NEWS: IBM results 2006

I had a look at the IBM results published here. Some quite interesting information about Big Blue.

Financial results 2006 (compared to 2005)

  • Total revenues: $91.4 bn (+0.3%)
  • Net income: $9.5 bn (+17.8%)
  • Revenues and gross margin per activities:
  • Services: $48.2 bn (52.7% of the revenues), gross margin 27.5%
  • Hardware: $22.5 bn (24.6% of the revenues), gross margin 37.0%
  • Software: $18.2 bn (19.9% of the revenues), gross margin 85.2%
  • Financial Services: $2.4 bn (2.6% of the revenues), gross margin 54.7%
  • Others: $0.1 bn (0.1% of the revenues), gross margin -13.2%

  • Available cash (end of 2006): $10.7 bn
  • 17 companies were bought by IBM during 2006, thereof 9 from the Software sector (eg: FileNet, MRO Software, Internet Security Systems, Webify Solutions, etc.)
  • Some comments

    • Stagnation of the revenues, compared to 2005 (+0.3%), but very clear improvement on the profit side (+17.8%)
    • Hewlett-Packard is now “bigger” (revenues) than IBM ($91.7bn for HP vs. 91.4bn for IBM)
    • IBM is now the second biggest Software company after Microsoft
    • IBM is now clearly a Services company, with 52.7% of the revenues generated in this area. It is also important to note that the Services sector has the lowest gross margin, which is quite strange. IBM decided to push this part of the company because of the expected profit situation there…
    • Based on the gross margin situation in 2006, IBM should intensify its acquisition strategy of Software companies in 2007. Cash is definitely here (more than $10bn)
    • IBM has further on a quite complicated positioning on the Software market, with, in about all segments where the company is present, its own commercial products, plus some Open Source solutions
    • IBM is still very active in the Open Source landscape (Linux, eclipse foundation). Some people are talking about investments above $1bn…

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    PICTURES: Saturn’s moons

    via CICLOPS and CICLOPS

    Again, absolutely marvelous pictures of two moons of Saturn: Pan and Dione.

    Pan is seen in this color view as it sweeps through the Encke Gap with its attendant ringlets. As the lemon-shaped little moon orbits Saturn, it always keeps its long axis pointed along a line toward the planet. From this vantage point, the dark side of the moon is visible.

    This view looks toward Pan (26 kilometers, 16 miles across) within the Encke Gap (325 kilometers, 200 miles wide), on the unlit side of the rings, and from an inclination of about 33 degrees above the ringplane.

    Images taken using red, green and blue spectral filters were combined to create this natural color view. The image was taken with the Cassini spacecraft narrow-angle camera on Dec. 16, 2006 at a distance of approximately 779,000 kilometers (484,000 miles) from Pan and at a Sun-Pan-spacecraft, or phase, angle of 83 degrees. Image scale is 5 kilometers (3 miles) per pixel.

    pan

    Canyons and mountain peaks snake along the terminator on the crater-covered, icy moon Dione. With the Sun at a low angle on their local horizon, the line of mountain ridges above center casts shadows toward the east.

    Sunlit terrain seen here is on the anti-Saturn hemisphere of Dione (1,126 kilometers, 700 miles across)–the side that always faces away from Saturn. North is up.

    The image was taken in visible light with the Cassini spacecraft narrow-angle camera on Dec. 15, 2006 at a distance of approximately 299,000 kilometers (186,000 miles) from Dione and at a Sun-Dione-spacecraft, or phase, angle of 81 degrees. Image scale is 2 kilometers (1 mile) per pixel.

    dione

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    OPEN SOURCE: Business model based on Support

    via Billy Marshall

    Some interesting inputs from a former sales rep of RedHat concerning the value proposition approach of RedHat. And some structural figures about RH. The comparison between Oracle and RH is, to my mind, not really bringing so much in this discussion (as Billy is doing that) because both companies have different cost structure and business models. On the other side, which is very valuable in this post is the focus on the quality of the software as a key success factor, Open Source or not. Here I totally agree with Billy Marshall. As a Software company, you have to have a better product (or a product that doesn’t exist yet) with high quality of engineering, this should be in the center, not the model.

    About the support model

    Open source is not a business model, it is a development model. The software business, open source or not, is about providing customers with a product that is better than the competing product. […]

    A great software business is a great software business, independent of open source. Furthermore, customers will pay a premium for great software, if they cannot get the same great software cheaper from somewhere else. Therefore, if you have a great software business based upon high performing software that is only available from you, there is little reason to open source your product. […]

    Support is a bad business model for software because it misaligns the customer and the vendor. Customers don’t want to pay for support or services, they want software that works WITHOUT support. Vendors that generate revenue from support only scale their business if the software is buggy and difficult to configure – driving support calls/incidents/whatever in order to scale revenue. […]

    The biggest problem I had while running sales for Red Hat was overcoming the customer objection that Red Hat’s software should be very cheap, or that Red Hat’s value should be based upon how much “support” the customer consumed (incidents, callers, whatever). […]

    Customers stopped talking about “support” and “free software” because we convinced them that engineering is what really matters . . . . and they could only have the product if they paid for it. […]

    About the RedHat figures

    Spending structure as a percent of revenue:

    • Support and Service: 18%
    • Research & Development: 15%
    • Sales: 47% (wow)

    OPEN SOURCE: Some Novell Linux revenue numbers

    via Business Review Online

    Article from December 2006, but still some interesting information.

    Novell’s Linux revenue performance:

    • Q105 $8.5m
    • Q205 $8.6m
    • Q305 $8.9m
    • Q405 $9.3m
    • Q106 $10.4m
    • Q206 $10.3m
    • Q306 $11.6m
    • Q406 $13.0m

    […] With Linux revenue only accounting for 5.3% of Novell’s total revenue in the fourth quarter (4.7% for the fiscal year) it is not fast enough growth to offset the demise of Novell’s NetWare business.

    That business shrunk $19.4m year-over-year in the fourth quarter, while Novell’s combined Linux and Open Enterprise Server revenues were up just $4.3m year-over-year.

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    PRIVATE: My interview at leweb3

    I had the chance to meet, among others, two great Swiss colleagues at leweb3:

    They were kind enough to interview me, great exchange, super video and sound quality (Thierry, you are a pro podcaster ;-). Have a look, it is in French (yes, I know, would have been better in English). The interview is explaining what we are doing in ecenter solutions, how we have managed to spin-off, the state of innovation and entrepreneurship in Switzerland, blogging, etc.

    So, 16 minutes of good Q&A; with Thierry, a mp4 file of about 100MB.

    And a very kind introduction post by Thierry.

    interview leweb3

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    BUSINESS: Boomerang – Red means go

    Trends change. Boomerang does too.

    If you are following my blog for a while, you know that I have the honor to be a member of the Board of Directors of Boomerang since 2000 (for example, here and here). It is really very inspiring for me to be in this Board. And a real chance, the other members are definitely A-level professionals, and great persons.

    Boomerang has changed its logo and its website, and has re-communicated its vision and strategy. I really love the way it is communicating, but it is clear, I am not very objective ;-). Anyway, have a look, the red color is used, which is quite unusual as you perhaps know. People are saying that “blue” companies are more successful than “red” ones, excepted for one (huge) exception – coca-cola.

    What is doing Boomerang

    Our niche expertise comes from our in-depth knowledge of the pharmaceurical industry, combined with the best of online marketing techniques.

    Our vision is to educate and drive behavioral change that will lead to a measurable outcome by developing web realtionships sending the right message to the right person at the right moment at a reasonable cost.

    The 3 Boomerang’s services:

    • Clinical trial e-recruitment
    • Pharma e-marketing
    • Communications

    The new logo

    boomerang

    The new website

    boomerang

    The necessary Elvis touch :-)

    boomerang

    BUSINESS: Strategy vs. Tactics

    via Seth Godin

    An *excellent* post from Seth. He is explaining the differences between strategy and tactics and how a good strategy can simplify our life. Or the contrary, if you haven’t defined the right strategy…

    […] The right strategy makes any tactic work better. The right strategy puts less pressure on executing your tactics perfectly.

    Here’s the obligatory January skiing analogy: Carving your turns better is a tactic. Choosing the right ski area in the first place is a strategy. Everyone skis better in Utah, it turns out.

    If you are tired of hammering your head against the wall, if it feels like you never are good enough, or that you’re working way too hard, it doesn’t mean you’re a loser. It means you’ve got the wrong strategy.

    It takes real guts to abandon a strategy, especially if you’ve gotten super good at the tactics. That’s precisely the reason that switching strategies is often such a good idea. Because your competition is afraid to.