MBA saleswomen Carly Fiorina and Meg Whitman ruined the once great hardware company HP. Now Rometty with experience mostly in sales is shutting down Hardware mfg at IBM. The US has had to pay a heavy price for women's equality ! Engineers and hardware guys have the handicap that they need capital to do most anything significant so these airhead MBAs in pantsuits sent by Wall St. can boss over them.
One cannot be in the electronics industry for long without being aware of the contributions of IBM, and admiring the transitions they have made over the years.
For this topic, IBM invested in custom development (fabs, design, eda) at a time when literally these markets did not exist externally. In the meantime, the world has significantly changed, and it is not clear whether these custom techniques in fact provide significant competitive differentiation for their server class products. Plenty of companies (HP, EMC, etc) seem to find a way to build compelling products without these investments.
Like any large organization, I expect it is difficult to change gears, but I suspect there is little choice. Inspired leadership would figure out how to utilize the talented individuals within these organizations in a more productive manner. At least, that is the hope.
Even when threre is no investment involved, IBM is without a clue ! I run the India Processor program and about a year ago we selected PPC as our reference ISA. But could not get IBM to respond on licensing the ISA. This was a big deal since all strategic and govt. funded program would shift to this ISA from commodity ARM and Intel. You are talking 5B USD + market. And to top it, IBM is providing tech. assistance on a fab coming up in India. One would have thought they would respond with some urgency, but no dice ! They did get back to me on selling Power boxes ...
Finally I gave up and switched to the Berekely RISC-V ISA. We will hopefully release FPGA versions by Christmas. IBM's loss.
There's a general problem with comanies:The stock market punishes them in long term projects. Attacking intel would be such project. Why behave in such manner ? Because stock investors basically look for short term gains. Invest in long term projects - and you decrease your appeal.  is a nice explanation of this.
That's why you get companies today hoarding cash , in a world so filled with technological opportunies.
While it's no substantial change for microelectronics, IBM is signaling fairly clearly that it's never going to invest in any new opportunity in hardware because of the commodity disaster that is the cloud.
I feel for this IBM employee that sees good technologies with opportunities to continue differentiation from competitors, but the sad truth is that when the buck stops at the C-level, IBM will never spend money they could use to buyback shares to invest in opportunities that might perhaps someday grow their hardware businesses. Not organically, and not through acquisition. Not unless something radically changes at the top levels of management.
You might look at GE reinvesting in being a maker of tangible things and think it could happen to IBM, too. But there's no bellweather moment for IBM like GE Capital pulling the whole conglomerate down like an anchor. IBM will continue to act like the share price is the company and all its worth, and continue to view any investment in its hardware business as detrimental. For the sake of the employees, it is hard not to hope they sell microelectronics entire.
1. I beg to disagree there. IBM/Motorola had a good customer in Apple (it was part of AIM, so technically a partner). It was Motorola's reluctance to keep up with Apple's needs that made Apple go to Intel. I have been a PPC customer from day one (still am, use the T4240 these days), so had a chance to see what was going wrong from day one. They simply did not have the energy to match Intel. Sheer lethargy and misplaced priorities. Or rather lack of priorities. If they had targetted Intel with a laser focus, they would have been a co-leader in the higher end processor market. I used to have these conversations with IBM and Motorola during thsi downfall, so had a ring side seat ! They just gave up.
As I mentioned, even today my customer base is 100% Power 7+. Nobody wants to touch a Xeon even when the Intel server is 50% the price of IBM.
Having worked with both IBM and Intel since the late 80s, it simply boils down to this. Intel simply wants to suceed more.
Even now, for a standard business server, the Freescale T4240 is a more optimal part than a Xeon. Freescale knows it but will not push it into that market.
For 65W TDP (normal 30-40W) I get 6 core Xeon level performance at half the TDP and with a 48 Gbit routing capacity on top of that. What is not to like.
Bottom line, IBM and Motorola simply did not have the stomach for a fight against Intel, inspite of having a better processor architecture and fab technology to match Intel. Such examples abound, TI and FS giving up baseband market to Qualcomm and Mediatek is a classic one. What is that scares western companies about low margin business ? As long as cash flow is OK, they are great businesses. The minimal profits itself a great entry barrier. My dad floated a company and took it IPO back in the 80s. The business, jeans ! Reduced Levi's in India to near oblivion in a span of 3 years and became the No 2 player in the market. I am just citing it as an example that just becuase you have powerful incumbents in a commodity market is no reason to walk away.
2. I meant to do a good CPU it helps if you have fab. There is a difference between the getting a custom process done for you and having a colleauge as the process engineer ! The incremental advantage is subtle but it adds up.
3. SW is a dangerous game to play. Power boxes sell now only if IBM uses RedHat. Nobody wants AIX even though it is a better choice as of now. So there goes the SW advantage at the OS level. And once RH Linux comes in, Jboss comes in ! Slowly your so called SW margins take a hit. All you will left with is selling Watson. Since I advise a lot of large companies, the IBM sales team makes regular pilgrimages to my offie. Keep telling them this but I think it falls on deaf years.
In short, IBM is losing its so called SW advantage, they have yet to realize it.