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Preston Gralla

Seeing Through Windows

Ballmer: IBM should ignore profits, get back into the hardware business

23 comments

Steve Ballmer hasn't exactly shined as Microsoft CEO, but he's confident enough in his business acumen to offer this stunningly bad piece of advice to IBM: It's time to get back into the hardware business. This, despite the fact that focusing on high-profit businesses like services and consulting has turned IBM back into a money-making powerhouse.

Ballmer told The New York Times that IBM made a mistake when it quit the PC, hard disk, and networking equipment businesses, because companies need to diversify if they want to profit over the long term. Here's what he told the Times:

"I.B.M. is the company that is notable for going the other direction. I.B.M.'s footprint is more narrow today than it was when I started. I am not sure that has been to the long-term benefit of their shareholders.

IBM shareholders may be surprised to hear that. The Times accurately points out that since 1999, when IBM sold off its networking business, and began selling off its other hardware businesses, its shareholders have much to be happy for, in contrast to Microsoft's shareholders. Here's what the Times says:

I.B.M.'s strategy has worked out O.K. for its investors over the last decade. Shares of I.B.M. are up about 30 percent since 1999, while shares of Microsoft have dropped about 30 percent over the same time span.

As the Times points out, Ballmer's criticism reflects the state of low-level warfare between IBM and Microsoft. IBM is a big Linux backer, for example, and competes against Microsoft on several fronts, including in cloud computing, email, and collaboration.

So it just may be that IBM getting back into the hardware business was a bit of wishful thinking on Ballmer's part, because if it did, it would distract itself from its battles with Microsoft.

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IBM hardware

Submitted by Aseries on October 4, 2009 - 9:24 P.M.

IBM has developed most of the basic technology that has driven IT for the last 50 years. Microsoft would not have even started without IBM. IBM made a lot of mistakes in the past but they have adapted. Let's see if Microsoft can adapt.

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Ballmer

Submitted by Anon4590 on October 2, 2009 - 3:33 P.M.

Somehow, I think Ballmer needs to step down and let a young and nimble CEO take over Microsoft. One who can shed the old MS products and start something from scratch and have the company re-invent itself all over again. I really think it's the shareholders who are now running the company, and not Steve Ballmer himself. MS has a lot of talented people, but I don't believe one bit that the tone of the organization is encouraging innovation.

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Race To The Bottom

Submitted by philipb on October 2, 2009 - 12:23 P.M.

I think the recent performance of Dell (and their race to acquire services, missing EDS but getting Perot) would argue against Ballmer's statements.

Windows based hardware is currently a race to the bottom. How long can you survive selling netbooks at Wal-Mart for $299?

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Business advice from Ballmer

Submitted by Trapper John on October 2, 2009 - 7:52 A.M.

That's like hair-growing advice from Ballmer (or me, for that matter ;-)

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Since we're discussing writing...

Submitted by Anonymous on October 1, 2009 - 11:22 P.M.

The past-tense of the verb "to shine" is "shone."

I'm sure Mr Gralla knows this but was too distraught over the continuing evaporation of IE market-share to worry about tidying up his prose.

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"Shined" is also correct.

Submitted by Anonymous on November 3, 2009 - 3:46 A.M.

"Shined" is also correct.

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Past tense of shine

Submitted by Anonymous on October 2, 2009 - 9:06 A.M.

Perhaps English isn't his first language?

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Good advice (not)!

Submitted by Anonymous on October 1, 2009 - 4:55 P.M.

That's the kind of thinking that killed DEC, Data General, and Sun! Hardware is a commodified business with HQ in Taiwan! The value today is in the OS and the most hackable OS on the planet is Windows and someone should and will take it out!

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This comment from a guy who missed the Search Engine

Submitted by SteveBalmerIsAnIdoit on October 1, 2009 - 1:51 P.M.

Steve Balmer is an idoit

His comments coming from Microsoft who has missed every major new improvement in computing under his watch?

Oh, Email, Internet, Search, Video, Texting, what's next and he has advice for some other company.

Yeah You Go Steve

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IBM versus I.B.M.

Submitted by Joyce Carpenter on October 1, 2009 - 12:21 P.M.

Computerworld's style is IBM. Preston had that at the beginning of
his post, but then picked up the bad habits of The New York Times later on. I saw it in the quotes, where we would leave it, but missed it in the main text. I have now fixed up the portion of the post that should conform to Computerworld's style, but left the instances in the direct quotes as that seems to be the preferred style at the Times.

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