Thursday, July 17, 2014

IBM ... a cunning fox?

In the battle between companies, ecosystems are force multipliers. Correctly used, they can increase rates of innovation, customer focus and efficiency simultaneously. The trick to doing this is a focus on consumption data.

Now, IBM has initially played a poor game in cloud and the battle for IaaS was lost. My eyebrows were raised however when it announced bluemix. This was a good move which enables them to to build a platform (ideally over several infrastructure providers) or even a market of platform providers and later on play substitution games in the IaaS space. However, this move could just be luck.

Next up is the deal with Apple. At first glance, this would seem to be in the long term favour of Apple as the applications provided in the store would feed consumption data into Apple. Admittedly Apple is not the best ecosystem player out there but the advantage would be to Cook. In order to swing the game in IBM's favour then you'd have to ensure that IBM collected the consumption data and Apple only had a generalised view. I will admit that when I first read an article on the deal, I discounted the possibility of IBM doing this and thought that IBM should push for a merge. I didn't think IBM was canny enough to play the game.
To create such a swing in IBM's favour then you would need to have all the applications provided on a bluemix service provided by IBM. Turns out I was wrong to discount IBM. This seems to be the plan. This is smart. Very smart. The advantage long term seems to be with IBM and not Apple.

As the old adage goes "Lightning doesn't strike the same place twice". Well, actually it does. However, you don't usually make good moves like this through luck. I don't know what has changed in IBM or who they've hired but somehow they seem to be making the right moves. The question is whether in the heart of IBM is a extremely dangerous and cunning strategist? Has IBM found its own Themistocles? Or not?

I'm certainly not going to underestimate their moves again. IBM is one to watch and with such play, then anything is possible. The future for IBM has just got a bit brighter in my opinion.

--- Update 17th July

I was just asked a rather interesting question of the form that this is only two events and since any two points make a line then you can't extrapolate. Alas, this isn't a measurement of physical properties and correlation between but a question of probabilities. If someone wins the lottery one week and then wins the lottery the next week, the probability of such is extremely low and it is perfectly reasonable to ask questions. You don't need them to win the lottery fifteen weeks in a row in order to draw a line. The probability of making a good move by random is relatively low in business due to the wide variety of permutations of choice and action. Two good moves are unlikely to be purely by chance, not impossible just unlikely. However, I do accept the point hence it's just one to watch.

--- Update 31 January 2015

Well, so far it's not looking good. Continued declines in earnings.