Global CIO: Why Are Microsoft, Oracle, And HP Bashing IBM? - InformationWeek

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10/26/2009
05:42 PM
Bob Evans
Bob Evans
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Global CIO: Why Are Microsoft, Oracle, And HP Bashing IBM?

Mark Hurd, Larry Ellison, and Steve Ballmer have all recently taken some fairly empty shots at IBM. But if Big Blue is such a loser, why do those three CEOs keep talking about it?

Steve Ballmer said this: "I.B.M.'s footprint is more narrow today than it was when I started. I am not sure that has been to the long-term benefit of their shareholders."

Larry Ellison said this: "We've already beaten IBM in software, now, if everyone will let us, we will beat IBM in hardware."

And Mark Hurd said this: "I don't follow [IBM] that closely so I don't know what they're working on so maybe you can tell me. Sounds like they're trying to chase us."

Now, we've all got competitors, and I'm not suggesting we should go out and hold hands and spend our time telling the world how glorious they are. I'm all for vigorous, aggressive, and when necessary savage competition based on who can deliver the greatest benefit and value to customers.

(More details and analysis on subjects mentioned in this column can be found in the "Recommended Reading" list at the end of the column.)

But I've got to question the motivation of these three world-renowned CEOs for what seems to have been their contagious fit of IBM-bashing over the past few weeks. Let's start with Microsoft and CEO Steve Ballmer's assertion that innovation is on the wane at IBM, which he seemed to be saying was hurting itself and its shareholders by getting out of some commodity hardware businesses and jamming its feet into extra-narrow shoes.

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If it's true that IBM is stiffing its shareholders, as Ballmer contends, then why have those same shareholders driven IBM's price up in spite of the 18-month recession? How has IBM managed to outperform most stock indexes over that time if it has abandoned innovation? Why has it spent $9 billion in just one of its various areas of acquisitions—business analytics—over the past five years if in fact it has stopped innovating? If IBM's hardware business is overly narrow, then how has it managed to displace several hundred competitors' Unix systems in the past year?

What does Steve Ballmer know that IBM's stockholders don't know? Whatever that is that led him to make that claim, he should probably disclose it instead of playing footsy with the New York Times reporter to whom he said it. On the other hand, if it's just a comment Ballmer tossed out to try to create a little FUD around IBM while vaulting Microsoft into enterprise ascendancy, well, let's just say he might want to pick a different tactic next time.

Because after the Times piece, headlined "Ballmer Criticizes IBM's High-Profit Diet," and our own analysis of those comments called "Ballmer Blasts IBM For All The Wrong Reasons," many other news and commentary sites picked up the thread and none of those that I have read said anything close to "Hey, Ballmer's on to something here."

That same week, Oracle CEO Larry Ellison took some jabs at IBM during a lively interview he gave in front of several hundred tech-industry executives at the Churchill Club in the Bay Area. After expressing his deep admiration for the early days of IBM under Thomas J. Watson—a company Ellison said Oracle would like to emulate—he said that today's IBM is no match for its glorious past, and that Oracle has already thrashed it in software and will soon do so in hardware as well.

Ellison claimed that Oracle has beaten IBM in middleware and in databases—claims that IBM disputes vigorously—and a couple of weeks later went so far as to offer $10 million to any IT organization that could make IBM's database run even 50% as fast as Oracle's. If Ellison is right, then Oracle should be able to address all of IBM's counterclaims. And heck, if Ellison's willing to bet $10 million on Oracle's superiority, then why not arrange a public shootout? I say we give each company about six months to prepare, and we'll have the great race at Interop Las Vegas in April 2010, with my peerless colleague Art Wittmann as the judge. But I digress.

My larger point is that even Larry Ellison, for all he has accomplished, looks a bit silly when he says he will beat IBM in hardware even though Oracle has never made or sold any hardware! Oracle has sold software and services by the billions, but Oracle's lifetime hardware revenue wouldn't match the take from your 9-year-old's Saturday afternoon lemonade stand. So what does Ellison have to gain by saying he'll beat IBM in hardware? Here's what I think:

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