How I Was Wrong About The Fearsome Engine That is IBM, Or, Thoughts on Lotus, Software and Elephants

It has long been my contention that IBM wasn’t taking enough risks when it came to creating new markets. Everything always had to be all about the The Companies Who Run The World, the Fortune-We-Don’t-Use-37Signals-Hundred. IBM wasn’t going to invest in things without a guaranteed payoff- R&D becomes a purely customer-led and paid for phenomenon.

Clearly I was dead wrong. Check out the New York Times:

I.B.M. reported a solid 12 percent gain in net income for the fourth quarter, bucking the trend of steep declines for many technology companies amid the economic downturn and surprising Wall Street. The company is seen as a bellwether of global technology spending among corporations. Yet its strong performance in the fourth quarter, analysts say, mainly points to the success of its strategy in recent years of tilting toward higher-profit software and services and reducing its reliance on the computer hardware business, which suffers more in down economic cycles.

IBM has heft and fat and weird bumps all over it – its like an Elephant rather than an Intel thoroughbred.

Last week, the chip maker Intel reported that profit fell 90 percent in the fourth quarter.

When you’re hunting the Savanna for water in the dry season follow the Elephant every time. Specialisation is evidently not such as a good place in a down economy. IBM isn’t a bellwether, its far more than that. Big Blue is a major economy in its own right- and an unusually successful one.

IBM’s current financial performance almost seems freakish. We’ll see if it can sustain its good run through this depression- but I do know IBM, like Cisco, is viewing the current situation as an opportunity. If IBM didn’t get the respect it feels it deserves on the way up, its going to make damn sure it gets it on the way down. We can expect more acquisitions, lots of hardcore plays against competitors and so on.

But don’t discount the company’s organic portfolio either. Lotus is the latest IBM software brand to get an extreme makeover. This is a long time project, almost Quixotic in nature. That is – Lotus is the brand everyone loves to hate. People that used Notes in 1995 are still bitching about the experience But IBM’s collaboration tooling is reaching a very interesting place right now:

Here’s the deal: whenever a vendor does something that I think is, all around, a good idea, I start to get suspicious of myself. It’s that demo glow thing. Worse, when they start finally doing something they should have been doing so long ago, but haven’t, that you’ve given up believing that they would actually do it…you’re sort of all screwed up in your head in this analyst business.

That, dear readers, is my reaction at 20,000 feet (literally and figuratively) to this year’s Lotusphere. IBM actually released an application that ends in a .com. They’ve got SaaS, friends, and they’re not ashamed of it.

IBM’s new mashup server tools rock, frankly. If the company can get people over the brand hump (Ed- wait, is this an Elephant or a camel?) it will do well in the Enterprise 2.0 space, which some even argue will subvert the nature of the Firm. I wanted to be at Lotusphere this year because I knew all this cool stuff was coming. I had to follow it on twitter instead. As my man John Simonds says:

we are using twitter @lotusphere to follow all the traffic. More tweets than blogs this yr, a social shift

Lotus headbanger Ed Brill makes much the same point.

While I have tended to say things like Facebook for the Enterprise… is Facebook (cheers Den!) or wonder how to integrate enterprise directories with web social networks IBM keeps replicating the cool stuff with enterprisey bells and whistles. Bluehouse, now called LotusLive, is the latest example of same. Soon enough IBM customers will be playing with a rebranded BlueTwit, IBM’s currently internal Twitter clone.

Unlike web companies IBM does its “perpetual betas” behind the firewall- like I say heft makes a lot of difference, if it means a user population of 330k+.

So IBM is a follower, a second or third or fourth mover advantage kind of play, but it does have some increasingly hot software platforms. I like everything about Jazz.net for example, except for the sticker shock and the license model.  Can IBM grok the new world – that is no longer the question. The question now is can everyone else survive while we remake the world?

As I have said before IBM is quite serious about the Smarter Planet. When Barack Obama talks about creating 4m new jobs in 2 years he has IBM data to back him up. Never mind chasing the New New Thing this is about getting paid in the New New Deal.

I used to think Stephen my business partner was a little too cautious. Now I am just really happy we have zero debt and money in the bank. I am sure there are a lot of people at IBM feeling the same way right now.

My advice to large enterprise customers- check out the new Lotus tools, they might surprise you. And you know IBM isn’t going anywhere. IBM’s competitors meanwhile- check out the rear view mirror – the Elephant may be closer than you think.

disclosure: IBM is a major client.