JPMorgan Tech Conference: IBM Wants to Keep Its Noncompetitive Edge
SAN FRANCISCO -- Big Blue is happy to remain the man in the middle.
Don't bet on it.
"We're certainly not going into the classical applications area," Mills said. "When you do that, you end up competing with everyone in the space, and then they don't want to partner with you. We get more revenue around SAP than SAP gets itself."Mills was referring to the fact that many software vendors, like SAP, PeopleSoft and Microsoft, build programs such as customer relationship management or supply-chain management software that works in conjunction with IBM's DB2 database or its WebSphere applications server. Of course, the more software vendors who write programs that work with IBM, the easier it is for IBM to sell its own products. Mills didn't say how much revenue IBM makes from services and "middleware" software set up to work in tandem with software from SAP -- or PeopleSoft or Microsoft, for that matter. But try this on for size. Of the roughly $32.4 billion in gross profit, not revenue, that IBM racked up in year 2000, more than $10 billion came from the company's software group. For the sticklers out there, IBM's 2000 revenue came in at $88.4 billion. The IBM vice president contrasted his firm's strategy with that of Oracle (ORCL - Get Report), which has been on an ambitious crusade to become the software company that's all things to all companies' computers. Stemming from its core database business, Oracle has pushed into building software that directly competes with the above-mentioned software firms. It has also forged ahead in the applications server area -- software that helps connect the front end of a Web site to the database that sits behind it -- to compete not only with IBM, but also with aggressive younger buck BEA Systems (BEAS). Touting the 59 strategic partnerships IBM has with independent software companies, Mills said, "We have Oracle to thank
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