GINNI GIVES A NEW MEANING TO “IBM UMBRELLA”
The term “IBM umbrella” used to mean a safe haven, protection from the elements. No longer.
Even a supposed Wall Street sage, Warren Buffett, has now been buffeted by the market winds that shredded and turned Ginni’s IBM umbrella inside-out. Thanks to IBM, Buffett dropped a cool one billion in market value in just one day (see Down $1 Billion on IBM, Forbes, Oct 20).
“Wall Street loves a loser” I noted in this July 2013 image about HP.
Ditto re. IBM…
Wall Street loves a loser until the bubble bursts. For IBM, that was today – Oct 21, 2014 – IBM’s “Black Tuesday.”
Yet this writer first warned about IBM’s coming demise two-and-a-half years ago (see IBM: Death by a Thousand Cuts, Apr 2014 and Big Blue Feet of Clay, Apr 2012). Few on Wall Street listened to it. But an unlikely sage – a federal government agency in arrived at the same conclusion three months later.
The CIA Also Saw IBM’s Feet of Clay…
In the summer of 2012, five American technology companies bid on a project for a demanding new client: the CIA. The spy agency was collecting so much information, its computers couldn’t keep up. To deal with the onslaught of data, the CIA wanted to build its own private cloud computing system.
IBM ended up as one of the two finalists. IBM’s cloud business is its pride and joy. The other was Amazon. Amazon beat IBM for a $600 million contract. And it hadn’t done on price. IBM learned that its bid was more than a third cheaper than Amazon’s after officially protested the CIA decision.
Which resulted only in greater embarrassment when a federal judge upheld the CIA decision. Here’s what Business Week wrote about it on May 22:
No single deal encapsulates a 103-year-old company with a market capitalization of $185 billion. But the CIA butt kicking is a microcosm of larger problems IBM is having as it struggles to adapt to the cloud era, in which clients large and small rent technology cheaply over the Internet instead of buying costly fixed arrays.
I chuckled when I read this story. Back in 1983, when I first blew the whistle on IBM’s first mortgaging of its purchase, I used the acronym CIA to describe my work. CIA – Computer Industry Analyst. 🙂
And this is a reproduction of an image I published along with that June 1983 report…
The more things change, the more they stay the same (Jean-Baptiste Alphonse Karr, French journalist and novelist, 1808-1890)
NOTE ABOUT AUTHOR:
Bob Altzar Djurdjevic, author of this article, retired from business on June 30, 2014 after 36 years as president of Annex Research, a consulting firm he founded 36 years earlier. He continues to write on a variety of subjects, both earthly and spiritual. He uses the Truth in Media, a non-profit organization he founded 25 years ago, as the venue for his geopolitical and business commentaries.
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