IBM (International Business Machines Corp.) investors have expressed concerns about the direction of the company after 11 consecutive quarters of decreasing revenues. For IBM (NYSE: IBM) it may be its developing relationship with Apple (NASDAQ: APPL) that aids in recovery. However, investors may be able to take comfort in knowing that the technology this computer industry giant produced in the early 1990’s, as is discussed by the nuns in the classic IBM commercial provided below, is still being used today in Microsoft’s newest operating system Windows 10.
There have been reports that IBM’s investors are growing anxious after investor activists Jeffrey Ubben’s ValueAct and Bill Acksman’s Pershing Square have turned down requests to bolster the company’s business. The company earns two-thirds of its revenue from outside the United States, is worth $157 billion, and yet has shown signs of struggle in its efforts to transition itself from a “low-margin hardware maker into a cloud-based software and services company.” IBM has commented on the issue explaining they are continuing to implement the strategy they feel is most effective which includes investments in growth sectors like analytics and the cloud as they take measures to reinvent themselves as to increase returns to shareholders. They have also reiterated that they “are managing the company for the long term.”
IBM does have a tradition of staying power. This can be seen in the inclusion of their OS/2 Warp technology in Microsoft’s most recent version of Windows. This operating system technology was released in 1994 and while it was not as popular as IBM nor Microsoft would have hoped, it was adopted by specialized industries and was used in New York City’s subway station card reading machines, Safeway check out systems, and some ATMs. Unfortunately, investors will not see any of the revenue generated from the application of their technology. While OS/2 Warp signaled a new project for IBM and Microsoft’s partnership that dated back to 1980, the two companies parted ways in 1990 with the license for the operating system remaining with Microsoft.
IBM investors do have some wisps of hope on the horizon that include eight new applications being developed in their new partnership with Apple. All of the apps are designed for the iPhone and iPad and all of them are for uses of industry rather than personal use. Four of the apps have been developed for nurses. They will aid in allowing nurses not to have to carry multiple pagers, they will help to delegate and prioritize tasks, they will provide images of patients and their healthcare information, and will also give the actual location of the patient whether they are in the hospital or at the home. It will do this using Apple mapping technology.
Of the other four apps, one is for coordinating shifts with fellow workers in an industry. One is aimed at flight attendant functions like upgrading seats, in-flight services, and monitoring duty-free products. Another optimizes the monitoring of sales for merchants and helps in tracking projections enabling better informed business decisions. The last one has been developed for the insurance industry and analyzes risks associated with insurance claims and crime in any particular geographical location.
IBM investors have reason to be concerned with the future of their company after three years of falling revenue. Yet, it has demonstrated that they can develop technology that will endure decades of innovation and that it can work with those who in the past have criticized the tech behemoth as being complacent. IBM and Apple’s new partnership will provide both companies the opportunity for further growth.
By Joel Wickwire
Photo by Patrick – Flickr License
Photo by Marco Paköeningrat – Flickr License