Services model vindicated claims IBM's Gerstner

IBM chairman Lou Gerstner reiterated last week that services, rather than demand for hardware or software, would become the...

IBM chairman Lou Gerstner reiterated last week that services, rather than demand for hardware or software, would become the driving force of the IT industry.

Gerstner's comments, in what may be his last annual analyst meeting before his retirement, were seen as a claim for vindication of the change in direction he imposed on Big Blue from the mid-1990s onwards.

Gerstner said that IBM's highly successful push into services, where it is now the market leader, had produced $20bn (£14.1bn) of IBM's total $32bn of revenue growth since 1994.

The chairman added that IBM's achievement, as one of the few companies to meet analysts' estimates in the first quarter, was a result of the company's strategy to place services at the core of its business plan; a move that he had instigated in order to arrest declining profits and sales growth.

"It was the genesis of the biggest business decision I've ever made in my career. We quietly established a clearly overwhelming leadership position in the services market that will be the largest and most important in our industry for years to come," he said.

Asked if he would be around for the next years analysts' meeting, Gerstner, who is expected to step down when his latest contract expires in March next year, kept his cards close to his chest, commenting: "We don't plan that far ahead here at IBM."

Meanwhile, IBM's Computer Users Association (CUA) has announced the launch of Common UK for users of IBM's I-series 400 platform.

The CUA, which has always held the franchise for Common, said that its membership would cover Common UK for users who have a special interest in midrange systems.

Stuart Finlayson

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