On April 18, IBM announced quarterly results – and for the first time in eight years missed analyst expectations.
Top-line numbers are declining across the board: quarterly revenue was down 5% year-over-year (3% in constant currency), hardware revenue down 17% (16% in constant currency), and services revenue down 4% (1% in constant currency).
Some new businesses showed respectable revenue growth: for example, cloud revenue up 70% YoY, but these were too small to offset the decline from the larger legacy businesses.
A frequently heard conclusion in the market: this must show a weakness in the overall IT industry:
“If Big Blue can’t hit its numbers, the thinking goes, it’s probably bad news for much of the IT industry.” (Arik Hesseldahl)
But how does this fit with news from a vibrant startup scene, or with the still impressive growth rates posted by Apple or salesforce.com?
Clearly, not all of the IT industry is struggling with stagnant or even declining revenue.
I believe IBM is an example of an IT company that focused exclusively on where the money was in the past, serving primarily big enterprises with big IT budgets. I can’t think of any offerings in IBM’s portfolio that would appeal to smaller businesses or even consumers – especially, no client or mobile devices.
To me, IBM’s results underscore that the “consumerization of IT” is real: these days, the buying decisions of consumers and small businesses are driving innovation and growth in the IT market – and not the big enterprise departments any more.
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