System iNetwork

January 2009

January 28, 2009 10:23 AM

IBM Layoffs Continue, Numbers Unknown, Hundreds Hit Rochester?

Layoffs from major corporations across the country have been hammering the news lately, and IBM is no exception. Although many corporations have been relatively upfront about the number and scope of their layoffs--Home Depot, Caterpillar, Sprint Nextel, Texas Instruments, Microsoft, Pfizer, Best Buy, General Motors--IBM is keeping its numbers secret.

Sure, the company has admitted that it's taking some "resource actions" and has been laying off workers, but in any news story that includes IBM that I've been able to dig up, the company has clearly dodged questions on the numbers or locations of the layoffs.

To be fair, I traded voicemails with an IBM public relations spokesperson, but we have yet to connect. I'm sure he's busy fielding calls from much bigger publications. Either way, when I see him quoted by newspapers that have IBM divisions in their home towns, he's not saying anything substantial. I highly doubt that he would tell me anything interesting enough to share. And that's the way of it.

Little Cuts Don't Even Need Bandages

The problem is that IBM has a massive global workforce of about 400,000 employees. The latest number being bandied about is that IBM layoffs could reach 16,000 . . . which is about four percent of its staff. That's a small fraction, and if IBM is continuing to hire new employees, the total relative percentage of "lost" jobs shrinks even further. In that case, does IBM really owe more information to its shareholders? And if the numbers really are small, isn't IBM just doing a bit of responsible trimming? You know, like a butcher who slices off some extra fat before he weighs the steak and slaps a price tag on it?

Right. But that's not the point here, is it? The U.S. is in a recession, and IBM is a technology sector leader. However, IBM isn't acting like a leader. All the company has to do is say, "Hey, here's what we're doing. Here's where the cuts are. And we know this sucks for our loyal employees. But this is where we're at right now, and this is what we're doing to make sure IBM remains strong and healthy."

But silence?

That just dehumanizes IBM's workforce. I don't think any reasonably smart tech sector employee is oblivious to why companies lay people off. Yet IBM doesn't seem to understand what's going on in the world. Doesn't some really smart guy with a pretty tie at IBM--who's way more intelligent than I am--realize that he has the power to talk frankly?

And why wouldn't IBM want to control its media message to world? Why not give the talking heads on TV an opportunity to say, "Wow, look at all these other tech companies slashing while IBM is just trimming. What's IBM doing right?"

Might that not help change the whole tone of what's going on?

Little Consolation

For those who have already lost their jobs, many of your colleagues and industry peers are sincerely sorry--but they're also breathing tight sighs of relief that they still have jobs.

The Alliance@IBM employees union website is claiming that IBM has cut nearly 3,000 jobs so far and that more cuts are expected -- and likely in June.

Further Reading

NBC news affiliate KTTC is reporting that IBM has made "800" job cuts at its Rochester, Minnesota, facility, most of which are from the Systems and Technology group.

The local Rochester newspaper, the Post-Bulletin, reports on some of the regulations that IBM may or may not be following surrounding the Rochester job cuts.

Posted by cmaxcer on January 28, 2009 at 10:23 AM | Comments (6)

January 26, 2009 9:57 AM

DB2 Storage Engine for MySQL Coming Soon

I caught up with Eileen Burgess, IBM alliances manager for MySQL, to find out when the anticipated DB2 Storage Engine for MySQL will become readily available. MySQL is the popular open-source DB for open-source apps, and the DB2 Storage Engine will let applications write to MySQL but keep the data stored in DB2. The advantage? It lets IBM i organizations do backups and systems management through DB2, plus the data in DB2 can be more easily shared with RPG applications.

IBM and MySQL have been running a closed beta for months. IBM handpicked several of its customers and has been providing updates and bug fixes. So when might the masses get a chance to try it out?

"We'll put out a beta release on our website in the next couple of weeks--and that will be open to everybody," Burgess says. "Then, we'll have a GA release on or before the end of March."

The MySQL Community Edition, which is the freely downloadable open source database, has been available for i5/OS for more than a year. It has been downloaded about 7,700 times so far.

For those interested in MySQL, there's a SystemiNetwork.com "IBM 2009 Power of i Webcast Series" that includes "The Power of PHP and MySQL" webcast on February 18. Of course, the other events in the series will likely be useful, too. They are all free.

Posted by cmaxcer on January 26, 2009 at 9:57 AM | Comments (0)

EGL Jam 2009 Ends Tomorrow

IBM, through its EGL Cafe, which is one of the IBM Rational Cafes, has been soliciting ideas for enhancements that users would like to see. The effort, called EGL Jam 2009, has generated about four dozen suggestions for improvements so far. Plus, Cafe members can rate the enhancement ideas to help give IBM a sense of what's most important.

If you're interested in EGL and haven't yet posted your own ideas for improvement, your window of opportunity is closing--IBM will end the Jam tomorrow; however, you can rate the ideas until January 30.

Posted by cmaxcer on January 26, 2009 at 9:55 AM | Comments (0)

January 21, 2009 9:49 AM

IBM Comes Out on Top in Fourth Quarter--and the Year

Surprising Wall Street, IBM reported better-than-expected results for its fourth quarter of 2008 and the year. Hardware sales dropped in the fourth quarter, but services and software picked up the slack. In 2008, IBM's pre-tax profit was $16.7 billion, and over 90 percent of its segment profit came from software, services, and financing.

"You can see that 40 percent of our profit came from our software business, and 42 percent from services, while hardware contributed just 9 percent," Mark Loughridge, senior vice president and chief financial officer, said in IBM's webcast for investors yesterday.

"This really illustrates how our business has changed over time as a result of our significant portfolio actions and targeted investment strategies, as we shift to where we see the best long-term opportunity," he added.

Results in a Tough Environment

Despite the economy, IBM appeared bullish over its 2008 year and its 2009 forecasts. For 2008, revenue was $27 billion, down 6 percent (1 percent at constant currency). Still, IBM delivered $3.28 of earnings per share, up 17 percent year to year.

"Let me tell you how we've been able to achieve these results in a tough environment," Loughridge said.

"We had relatively stable revenue performance--by delivering what customers need in this environment. So for the customers that are trying to save cost and conserve capital, we can adapt our offerings to help them do that," he explained.

Basically, while customer companies are trying to trim costs and reduce their operating budgets, IBM has been able to sell services and solutions that quickly cost less. In the fourth quarter, IBM's Strategic Outsourcing signings were up 34 percent in the U.S. and up 66 percent in Europe. Plus, IBM is focusing on customers and business segments that produce higher profits.

"We signed 24 [Global Services] deals larger than $100 million, and that's the highest number we've seen in quite some time," Loughridge said.

Software Up, Hardware Down for the Quarter

For the quarter, software revenue of $6.4 billion was up 3 percent year to year, or 9 percent at constant currency. Loughridge said WebSphere, Information Management, Lotus, and Tivoli software sold well.

Systems & Technology revenue of $5.4 billion was down 20 percent year to year, or 16 percent at constant currency.

"Our system z and converged system p servers did well, but our x86 platform declined. In this tough macro-environment, customers are focused on reducing the cost of running their IT infrastructure," Loughridge said.

"Virtualization, which provides the ability to run multiple workloads on a server, is a key enabler of efficiency. System z is the ultimate platform for virtualization, able to support thousands of images and run fully utilized. Our POWER architecture supports hundreds of partitions, often driving utilization rates of over 60 percent. Both of these platforms leverage the entire system, from their custom semiconductors right through the software stack, to achieve these high levels of efficiency, and lower cost of ownership," he explained.

System z revenue declined 6 percent but MIPS grew 12 percent.

Converged System p delivered 8 percent revenue growth (14 percent at constant currency).

"This is the tenth consecutive quarter of year to year revenue growth. The energy efficiency and multi-operating system capabilities of POWER6 technology continues to resonate with customers. Coupled with exceptional performance, POWER6 is the right solution for a multitude of workloads. The result is strong performance in both high-end and midrange servers, both growing 16 percent at constant currency," Loughridge noted.

Storage revenue declined 20 percent. Disk was down 16 percent, and tape declined 31 percent. System x server revenue declined 32 percent, with blades down 27 percent.

"This reflects a significant slowdown in the x86 market, as customers are virtualizing and consolidating workloads into more efficient platforms such as POWER and mainframe," Loughridge said. "So as you look at these results, you can see that the industry standard hardware is clearly more susceptible to an economic downturn."

No i?

Loughridge didn't call out IBM i, but the IBM press release for the financial results briefly noted that "revenues from the legacy System i servers decreased 92 percent." This is obviously the older System i boxes still selling, and based on how IBM is reporting its numbers, entirely expected. IBM i-based POWER6 systems now fall under the converged System p category.

Layoffs?

Layoffs have been looming for most tech sector companies, and IBM is no exception. The New York Times reported that IBM CEO Samuel J. Palmisano, in an internal email to employees, said layoffs were not the company's current strategy.

Still, IBM regularly lays off workers in underperforming segments, but in recent years has also continued to hire new employees. Alliance@IBM, which is the official national site for the IBM Employees' Union, has a Job Cut Status message board that urges IBM employees to post news and information regarding staff cuts. There's been a lot of chatter of late, and it's hard to say what's accurate and what's overblown.

One apparent IBM employee posted: "Rational is laying off workers. Just got a call from my manager saying that 1) there is a layoff in progress; and 2) I'm not getting laid off."

Another wrote: "World Wide Software Marketing Teams are getting the calls today. Preparing for a blood bath. Will post more detail as them become available."

And here's more: "How can IBM achieve $9.20 per share more than analysts are expecting in 2009?. It is possible by trimming work force in USA and outsourcing. See how confident IBM is."

Posted by cmaxcer on January 21, 2009 at 9:49 AM | Comments (7)

January 14, 2009 9:53 AM

Forrester Predicts Small Rise Or a 3 Percent Drop in IT Spending

A new forecast from Forrester Research is predicting that global purchases of IT goods and services will decline by 3 percent in 2009, as measured in U.S. dollars. Compared to 2008, Forrester saw global IT purchases increase by 8 percent, and the 2009 decline ends seven years of growth in global IT purchases. Technology purchases fell by 6 percent in both 2001 and 2002.

"Our forecast for 2009 rests on the assumptions that the economic recession in the U.S. and other major economies will start to end in the second half of 2009," notes Andrew Bartels, Forrester Research vice president and principal analyst. "For IT vendor strategists, the global IT market will be a gloomy one in 2009, with prospects of improvement in 2010. Unlike in past years, there are no significant growth markets to offset the weak ones."

The Upside

Ironically, when measured using a mix of local currencies, the picture is a bit better, Forrester reports, with global growth of 2.5 percent projected for 2009. Regionally in the relevant local currencies, U.S. purchases of IT goods and services will grow by 1.6 percent in 2009; purchases in Western and Central Europe will be 1.3 percent higher than in 2008; Eastern Europe, the Middle East, and Africa will see 5 percent growth; and Asia Pacific purchases will rise by 3 percent. However, when all the regional numbers are equated to U.S. dollars, there is a sharper slowdown in IT spending globally.

The report highlights currency fluctuations as another key factor driving the global IT market and having a negative effect on U.S. vendors in particular. Bartels notes, "The fact that 2009 IT purchases growth is so much weaker in U.S. dollars than in local currencies means U.S. vendors with significant overseas business will feel a double dose of pain, as both the economic environment and currency market will work against them for much of 2009."

By sector, Forrester expects software investment to remain the same although communications equipment investment will shrink by 3 percent. Purchases of personal computers, servers, storage devices, and peripherals are expected to slip by 4 percent to $434 billion in 2009, from $450 billion in 2008.

Forrester also believes that governments and businesses will buy $484 billion of IT consulting, systems integration, and outsourcing services in 2009, which is 3 percent less than in 2008. IT outsourcing services will do a bit better than IT consulting and systems integration services, though.

The report is "Global IT Market Outlook: 2009".

IBM i

I've been talking to a variety of people in our industry for a report that'll come out in the March issue of System iNEWS about IBM i-focused spending. The one-sentence summary: IBM i-related spending continues on a similar track with loyal customers, but new purchases and upgrades are being tied much more closely to ROI than ever before.

Posted by cmaxcer on January 14, 2009 at 9:53 AM | Comments (0)

January 8, 2009 11:01 PM

From Blog to Print: Problems We Don't Have

Remember that blog post from back in September, "Top Ten IT Problems We Don't Have . . . with IBM i"? The one that snagged 31 comments from readers happy to share the cool points we sometimes forget about i-based systems? Well, I reworked that post into a piece for the print mag, System iNEWS, which happens to be out this month.

That particular article isn't nearly as fun as the one with the cascading list of comments, but it is shorter and more to the point. Plus, its title thankfully lost the cute little ellipses. If you'd like to see the more polished form, check out "Top Ten IT Problems We Don't Have with IBM i".

And for everyone who posted comments--thanks! This article was a pleasure to put together.

Posted by cmaxcer on January 8, 2009 at 11:01 PM | Comments (1)

January 4, 2009 10:38 PM

Share the POWER in 2009?

In the latest issue of COMMON.CONNECT, the official print publication of COMMON, President Randy Dufault brings up an interesting point: he ran into an old friend and former co-worker who had moved to a different job in a different state. Dufault's message is straightforward: as times have changed, his friend's mid-sized IT organization had changed, too. The company his buddy worked for was running AIX, Windows, and Linux servers in addition to an i-based system.

The i-based system, however, was overtaxed and running out of time to complete month-end batch processing. So the basic question was, should the company upgrade the i or add Capacity On Demand . . . or upgrade to a new POWER6-based system and use it to run their AIX workloads alongside their i-based workload.

In this scenario, IBM i could likely tap into unused resources from AIX partitions during month-end processing.

Of course, what if those colleagues responsible for AIX wanted a little extra i processing power, too? So that's the rub, isn't it? Sharing resources? Getting along virtually inside a single box. . . . Sounds nice from the outside looking in, but what if you're stuck on the inside?

So Here's My Question

If you had the opportunity to upgrade to IBM i 6.1 running on a brand spankin' new Power System . . . but had to share the box with your AIX and Linux-runnin' colleagues, would you rather stay on your existing System i . . . or go with the new shared hardware?

Posted by cmaxcer on January 4, 2009 at 10:38 PM | Comments (5)