented one……ever.
Will Apple Survive the Loss of Steve Jobs?
January 19, 2011
apple, microsoft, technology apple, iPad, iPod Leave a comment
I’m not wishing any bad luck or premonitions to Steve, but conditions don’t look that good given he already had a liver replacement and he hasn’t been the picture of health at conferences. I hope that he has a good recovery and stays at Apple keeping the industry hopping and keeps Apple bringing out newer and better products that make our lives free from Microsoft.
THOSE WHO SAY YES
There is enough in the pipeline with iPhone extending to new carriers like Verizon and any CDMA based companies. The iPad is just beginning to take off and as soon as they resolve flash or HTML 5.0 or whatever video standard, it will be the de-facto standard. The only drawback I can see is the keyboard is less than stellar, but I’m sure the form factor will change. We can already see what the iPad has done to NetBooks, the next big notebook innovation that never happened. It will likely kill most of the low to mid range PC sales. I think the iPod has a lifespan that may be ending after a few more revisions, but there is just too many other options that make this redundant.
This doesn’t even count Macbook which shouldn’t be selling as well as it does at 3 times the price of a Windoze PC, but they have a following and a growing market share. If they pattern it after the iPad, look out HP and Dell.
The Apple designers have enough Steve Jobs inspiration for 3-5 years of innovation and they have set the bar again and again. As long as Tim Cook keeps the Jobs mantra viable, they will dominate.
Let’s not forget that Jobs created Next and sold it to Apple, and Pixar which made him one, if not the largest Disney stakeholder. He is the creative mind who invented Apple and rejuvenated it.
THOSE WHO SAY NO
John Sculley came to mind as a corporate wizard who doesn’t get what Apple is. It is a culture and a mindset that just isn’t GE or Pepsi or your standard fortune 100 company. They need to keep Cook in place to keep things together, but they need a creative genius who will keep the juices flowing and create the next iSomething. Otherwise, short the stock and move along.
OTHER COMMENTS
Others like ZDNet weigh in:
There’s no doubt that Jobs played a big part in shaping Apple and helping it grow beyond that early base of cult followers and taking the company mainstream and beyond. Like Apple or not, you can’t dismiss the impact that the company has had on consumer electronics, music and movies. Jobs has done a marvelous job as CEO, and whether you own any Apple products or not, I’m certain that in some way Apple’s vision will have shaped and influenced some of the tech you have in your life. Apple shareholders should especially be grateful for the work he’s done and the effort he’s put into Apple.
So, given that Jobs has done so much for Apple, are the pundits right? Is Apple doomed without Jobs?
In a word, no.
