Thread regarding IBM layoffs

So this is likely a play to move engineering labor to lower cost geographies for microprocessor development to reduce costs in light of lack of exponential growth of Z or Power. This is a short term play to manage costs. Long term there needs to be something else...... hopefully not emulation.

IBM is clearly investing in advanced process semiconductor process nodes and licensing it, and likely will also invest in advanced designs for Z least. IBM should consider a "open architecture" as well. It should be noted that ARM server designs haves taken several points of market share over the last few years due to hyperscaler embracement. It is possible to make headway if IBM chooses to embrace key customers with an open archicuture and further reduce costs with reuse and differentiate in areas that offer performance and value.

When IBM decides to not invest in its own silicon, it will need to emulate its instruction sets on other "open" or x86 architectures.. That's really it. Look at sparc, pa-risc, etc.

Good luck on your Journey IBM.

Assuming that IBM isn't propped up with government support, there's a very good chance that IBM could end up like Computer Associates...an enterprise software developer and publisher that is eventually brought down by poor technical support, various hostilities towards customers and internal scandals...ending with a buyout (Broadcom in CA's case).

IBM is getting out of hardware...this much we know. They still have a viable mainframe business, but as others have mentioned Intel and/or AMD and/or ARM is good enough for most use cases. The remaining market share won't be enough to keep POK running, and so IBM will end up as just a software provider. This will sustain them for a while, but their high prices and ambivalence (if not outright disdain) towards non-enterprise customers will isolate them from most of the market. The shrinking will continue and drive IBM into eventual irrevalence.

This is the play IBM is following. Management has not been shy in telling the world this story. NOTE the words “enterprise customers” Outside of Enterprise customers, IBM has been hollowing out all of IBM’s offerings to smaller customers. Slowly but surely, IBM is shrinking down to a niche “enterprise” only provider. Shrink in the non-enterprise offerings for the most part is now getting accomplished via retirements. You don’t have to RA many more folks when the non-enterprise population has been decimated over the last 5 years via RA’s and non-investment resulting in the non-enterprise opportunities shrinking by 2/3rds. Welcome to Power 10 being 2 years late, and Intel being good enough

https://www.fool.com/investing/2023/12/13/ibm-has-a-secret-we-pon-thats-bringing-in-billions/?source=eptyholnk0000202&utm_source=yahoo-host-full&utm_medium=feed&utm_campaign=article

@3zsb

Just my opinion, but personally I wouldn't look for this to be a successful long-term play. Let's say for the sake of argument that your outlook is accurate, and IBM's ultimate role is to sell IBM implementation services for SWG products on AWS (or some other cloud service for that matter). That is not a terminal point for the customer...the customer would soon look for alternatives to replace IBM's stuff, and the major cloud vendors (Amazon, Microsoft and Google) would be happy to supply them. IBM is not the only player out there...I guess the question is whether or not they have a viable value proposition in the cloud space if they do not control the entire stack?

I say NO...not at this time. IBM could be successful in that sort of role, but only if it really shrunk down to a fraction of what it is now. That may be its ultimate fate, and it certainly explains the rampant cost-cutting. But right now, IBM needs to be selling a lot more than software and implementation services to be a viable and profitable company.

This is where the partnership helps IBM AWS will be responsible for the HW perform piece of the partnership. It’s their data centers, their HW, and their on site technical expertise. IBM will just be the sales front end (on which they will get paid a commission) and the implementation back end (on which it’s a billable hour consultant and SWO part of the offering. Both sides play to their strength

Amazon has a history of screwing its partners.

IBM will continue to outsource their commodity cloud HW investment to AWS, as AWS has such a lead, that it doesn’t pay to compete, but rather it does pay to partner.

Will IBM continue to invest in “enterprise” Niche cloud offerings? Of course as they catalyze consulting and SW opportunities

Will IBM try to exit HW manufacturing? Yes if they can find a willing partner. Why? Because IBM doesn’t have the customer base to be able to leverage their supply chain. HW manufacturing is a billions of components business, and that business has passed IBM by. NICHE manufacturing will remain (mainframe, large power, and large storage)

Will IBM try and exit their TSS business? YES at least partially due to TSS having a year in and year out shrink rate of 4-7% Niche products will remain (mainframe, large power, and large storage)

Moving Power to India just prolongs the inevitable Power is generating almost zero net new customers, so IBM has to cut costs to keep the lights on, thus the move to India (labor is 50-70% cheaper). The inevitable part relates to Power being in its replacement cycle (much like televisions) You only replace them if they break as there really isn’t any growth to speak of as everyone has one already. There is yet one more factor pushing power
Unix is being replaced by Intel Linux at warp speed This shrinks the install base
ISV’s have migrated to Intel Linux so they only have one code stack Again this shrinks the install base.
NET says we are in the “mature” throws of Power Intel is good enough for 80% of the install base, thus the base is shrinking, repair/replace HW cycle, and ISV SW migration away sums up the go forward opportunity. Not a pretty picture.

I've seen in past all contractors in Boulder were let g this time of year with no notice

If Power is going to India, storage is in even bigger trouble as it’s further down the commoditization path. IBM is committed to the mainframe, and I expect to large Power as they just built a joint manufacturing site in POK, and consulting is still needed to modernize the legacy mainframe and large power SW. Everything else will go to the partners as they depend on the ISV’s.

Both Power and Z were hit, Power worse. Power development will move over to India in order to cut costs. Non-Indian employees working on Power will either get redeployed or move to Z.

Future steps from the execs are unknown. Reading between the lines, I believe all non-Indian Power employees will eventually get redeployed. And Power employees will be asked to train their replacements in India. And Power will be sold, if a suitable buyer can be found.

This sure feels like Intel servers all over again. Intel servers went thru several rounds of layoffs before finally getting sold off to Lenovo. At the time we called it death by a 1000 cuts. The rumor was Lenovo and IBM had agreed months before to the deal, but Lenovo wanted the head count reduced before they took them over.

I'm skeptical. I've not heard anything, and I'm in Infrastructure.

Proof?

Did Ric Lewis get hit as well?