Enterprise Services Outlook Logo

IBM sees a decline in revenue as the company shifts to higher value deals

By ESOutlook | Thursday, February 12, 2015

IBM reported a 12percent decline in profits for the fourth quarter of 2014 following the sale of its System x business to Lenovo and cuts in its software operations.Total revenue generated from its software business was $7.6 billion, a decline of 7percent as compared with the fourth quarter of 2013.

Revenues for IBM’s Systems Storage and Global Services decreased by 8 percent and its Power Systems were down by 13percent when compared to the same period in 2013, while revenues from System z mainframe server products decreased by 26 percent. Its hardware sales are driven by organizations upgrading to the latest systems, as their applications and workloads increase.

According to Ginni Rometty, chairman, president and CEO (IBM) the company was shifting its focus to higher value IT, including analytics, mobile and cloud services. "We are making significant progress in our transformation, continuing to shift IBM’s business to higher value, and investing and positioning ourselves for the longer term," she said.

IBM's senior vice-president and CFO Martin Schroeter said: "We introduced our cloud platform as a service Bluemix and are shifting capital to globally expand our SoftLayer cloud datacentres." The company has also started selling Watson analytics to business users, he added.

Apple and IBM molded a partnership in July 2014, where IBM would build vertically focused applications on top of iOS. The first fruits of this partnership were released late in the year with a set of mobile-enabled applications targeting travel, banking, finance and government users.

The company recently launched its latest z-series mainframe, the z13, which it claims is capable of processing 2.5 billion transactions a day. The machine is an alternative to using infrastructure as a service on the public cloud and hosting the back end for mobile applications. But even at an existing mainframe site, hosting more applications on the mainframe is often not economically viable.

Sourcing Insights

William Miller, SVP & CIO, Broadcom, Inc.

Confluence of Trends is Changing the Landscape of Industry

By William Miller, SVP & CIO, Broadcom, Inc.

Dr. Cheryl Flink, Chief Strategy Officer, Market Force

Boosting Store- Level Performance through Big Data

By Dr. Cheryl Flink, Chief Strategy Officer, Market Force

Paul Kent, VP-Big Data, SAS

Using Hadoop as an Analytics Catalyst

By Paul Kent, VP-Big Data, SAS