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How IBM plans to get with the times

How IBM plans to get with the times

Can Big Blue compete effectively against much younger tech firms?

I like the IBM Edge conference because it tries to showcase how infrastructure can provide a large company with a competitive edge. While the event clearly contains content on IBM products and services, the emphasis appears to be on getting things. This year's event also offered a snapshot of how IBM is adapting to address one of the most massive changes the technology market has yet made.

Remember, the fountain of youth is a myth

Perhaps the strongest metaphor for the problem that IBM faces was the opener for the first keynote talk: A brilliant guitarist who's only 11 and has been playing for just three years. (I found that personally depressing.) An older musician soon joined him; he was able to keep up, and perhaps even outplay him, thanks to his experience.

This older musician represents IBM's potential. IBM can never again be an amazing young company, but its experience and history should let it step up and at least match any young firm. The key here is that the older musician matched the younger musician's tune and didn't try to step in with classic rock. IBM must be agile enough to play as well as the young companies entering the market to make its experience seem like an advantage.

As the youngster left the stage, and he was asked who he wanted to be like, he said he just wanted to be himself. There's the problem with the young company - it's still trying to figure out what it will be. That's a painful path that the older company has already completed. IBM knows what it is - and that's the sustaining advantage that any older company must remember. IBM's most iconic CEO, Thomas Watson Jr., said it best: To succeed, you have to be willing to change everything but who you are.

IBM partnerships, products position company well

Perhaps IBM's most powerful and interesting move to the sale of the IBM System X group to Lenovo. This goes to the heart of the "change everything" part of the equation. System X wasn't working inside IBM. Lenovo's own server group represents an increasing threat, but it's not growing very quickly.

System X brings low margin to IBM, but Lenovo is a low-margin company, so it could take this division and actually increase its margins. In short, IBM is trying to eat its cake and have it, too.

In addition, the ongoing drama between the U.S. and China on data security makes it nearly impossible for US companies to sell in China and vice versa. IBM and Lenovo clearly execute better than most companies, but this issue still hampers them both.

The deal surrounding the acquisition provides an answer: Lenovo can take the lead selling IBM products in China, while IBM can take the lead selling products in the parts of the U.S. where this conflict poses problems (such as the U.S. government). Neither company has ever been identified as working against its customers, and both firms' ability to assure a willing outcome should be a common competitive advantage.

That said, IBM does have another clear advantage: Watson. IBM is the only company working on artificial intelligence at enterprise scale, and Watson represents the next big step in real-time applied analytics-based decision support.

Integrated into IBM offerings, this system should significantly improve the decision accuracy of IBM executives and IBM customers as well. Watson stands out in IBM's line as a massive competitive advantage, as it turns the rest of IBM's data analytics solution into something that's nothing short of industry changing.

One IBM customer, a huge healthcare company, said its goal was an enterprise-scale solution using cloud methods and technologies. Buyers at this size need the compliance of an enterprise company and want the cost advantages of the cloud.

Everything old Is new again

That's what IBM presented this week - and it demonstrated that IBM's transition to a very different company continues. Once complete, IBM will have offerings such as Watson and partnerships with firms such as Lenovo that are unique, powerful and unmatched in the rapidly changing technology world.

IBM Edge 2014 provided a unique view into the future of at-scale cloud computing infrastructure and the near-term future of IBM as a company that plans to be the very best at providing what you need when you need it.

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group.

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Tags applicationsIBMIBM Edge2014data miningsoftwareTechnology TopicsIBM cloudOracleIBM and LenovoIBM WatsonTechnology Topics | Big Data

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