Does Big Blue's Lou have a clue?
By Scott Bradner
Network World, 04/26/99
IBM has long been the object of vague disdain by many Internet geeks.
Somehow IBM seemed like a dinosaur from the old days when mainframes were the centers of the corporate information technology world - those bad old days when one had to persuade the guardians of the mainframe to install the application you wanted to use.
IBM seemed to many in the Internet generation to not "get it" when it came to the basic fact that on the Internet, applications are on the local hosts and not just brought to you by someone in the computer center.
It may be time to reevaluate some of these assumptions and notions, but not all.
IBM has just published its annual report, which contains a "Dear fellow investor" letter from IBM Chairman Lou Gerstner (www.ibm.com/annualreport/1998/letter/ibm98arlsen01.html). This is quite an interesting document that gives some insight into just what IBM's boss thinks is going on Internet-wise.
IBM is a big company. Actually that's not quite accurate - IBM is a very big company. IBM did $81.7 billion worth of business last year, up from $64.1 billion in 1994. It's true that Wall Street does not value IBM (at $156 billion) as high as what some people have said is the product of IBM's biggest blunder, Microsoft (at $437 billion). This is in spite of the fact that Microsoft only did about one-sixth the business of IBM ($14.5 billion) last year.
I expect the latter difference is more a reflection of Wall Street's rose- (or is it greedy green?) colored glasses about anything that seems Internet-related than of any reasoned view of the relative potential of the two companies.
Lou writes: "What makes 1999 different, though, is that a historic shift . . . [the Internet] is reshaping everything: how we work, how we shop, how we interact with our governments, how we learn, what we do at home.
Every day it becomes more certain that the Internet will take its place alongside the other great transformational technologies that first challenged, and then fundamentally changed, the way things are done in the world."
This is an important realization from a company that once thought it could own the corporate data network. Gerstner goes on to say "the 'Net is about mainstream business, not browsing, about conducting real commerce, not merely accessing content."
This is an understanding that far too many of IBM's competitors have yet to grasp.
Lou and at least some of the people at IBM understand that the Internet is creating new business models, not just new businesses. Only one thing reminds me of the IBM of old: Lou's vaguely sinister concept of "Pervasive Computing," which sounds too much like the old computer center people knowing what was best for me.
Disclaimer: There is nothing pervasive at Harvard other than history, so the above must be my own thoughts.