IBM decision-making mistakes in the past 4 decads led to today’s outcome

IBM decision

First of all, please click on my post “How’s IBM performing these years?

Based on my understanding of IBM, I personally believe that Rome was not built in a day. The building will collapse and cannot be supported by a single tree. IBM has made major and irreparable mistakes in decision-making on many major issues; it can be said that IBM decision-making mistakes caused today’s predicament.

Management team

The management team is not doing its job, and the corporate governance structure gives all the power to the corporate management team (please note: don’t forget the board of directors), especially the company’s CEO. The corporate management team should take responsibility for all mistakes. This is the fundamental meaning of matching rights and responsibilities. But over the past 40 to 50 years, what investors have seen is that IBM’s management team has been ineffective, and several management teams have repeatedly disappointed investors.

Company culture

Big companies are sick, and bureaucracy is rampant; the most typical representative is that IBM is not the first, but it should be among the top in the technology world. Regarding how big company diseases and bureaucracy affect an enterprise, I suggest you click on my post: “Institutional imperative – the good, bad, and ugly

Internet

The commercialization of the Internet more than thirty years ago changed the world. It has created modern technology giants such as Amazon, Alphabet, and META. More than thirty years ago, IBM had the richest resources, talents, market positions, and customers in the technology industry. It was a top technology company that was envied by everyone. However, the conservative IBM seemed like a dinosaur living in modern society and had no desire to do so. Be part of this epoch-making change.

Cloud computing

In 2010, IBM began to explore cloud computing business; in 2013, it established a true cloud services department through the acquisition of SoftLayer. However, it was not until 2017 that IBM established a cloud service strategy based on “Hybrid Cloud” (Hybrid Cloud, which can be regarded as a combination of public cloud and private cloud), and strengthened this strategy through the acquisition of Red Hat in 2018 Strategy.

But it is too late, because the world’s top four cloud service providers, led by Amazon, Microsoft, Alphabet, and Alibaba, have already occupied a favorable position and established a market size that is difficult for later participants to join.

Artificial intelligence

Please note that fifty years ago, IBM’s artificial intelligence technology was at the top of the global technology community, and no one could surpass it. But what about today?

IBM’s “Deep Blue” artificial intelligence defeated world champion Kasparov in 1996. You may also remember that IBM Watson defeated human players in the “Jeopardy!” knowledge competition in 2011. Very impressed.

It failed to catch up with the transformation of artificial intelligence technology into deep learning, thus making its accumulation of artificial intelligence technology in the past few decades quickly obsolete.

Despise terminal devices

IBM invented and defined the IBM PC, but it was Intel and Microsoft that made the most money from PCs. IBM not only missed the golden age of personal computers forty years ago, but also failed to learn from it.

Faced with the emergence of mobile computing devices 20 years ago, IBM remained the same as before, as if it had nothing to do with it, just being a spectator and not wanting to participate at all. The result is that Apple has continued to hold the throne of the world’s listed companies in terms of market capitalization to this day.

Conclusing words

Although it has been rich in the past, there is no guarantee that IBM will not follow Intel’s footsteps in the long run. This is because investors have very low expectations and confidence in IBM’s repeatedly disappointing performance in the past few decades. Unless something breaks the boat or something unexpected happens, under the current situation, investors who want to invest in IBM for the long term should think twice.

If you understand the technology industry, compared to 40 years ago when I first came out of society, if IBM suddenly collapses or disappears from the earth, it will not cause much loss to the world──This is my view of IBM .

IBM decision
credit: Ideogram

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