This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

[video] IBM Is Boxed In by Falling Hardware Sales

Stocks in this article: AMZNCRMGOOGIBMMSFT

But Rometty seems to be reacting to events rather than anticipating them. She rose to the top of the company through the inside, which in normal times makes sense for a company like IBM. But these are not normal times.

Anyone arguing for new leadership at IBM, however, needs to offer a new vision that makes more sense than what IBM is already doing, and what Rometty was pushing for before becoming CEO. Such visions are in short supply, as the Microsoft board knows all too well.

The savings that come from cloud computing go overwhelmingly to buyers of technology. They can now rent huge amounts of capacity at very low costs, in a highly competitive market that is forgoing profits for growth.

IBM has high hopes for its Watson computer. But as even IBM has written, it's really just a fancy front on a cloud running Apache Hadoop -- something you can build in a basement. 

IBM's best hope for growth is to become a dominant provider of Software as a Service (SaaS) using its own cloud. But the leader in that business, Salesforce.com (CRM), is not profitable and had its first $1 billion quarter just last fall.

Even Amazon was estimated to have cloud revenue for 2013 of $3.8 billion, though some analysts were even skeptical of that figure. 

IBM is not a player in devices, the other high-growth area of computing. In the near term, it's hard to see the gap between what IBM needs and what cloud delivers doing anything but growing.


At the time of publication, the author owned shares of GOOG. 

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

 

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs