Thread regarding IBM layoffs

Lenovo and Spectrum Fusion would be a nice partnership that benefits both companies

I would say “spectrum fusion” is in the cross hairs. It’s just not a big enough player to invest in vs just cutting a deal with one of the bigger players

https://www.theregister.com/2023/09/14/cisco_discontinues_hyperflex_hci/

Concerning what’s next, you must consider a few of these issues.

1. IBM enterprise engagements are not growing, but neither are they shrinking. They are subject to the business cycle, and are best considered “NICHE” markets.
2. As goes server enterprise engagements, so goes enterprise storage engagements. The enterprise server is connected at the hip with enterprise storage.
3. As goes TSS shrink so goes Power shrink. Shrink rate for non-enterprise is double digit, as Intel continues to steal share at the low end and enterprise is subject to the business cycle
4. Power volumes have shrunk enough to not justify IBM’s future investments without some future cost take outs.
5. IBM cloud does not support legacy OS’s which strands approx 1/3 of IBM’s power install base thus accelerating Powers shrink

TBH I do not know why IBM brought instana, a good product but they are ki-ling it. not sure why they are in any of the monitoring solutions TBH, the market is over supplied with tooling. IBM might as well get rid of AIOps (netcool) and instana, don't think they have sold to a greenfield site in the last few years - might be wrong, they moved workload automation, intelliden, network manger etc etc to the big Indian firms might as well do the same with the above.

IBM has said it a 1000 times since AK took over. They are a Hybrid cloud/AI/SW modernization/enterprise company. If they could exit HW safely and protect their business propositions going forward (something they didn’t do with sole sourcing GF) they would as HW has become too much investment for the return. Given that IBM’s business propositions going forward have to run on some kind of HW, IBM will remain in the HW business, but it will be streamlined to “enterprises” Everything else will go. You don’t have to like that answer, but the CEO and the CFO have repeated that answer for more than a year to the Wall Street analysts. All things non-enterprise are being deemphasized and that includes HW, SW, and services including Consulting. It’s not a matter of what division (infrastructure, SW, or consulting) you are in, but it is a matter of whether you cater to enterprise vs non-enterprise that will determine your future at IBM.

It's the hardware-heads who always think IBM is about to sell off Consulting. Meanwhile most people in the company don't even know we make storage products. That whole line could disappear and no one would notice.

IBM's been buying little consulting shops almost quarterly for the last few years, picking up bodies and customers (what else is there in consulting?) Doesn't sound like something you'd be doing if you were planning to sell off Consulting.

If you look at “enterprise” consulting (AI, SW, cloud, and Infrastructure), then yes you are correct that consulting is smaller than Kyndryl. Let’s say 65-70k head count. IBM’s problem with consulting is it’s a 160k organization. Yes there is a group within consulting that just does perform services (essentially glorified outsourcing) that cannot be thrown overboard. BUT I would speculate there is 40-50k worth of consulting that IBM wants to exit, not because it’s not profitable, but because it doesn’t fit into IBM strategically (eg enterprise engagements) So yes IBM could easily hit consulting next getting rid of the less than fortune 1000 customer sets. With that said, if they do that, it’s just a hop skip and jump to IBM eliminating “infrastructure” division completely and absorbing the “enterprise” side of infrastructure under the consulting arm and eliminating everything else.

Consulting for sure. Sales drives it and Sales are in decline. Consulting should have always been a function of the Client Rep anyway. That whole IBM consult business was just the result of another bad acquisition that added a ton of overhead on low margin. It was like the ho---r that refers you to a doctor after the transaction is complete

I think Consulting is next because it is basically a smaller version of what ended being split off into Kyndryl.

We can certainly speculate. Given IBM’s moving of storage manufacturing out of Hungary to Guad Mexico (where scaleout power is made) this month, it sure looks like IBM wants to consolidate all of the internal commodity component users into one spot. Yes that certainly shortens up the supplier issues thus resulting in cost take out. What it also does is make the commodity side of the house within IBM a target of opportunity for an even larger commodity user. The logical choice is someone who uses millions of commodity parts and who can leverage their supply chain (Lenovo, Dell, Cisco, HP). If IBM wants to exit the commodity manufacturing side of the house, they will not abandon their proprietary designs, but rather structure a third party manufacturing agreement much like they did with GF. Essentially IBM is becoming a DuPont on the low end (leveraging the IP stream and letting someone else build it) and a niche supplier on the high end (leveraging their monopoly (enterprise boxes) as that is where the current strategy is focused). In looking at IBM’s revenue, 85% of it comes from “enterprise” customers, exiting commodity offerings makes sense. As such I suspect commodity power and storage manufacturing are about to be spun off to a willing partner who IBM will structure a long term deal with.
As far as legacy SW Most likely not as the margins are still way too high
As far as consulting No overt action is needed as turnover is in the 20% range so is self leveling