I think I'm missing something. These sounds like generic industry apps, but Fortune 500 companies don't use generic apps, they use stuff tailored to their business. It says they are customizable, but that's a lot easier said than done.
Tailored is exactly what IBM wants. They are basically a consulting and services company nowadays, having let go most of their hardware divisions after analyzing their business and deciding they weren't profitable. They will be exceedingly happy to sell you consultants time to tailor the apps for you, in fact, if the app didn't require tailoring, they probably wouldn't want it in their line up.
I'm an IBM consultant. A large portion of our revenue comes from services. I'd say it would be correct to classify IBM as a Consulting and Services company now. More so than software and hardware. We still do a lot of software but the bread and butter is consulting. We're basically exiting low margin hardware businesses. Also the original comment is correct that most enterprises don't want out of box solutions. They almost always want something customized.
I still don't know very much about the IBM and Apple deal. It almost seems like Apple is trying to leverage the IBM brand to get into enterprise business but we'll have to see how it plays out.
I'm amazed by that decision (to leave the hardware & software biz). Look at Apple -- that's pretty much all they do, and they have a $650B market cap, 4x that of IBM.
I suspect Apple and IBM's software and hardware businesses have different margins. Another comment said that IBM still does some software work, but has basically exited 'low margin hardware' business.
Whereas Apple's software is nearly all free (and used to supplement hardware sales) while their hardware is extremely expensive for consumers and has huge margins.
It's not simply that Apple is in the hardware biz, it's that Apple has a strategy for the hardware biz that enables 40% margins. They're an outlier. None of their hardware competitors have that.
If someone could show IBM a strategy for their hardware that had those kind of margins, I bet they would stay in hardware.
I see you decided to pull something out of your ass then do a simple search.
26 Billion of their 2013 revenue came from Software division
14 Billion came from the Systems and Technology division
2 Billion came from the Global Financing division
I use to freelance for a large investment bank. They had one large open source initiative, that had two offerings: one that was completely open source, and less powerful and the second enterprise class and highly customised for there needs.
When i left they started a new project, making iOs apps, that would make use of employees phones, rather than dish out expensive (basically hired the phones) blackberries. Again this was customised, security and restrictions and what not.
It sounds like these are essentially mobile app interfaces to existing IBM Solutions? I wonder if they generate the local interfaces dynamically to allow for that customization, or if each app is individually written for each customer.
I guess that IBM are planning to use this as a framework to build custom apps on. And the publicity from this announcement is supposed to help them get more companies asking them for apps.
IBM is playing to two of it's strengths here -- decades of enterprise sales relationships and development manpower, largely based in India. In effect, they're becoming a sales and System Integration channel for Apple. In return they get to give their customers mobile apps that put lipstick on the pigs (Mainframe software, WebSphere/J2EE apps).
What I find amusing is how IBM is spinning this into a "Data and Analytics" play. Granted, it is a bit of marketing BS. But I also suspect that they are trying to please the stock market analysts. It would probably be a highlight in their next earnings call.
IBM has positioned itself as the consulting company that understands the need to be truly global, even running ads on television emphasizing that recently.
What they're pitching for data storage and consulting is just as beneficial for development. Thus, if they're saying one thing and then doing all their dev work in India, that sucks.
Do you know if they QA every device or just spot checks for quality of batches? I'd also guess this is only for US-sold devices as it'd be a bit prohibitive to ship them all from China to the US for QA and then ship them to Europe for sale. Is that the case?
I work in manufacturing test, so I can speak to this.
There's a difference between design/development test and manufacturing test. Thermal, drop, vibration, interference, etc. tests are design tests: they verify that units built according to spec are sufficiently reliable. None of the devices you buy have undergone these tests, because the tests are destructive. You wouldn't want to buy an iPhone that had been baked in an oven, or dropped on a concrete floor. It's best to perform these tests near where development happens, to enable fast iteration and easily involve the hardware engineers.
Manufacturing tests verify that individual units have been built according to spec. For example, that there's no electrical shorts, missing connections, cosmetic defects, etc. All of the devices you buy have undergone a large battery of manufacturing tests, which exercised all of the hardware features of the device. These tests are performed at the factory, because it's better to catch these failures early in the assembly process. For example, if a camera module is busted, you want to know before it's installed into an iPhone.
Of course Apple isn't unique in this way. This is just how manufacturing is done.
Thanks for the detailed response. I wasn't as aware of all that as I should be. I'd wager it varies based on the level of the brand, though. So, you could expect this with something like Apple or Samsung or HTC, but lesser brands may not even test their wares before shipping them. My recent purchases of a Monoprice keyboard and network adapter, for instance, both of which were DOA with obvious manufacturing defects.
IBM hasn't reported country-by-country employment data in several years, but it's widely assumed that India has the plurality of their workforce (about 1/3), with the U.S. having their second-biggest headcount. One big part of their business these days is large-scale IT consulting, and while they position themselves as a significantly "premium" provider compared to e.g. Accenture, they probably feel more constrained in just how much of a premium they can charge than they used to, so have been trying to get their cost structure to be not too far from that of their big IT-consulting-shop competitors.
IBM India is a clusterfuck, according to several IBMers I know. Sure, there might be pockets of good devs, but as a whole it's less than zero. I don't blame India, this is most likely a problem caused higher up looking to cut costs above having good teams. Talented guys in India are not that cheap.
Is there any large software company in the industry that has a sizeable development center in India that isn't a clusterfuck?
I've got a sample size of three and all were gong shows.
I blame the outsourcing mindset -- low cost, high volume of people. No focus on quality and accountability. Because the individual engineers I've worked with have on average been excellent. Most of the time though you just get a pool of "resources" rather than actual named people with clear responsibilities.
"largely based in India" == I'm not surprised. Texas Instruments has so many engineers in India that it's joked as "Texas India" these days.
Except for the social-web-developers in SV(facebook,twitter and all that, though Tecent in China is already larger than Facebook in that front too, not to mention Alibaba, Baidu etc), we don't really realize how much of those big companies' products are R&D-ed and manufactured overseas these days from silicon design all the way up. When we wake up, it might be too late already. Sometimes I think the end result will be probably a war, as that's really what US leaves with these days. I hope I'm 100% wrong.
Fuel costs are temporarily down because Europe's economy is so weak, but I wouldn't count on fuel staying this low. Also Chinese labor is not such a bargain as wages rise.
The next generation of big enterprise application platforms needs to target mobile and IBM is trying to get ahead of the curve. The more interesting part is that Apple is now playing along. In the Steve Jobs' days, they never would have paid much attention to the enterprise.
The whole announcement is just words. These are just words to keep stockholders apprised of the situation. This release suggests they have some business clients, and it gives some businesses who would like to bring in Apple more leverage to campaign to higher ups who are scared to death of putting a toe outside the warm blanket of Microsoft, IBM, Oracle, et al.
If you're not big enough to have a press release full of buzzwords that no one cares about, you're not big enough to talk to the Pentagon. Seems backward, but that's the logic inside the Pentagon.
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[ 4.6 ms ] story [ 96.1 ms ] threadI still don't know very much about the IBM and Apple deal. It almost seems like Apple is trying to leverage the IBM brand to get into enterprise business but we'll have to see how it plays out.
Whereas Apple's software is nearly all free (and used to supplement hardware sales) while their hardware is extremely expensive for consumers and has huge margins.
If someone could show IBM a strategy for their hardware that had those kind of margins, I bet they would stay in hardware.
Then instead of focussing on a real product line they build 20 of them and are trying to see what will stick when they throw them against the wall.
Which really means what can they use as bait to get big consulting contracts since no-one will ever use these off the shelf.
When i left they started a new project, making iOs apps, that would make use of employees phones, rather than dish out expensive (basically hired the phones) blackberries. Again this was customised, security and restrictions and what not.
http://www.faa.gov/other_visit/aviation_industry/airline_ope...
I guess that IBM are planning to use this as a framework to build custom apps on. And the publicity from this announcement is supposed to help them get more companies asking them for apps.
What I find amusing is how IBM is spinning this into a "Data and Analytics" play. Granted, it is a bit of marketing BS. But I also suspect that they are trying to please the stock market analysts. It would probably be a highlight in their next earnings call.
What they're pitching for data storage and consulting is just as beneficial for development. Thus, if they're saying one thing and then doing all their dev work in India, that sucks.
All done by Apple in the US.
There's a difference between design/development test and manufacturing test. Thermal, drop, vibration, interference, etc. tests are design tests: they verify that units built according to spec are sufficiently reliable. None of the devices you buy have undergone these tests, because the tests are destructive. You wouldn't want to buy an iPhone that had been baked in an oven, or dropped on a concrete floor. It's best to perform these tests near where development happens, to enable fast iteration and easily involve the hardware engineers.
Manufacturing tests verify that individual units have been built according to spec. For example, that there's no electrical shorts, missing connections, cosmetic defects, etc. All of the devices you buy have undergone a large battery of manufacturing tests, which exercised all of the hardware features of the device. These tests are performed at the factory, because it's better to catch these failures early in the assembly process. For example, if a camera module is busted, you want to know before it's installed into an iPhone.
Of course Apple isn't unique in this way. This is just how manufacturing is done.
I've got a sample size of three and all were gong shows.
I blame the outsourcing mindset -- low cost, high volume of people. No focus on quality and accountability. Because the individual engineers I've worked with have on average been excellent. Most of the time though you just get a pool of "resources" rather than actual named people with clear responsibilities.
Except for the social-web-developers in SV(facebook,twitter and all that, though Tecent in China is already larger than Facebook in that front too, not to mention Alibaba, Baidu etc), we don't really realize how much of those big companies' products are R&D-ed and manufactured overseas these days from silicon design all the way up. When we wake up, it might be too late already. Sometimes I think the end result will be probably a war, as that's really what US leaves with these days. I hope I'm 100% wrong.
You are. Manufacturing is moving back to the US quickly as labor in China gets more expensive and fuel costs increase.
If you're not big enough to have a press release full of buzzwords that no one cares about, you're not big enough to talk to the Pentagon. Seems backward, but that's the logic inside the Pentagon.