IBM Eye

Much has been made by myself as well as others, about IBM’s open arm embrace of open source software. A great article at preens.com notes the oddity in the following way: IBM, the epitome of conservative business, de-emphasizes its billion-dollar “AIX” operating system in favor of a product developed by a loose coalition of programmers with no financial motive in common, upon whom no corporate directive can be binding, whose leader has no power but the respect of others.

This week there have been a number of fine articles I’ve seen attempting to describe the business benefit of such a move. Later in that same article,it states:

Examples of this sort of company are IBM and HP. Hardware is a great product to sell along with Open Source software. It costs a penny to copy software, but you can’t copy a loaf of bread without a pound of flour. Until we have the Star Trek “replicator”[13], hardware is a difficult-to-copy product. Allowing the customer to know something of hardware internals doesn’t necessarily remove all of its business differentiation, as might be the case for software. The hardware manufacturers that participate in Open Source development do so to enable sales of their hardware products. Hardware is useless without software, and specifically computers are useless without the operating system that interfaces the computer hardware to software applications. Open Source developers seem to be better at systems programming than any other form of programming, so far, and the Linux operating system kernel is now as good as, or better than, many proprietary operating systems for similar hardware. Hardware manufacturers formerly spent billions on proprietary operating systems that, for them, were always enabling technology rather than a profit-center. The margins were in the hardware itself. Many of these manufacturers have eagerly embraced Linux because it allows them to distribute the cost and risk of the operating system among multiple companies, has a cost-efficiency greater than that of similar proprietary operating systems, and is in general desirable to the customer.

I found that interesting, and valid from an academic perspective (an easy classroom example) but not accurate in describing IBM’s motives. IBM, I believe is far more interested in the thought leadership, goodwill and most of all the major money they make from implementation, middleware and services like implementation, maintenance and the like related to the expertise and possibilities created by the free software. I don’t think IBM sees this as a value added throw-in for their hardware. That would be true even if they were an open source parasite, passively reaping the benefits of others.

There’s some good debate over at slashdot about Open Source monetization that is interesting but not directly about IBM

Money Magazine has a v
ery positive article about IBM at CNN on Friday. This is the kind of
positive publicity I was wanting when I wrote my embittered (and
retrospectively ironical)”Why I hate HP”
post in August. IBM, in spite of sluggish services growth in Q3 seems
to be firing on all cylinders and people (journalists and analysts)
really seem to like their decision to acquire software firms like a
squirrel preparing for a long winter (I’m still on the fence). But it’s
fun seeing positive things about good old IBM. Enjoy it while you can
because press attitudes can change overnight and it’s way easier for a
lazy journalist (or blogger as the case may be) to criticize than it is
to thoughtfully praise. I really like where IBM is right now
fundamentally. They are doing a very nice job of delivering short term
while showing great vision with investments, research and staffing for
the long haul.

A few quotes from the article:

IBM went on a software buying binge last year and analysts
think this was a good move.

“They’ve made some key acquisitions in the last year, and
they’re not overspending on them,” said Christopher. “They’re buying
companies with established businesses that aren’t too big, but that can
grow.”

“Internationally, they’re extremely strong - they’re viewed
as the gold standard”.

And with IBM trading at a discount to all of its top competitors, you
could say the same about the stock.

IBM has purchased Internet Security Systems Inc. (ISSX), an IBM partner since 1999, for $1.3 Billion.  ISS started in 1994 with one product, Internet Scanner, and has grown to a suite of security offerings including the ISS X-Force Intelligence Service credited with discovering a number of Microsoft security vulnerabilities in recent months.  This is IBM’s forth acquisition this month, and its 5th largest of all time, but hey, who’s counting.

Kristof Kloeckner, vice president of strategy and technology for IBM’s software group, was interviewed about the purchase by the Washington Post. 

He said, “We have enough freedom to do whatever is required to strengthen our business. We do not feel constrained”.  I think in this case someone should have constrained him.

From where I sit here in the cheap seats, it looks as though IBM has made its first bad acquisition of the year.  (more…)

IBM was the first big company to fully commit to Linux and tie its fortune to the success of the Linux OS.  It is hard to argue that IBM has done very well embracing the open source operating system with such vigor.  They are hoping to do it again.

Believing Linux to be mainstream and viable, IBM is moving into other open source areas, attempting to get them to the same level of functionality / viability.

At Linuxworld yesterday, IBM announced what has been dubbed their “Beyond Linux” Strategy — a roadmap showing where IBM is investing time and money to the benefit of the open source community (and IBM Global Services, to the tune of $250 / hour).  The strategy targets the following eight areas:

(more…)