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IBM Exits Hardware in 2020?

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sofianitz
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IBM's lost opportuniies
sofianitz   1/26/2014 7:08:30 AM
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The history of IBM is littered with failed oportunities.  IBM is now and has ever been a Marketing company, controlled by salesmen, who get paid for maintaining "customer relationships".  A couple of examples:  Microsoft would not exist if IBM had not let itself be wrong-footed and outsmarted by Bill Gates.  Oracle would not exist if IBM had not sat on the Relational Model for three years, fearing to impact their customers use of IBM's "IMS" data management, software, a technical disgrace. Intel would not exist if IBM did not cop to their 8080 architecture, inferior to their own IBM 360. and then provide them a 10 million dollar loan when they were about to go under.  ARM would not exist if IBM had properly fostered and promoted and opened their own RISC architecture.  IBM invented all this technoloty, and then let it slip through their fingers because of their "Marketing" vision.  Even now, if the dim-wits in IBM's White Plains Industry Marketing Department cannot forsee a 15% net margin, they dump the activity.  The basic error is to suppose that if you ask your customers "what they want", and then give it to them, you will be successful.  As everybody else now must understand (it's a trivial fact}, "customers" do not know what they want.  IBM still doesn't understand this.

resistion
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CEO
New hardware?
resistion   1/24/2014 2:30:00 PM
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Maybe not CMOS or even silicon anymore, but there's going to be some new hardware for sure.

TonyTib
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CEO
It's just 3 HDD companies
TonyTib   1/24/2014 2:17:24 PM
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The majors:

Seagate (including Samsung's HDD division, Maxtor (which bought Quantum IIRC), Connor, CDC, etc)

WD (including Hitachi Global Storage, and suppliers such as ReadRite and Komag)

The minor:

Toshiba/Fujitsu (IIRC ~10% market share)

Plus possibly a company in China making a negligable amount of HDD's.


At least the HDD companies have some good ideas, such as targeted drives (e.g. WD Black=performance, Blue-mainstream, Red=NAS, Green=power saving) and hybrid drives (Seagate's with 8G NAND cache, WD has some with full SSD and HDD).

The HDD industry does seem to have a pretty clear path to substantial density increases with HAMR and patterned media; I'm not sure the path is so clear for flash memory.  It's also interesting that there are close ties between the some of the HDD & flash companies (e.g. Seagate & Samsung, Toshiba)

DMcCunney
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CEO
Re: You can't make money on hardware
DMcCunney   1/24/2014 2:01:17 PM
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@rick merrit: Once there were 30+ drive makers. Now there are about four. It's the way of tech I think.

Yep.  Hardware steadily becomes commoditized, and it mostly doesn't matter whose name is on the label.   The Backblaze folks recently posted a blog entry about the drives they buy for their cloud services, and the answers were Seagate and WD, with Hitachi third and a few others with miniscule usage.  According to their stats, Hitachi drives are the most reliable, but not enough so to make them pay the higher price Hitachi wants.  (And Hitachi apparently just sold off it's drive business, with part going to WD and part to Toshiba.)  I remember when WD made drive controllers, not complete drives.

I used to read one of the trade papers that tracked OEM manufacturers, and watched the progress toward "last men standing" in the OEM drive market.  Some I regretted (like when CDC sold it's OEM drive operations to Seqagate, and for a while I kept a table of which Seagate models were former CDC.  CDC drives were built like tanks and just ran.)  Some I said "Good riddance to bad rubbish", like Tulin, whose drives bred bad blocks like flies, and I suspected would fail before installation.

But it's the way of tech in all areas.  You constantly cut costs and sell cheaper, or you get acquired or go belly up.

rick merritt
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Re: You can't make money on hardware
rick merritt   1/24/2014 1:34:01 PM
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@DMcCunney: I visited Conner, Quantum and more back in the day. Once there were 30+ drive makers. Now there are about four. It's the way of tech I think.

PaDesigner
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Re: IBM Microelectronics
PaDesigner   1/24/2014 11:11:13 AM
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With growing in Cloud business, i can also see IBM focusing in it. But, Amazon and others have really gained massively in Cloud computing. How would IBM compete with Amazon and others currently leading in the Cloud?

DMcCunney
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CEO
You can't make money on hardware
DMcCunney   1/24/2014 11:01:16 AM
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No surprise IBM sold off the drive business.  In fact, the surprise is that it didn't happen earlier. I've been watching consolidation in the drive industry for decades.  Does anyone remember Micropolis, or Quantum, or Conner Peripherals, or CDC, or...  Consolidation was inevitable as prices dropped, margin shrank, and you needed market share to survive.

Hardware inevitably becomes a fungible commodity, with commodity pricing, and you can't make money on it unless you sell enormous volumes.

The user isn't buying hardware.  They are buying a tool to do work, and that tool includes hardware and software, designed and integrated for a purpose.  The value to the user is what they can do with the tool, and not what the tool is made out of.

I don't see IBM entirely exiting the hardware business, but they began diversifying into software and services when the mainframe market was still thriving, and for good reason.

IBM will stay in hardware that is not a commodity and can command a decent price, but IBM has always sold fundamentally sold systems, not components.

rick merritt
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Re: IBM Microelectronics
rick merritt   1/24/2014 10:40:18 AM
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@Fergie: Agreed that IBM may be making more money and margin out of selling software tied to its proprietary hardware, and harder to make that without the boxes.

But I suspect cloud computing data centers of x86 (and some ARM) boxes will increasingly chip away at all the workloads, leaving less and less to run on propreitary IBM boxes.

rick merritt
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Re: IBM Microelectronics
rick merritt   1/24/2014 10:35:12 AM
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@ Geekmaster: Ah, a surprise company...who are the candidates there?

Sheetal.Pandey
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Manager
Re: IBM Microelectronics
Sheetal.Pandey   1/24/2014 7:45:28 AM
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IBM is well known for its research, development and innovation as they are for mass production. These are the times when carrying out hardware business is not that profitable and also they have been holding the legacy from long. May be sme new players can take it forward and bring in more revolution. 

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