Next Week's Bloodbath At IBM Won't Fix The Real Problem

http://www.forbes.com/sites/robertcringely/2015/01/22/next-weeks-bloodbath-at-ibm-wont-fix-the-real-problem/

by randomname2 • 11 years ago

367 188 11 years ago

hmate9• 11 years ago

Guess I won't apply for an internship there for the summer....

FWIW, if you're looking all over the place for an internship, maybe don't rule them out[1]. Often companies lay off employees who aren't useful to them, but are still looking for employees who will be useful. In particular, someone who's good at programming[2] and junior[3] might be the kind of person they still want to hire.

[1] Then again, the fact you're commenting on HN probably means you're a strong candidate who'll find an internship with ease. So follow your dreams. ;)

[2] Again, just assuming this based on the fact you're an HN reader. You might be horrified to see what proportion of people in a BigCorp company can't do even basic reasoning.

[3] Pay an intern pennies to do pounds worth of work! Yay!

wernercd2• 11 years ago

"[3] Pay an intern pennies to do pounds worth of work! Yay!"

And that's why they are (or could be) losing customers... charging a premium for intern work.

I know what my skill was worth straight out of school... vs after putting years of practice in...

trishume2• 11 years ago

On a related note, Blackberry is now hiring hundreds of interns for this summer!

seanmcdirmid3• 11 years ago

I interned for IBM twice: once in '95 (Boca) and once in '00 (Hawthorne as a research intern). The second was by far much better (working with all those great researchers), but there is just something about working for IBM that is a bit depressing...it really is Big Corp.

My current employer (Microsoft) has a reputation...but the reality is no where near what I felt when I was at IBM.

colindean• 11 years ago

You should still apply, especially if with Watson group.

wmf2• 11 years ago

Just be sure it's in a "cool" part of IBM that's growing, not a "dead" part.

walterbell• 11 years ago

Anyone have stories about the logistics of the previous 60K layoffs? How does a company and the survivors deal with that many departures at once - were they distributed evenly across divisions or were entire divisions eliminated?

gatsby3• 11 years ago

The cuts were made by Louis V. Gerstner, Jr., a fascinating executive who made AmEx and IBM major players in the 80s-00s.

Most of the layoffs happened in the summer of 1993, but in all, Gerstner reduced IBMs workforce by about 100k in a couple years.

The 1993 job cuts saved IBM about $4b/yr and IBM's market cap rose from $29b in 1993 to $168b in 2002 when Gerstner retired.

If you're interested in more, I recommend the book, 'Who Says Elephants Can't Dance' - a memoir by Gerstner.

seanmcdirmid3• 11 years ago

Many of those people were rehired as contractors or FTEs though. I was working at Boca Raton as a very young intern in '95 (just before they closed the site in favor of Austin), and one of the brilliant guys I worked with took a package in 93 but...they had to hire him back at higher pay because no one could do his job. There were also lots of vendors working at the Boca site who were laid off in 93 (though I think they where finally let go before the move to Austin).

rbanffy• 11 years ago

IBM's market cap rose from $29b in 1993 to $168b in 2002 when Gerstner retired.

When you optimize for market cap you may end losing sight of long-term relevance.

cbd19843• 11 years ago

The cuts were made by Louis V. Gerstner, Jr., a fascinating executive who made AmEx and IBM major players in the 80s-00s.

Are you claiming IBM wasn't a major player by the 1980s?

Spooky23• 11 years ago

I was in middle school at the time, but I recall that it was devastating in the Hudson Valley. Cities like Kingston were just devastated... When I was last there about 5 years ago, it was like a time warp to 1991.

larzang• 11 years ago

My father was a PM at IBM who was hit in one of the smaller rounds of layoffs in 92 leading up to the big one in 93. He worked at the Westlake campus in DFW at the time. The entire project he was on was cancelled and all of its staff were cut, and it was just one of many. Personal metrics didn't enter into it, it was just a question of whether you were lucky or unlucky in project assignment at the time.

Over those couple of years IBM went from using almost all of the sizable campus it had built to just one small section, renting out the rest. DFW was otherwise undergoing massive growth at the time though, so the cuts were readily absorbed by Dell, MS, and many others (my father went to AMR). It wasn't like in the early 2000s when virtually everyone in DFW was downsizing or closing and as a fresh college graduate I was competing for entry-level jobs with admins with 10 years at MS.

kvscott• 11 years ago

My father started with IBM in 1963 and work in Cape Canaveral building the radio systems that eventually put the first man on the moon and all the Apollos. When the Space Program closed down he was transferred to Fishkill NY and then to Boca Raton a year later where he worked on the Robotics. He was a brilliant man. In 1993 at the age of 59 he took the package and went back to school and got his Masters. He taught high level math. And yes, they did hire him back as a contractor. He used to brag about IBM. I think he was disappointed when the layoffs came. http://articles.sun-sentinel.com/1998-02-01/news/9801310114_...

fest_und_treue• 11 years ago

What does the CEO's comp package look like this year?

gatsby3• 11 years ago

In 2013 it was $14m.

Source: http://www.forbes.com/profile/virginia-rometty-1/

yuhong2• 11 years ago

"It's becoming apparent she is not up for the job and can't pull the company out of its nose dive."

I wonder who would be the right person.

hueving3• 11 years ago

Marissa Mayer seems to be the goto for a struggling giant.

yuhong2• 11 years ago

Only a specific kind.

adwf2• 11 years ago

A legacy of bad management. Whilst IBM might have a reputation of top research in the past, they've been cutting R&D in a very short sighted manner for many years now. That their revenue is declining and they need to cut staffing (again) is just them reaping what they sowed.

jeffreyrogers2• 11 years ago

They've still done good research lately. This is just the nature of business I think. Eventually others catch up to where you are, and it is difficult to constantly remain competitive. A further problem in IBM's case, which maybe isn't as pronounced in other industries, is how quickly the computing landscape is changing.

adwf2• 11 years ago

Yeah I wasn't trying to insinuate that they don't still have a great research department. But you can only see so many cuts happening over the years without thinking that it'll impact their bottom line eventually.

Whilst I'm sure these ~100,000 are from services and sales - I'm equally sure that if they had something unique to sell in the first place, they'd be doing a heck of a lot better.

bhouston2• 11 years ago

What is the ratio of cuts in India vs North America/Europe? IBM for a while has been laying off non-Indians in favor of hiring Indians. Has this contributed to the nosedive?

adventured4• 11 years ago

IBM's nosedive has nothing to do with Indians.

IBM has three problems that are coming home to roost.

1) They abandoned a large portion of their technology business, and became a consulting & services business. There is very little special about them now, they are almost a commodity business with a famous name.

2) They invested a very large sum of their earnings, not into innovation, R&D, science - but into financial deception and gimmickry. Basically they've attempted to deceive investors by projecting earnings per share growth through share buybacks, while the underlying business was rotting.

3) The consulting & services business they've chosen to focus on, rises and falls with the global economy. The global economy hasn't been great the last six years, and most of the governments of the world are struggling when it comes to spending and budgets. With global economic weakness, even big corporations have been restrained on spending for IT the last six years, there have only been a few bright spots.

agumonkey2• 11 years ago

Let's hope they still have a strong enough core of smart people to bounce back. IBM is old and have seen this industry nascent and changing many times, they're still massive, thus having the resources to adapt (IMHO). Microsoft managed to bounce too. Kodak didn't.

I'm still very curious about the partitioning of these claimed layoffs.

ps: 4 times 'still' in one comment.

keeperofdakeys2• 11 years ago

It could be related to Lenovo buying IBM's x86 server business http://news.lenovo.com/article_display.cfm?article_id=1755

IBM• 11 years ago

Does that business employ that many people?

keeperofdakeys2• 11 years ago

I'm not sure, the two pieces of news are just quite close together.

wmf2• 11 years ago

That closed a while back and has already been accounted for.

fat0wl2• 11 years ago

this may be true. I use a lot of IBM server/development techs & pretty much all of them are missing the magic they claim, boiling down to "confusing forced development paradigm that bleeds millions from your company in infrastructure and niche developer costs" (Web Experience Factory, Coremetrics, Portal etc.). None of the out-of-the-box-everything-integrates-seamlessly aspect is there, despite that being the whole basis for these monstrous sales prices. In short, many of their products have laughably little value and even non-technical corporate management is realizing this.

(You can tell a lot of the software is sold with IBM thinking "We'll tell them its their fault for a couple of years unless they hire a few of our consultants, then if they realize the product actually sucks hopefully we will have an upgrade ready by then.")

However, whenever I see articles from that Cringely dude (the one referenced repeatedly in this summary) I have to think "eh, maybe.... I'll believe it when I see it". He is pretty much an anti-IBM conspiracy theorist from what I can tell, though of course they are a strange enough organization that a lot of what he says turns out to be true.

http://en.wikipedia.org/wiki/Robert_X._Cringely

http://www.cringely.com/

aragot• 11 years ago

I've worked with IBM ClearQuest and IBM FileNet and I concurr, those products are retarded bloats of off-market junk. The free golf courses in Orlando are nice, though, so I've renewed the purchase for two more years.

stuff4ben2• 11 years ago

Yup. Message Broker wasn't all that bad, but the all-expenses paid trip to Vegas for a week was better.

Aqwis• 11 years ago

Could IBM turn itself into a generic tech consultancy? Accenture & co. seem to be doing fine.

jeffreyrogers2• 11 years ago

Accenture's market cap is 1/3 of IBMs currently however, so management probably isn't too interested in that route.

tg3• 11 years ago

A large portion of their business already is. I wouldn't be surprised if this layoff was in part shedding the non-consultancy parts of their business.

cbd19843• 11 years ago

Could IBM turn itself into a generic tech consultancy?

Not that anyone necessarily cares, per se, but if they do this, what happens to the companies invested in platforms like System z that only IBM can really support? Does "generic tech consultancy" include developing and supporting proprietary hardware and software?

hueving3• 11 years ago

They would probably stop developing it in that case and just support remaining customers.

kyllo2• 11 years ago

Enter the multitude of companies whose entire business model is selling products that emulate IBM platforms on top of commodity UNIX hardware and RDBMS.

johansch4• 11 years ago

I had a look at the 2013 annual report. This is the simplified division of revenue:

Services: 57%

Software: 26%

Systems & Technology: 14%

Financing 2%

(http://www.ibm.com/annualreport/2013/bin/assets/2013_ibm_ann... - page 37)

adventured4• 11 years ago

Accenture isn't exactly killing it. They're suffering from the same problem IBM is: the global economy sorta sucks.

Accenture has averaged 3.x% sales 'growth' in the last two fiscal years. Account for inflation, and they're lucky if they're not contracting as a business.

mbloom1915• 11 years ago

The past 5 to 10 years at IBM have shown their aggressive strategy to buy software companies but fail to integrate them into their many different IBM suites properly. Institutional knowledge and strong business relations previously held with purchased companies dies out quickly and ultimately results in low profit.

acveilleux• 11 years ago

Every IT behemoth that grows by acquisition is an idea graveyard. Just look at CA.

greglindahl• 11 years ago

Or Cisco. Wait, Cisco is incredibly successful thanks to acquisitions.

pesenti2• 11 years ago

Not sure where you get your info. IBM acquired my 150 people company 3 years ago. They haven't lost a customer and have increased revenue 4x in that timeframe. In their quarterly report they also highlight performance of all their acquisitions and they have a good track record of 80% or so above business case.

sputknick2• 11 years ago

"...pie-in-the-sky ideas like commercializing Watson..."

I'm not knowledgeable about the product, but it seems to me commercializing Watson is the smartest thing you could do. I feel like Watson could allow IBM to become dominant in almost every field and produce trillions in value for their customers. Am I off base? Has Watson development stalled over the past few years?

wernercd2• 11 years ago

Color me ignorant... What is the difference between Watson, Cortona, Siri and Now? What does Watson have that those services don't?

sputknick2• 11 years ago

I'm as ignorant as you, but here's a stab with something I found "This may seem similar to technology such as Apple's Siri or Google Now, but a cognitive computer becomes smarter over time as it learns from each interaction, a function far beyond typical computers. And let's face it … Siri is stupid.". As I understand it, Watson continues to learn with the goal of being a domain expert.

Keyframe• 11 years ago

What does Watson have that those services don't?

IBM sales force - on a non-tech level that is.

trishume2• 11 years ago

Be careful not to assume too much of Watson. IBM's marketing makes it seem like a do-everything general purpose AI, but that likely isn't the case.

The program that won Jeopardy was more of a specialized search engine with really good query parsing. Many of the other things they have announced as "Watson" look like entirely separate programs that they are marketing under one brand name. While looks like one amazing AI is just a mish-mash of domain-specific algorithms with some well-built glue.

gjm11• 11 years ago

In fairness, "a mish-mash of domain-specific algorithms with some well-built glue" is also not a bad summary of how some people see the human mind. See, e.g., https://en.wikipedia.org/wiki/Modularity_of_mind.

(For the avoidance of doubt, I am not suggesting that Watson is anything remotely like a do-everything general-purpose AI.)

xienze• 11 years ago

So, I used to work on Watson. The way I see it, it's not that development has stalled but that it's nowhere near as impressive as you've been lead to believe. The natural language processing is its biggest weakness. I worked with Watson in a medical context and the NLP was absolutely atrocious. But to be fair, parsing English which is usually informally structured is really difficult! Compound that with the fact that IBM was asking developers with limited domain knowledge to write the parsing rules and well... it's about what you expect.

I should also point out that IBM talks up Watson's abilities way too much -- to the point that customers have thought that Watson could essentially tell the future.

agumonkey2• 11 years ago

Looks like they've been writing the 2nd chapter of the IA winter.

PhantomGremlin2• 11 years ago

The natural language processing is its biggest weakness.

There were several documentaries about Watson after it won Jeopardy, and this weakness was quite evident to those paying attention.

Watson never really understood Alex's Jeopardy "answers" at all. This was quite obvious in "final Jeopardy". Watson's response clearly showed its limitations.

Here's how it went down:[1]

   The category was US Cities, and the answer
   was: “Its largest airport was named for a
   World War II hero; its second largest,
   for a World War II battle.”

   The two human contestants wrote
   “What is Chicago?” for its O’Hare and Midway,
   but Watson’s response was a lame
   “What is Toronto???”

Basically Watson's Jeopardy responses were a very refined equivalent of the Google "I'm feeling lucky" button.

I have to believe that the situation gets a lot lot trickier in a "medical context".

Still, couldn't it be possible to harness Watson as a super-smart assistant to humans? But there's probably not enough money to be made in that.

[1] http://asmarterplanet.com/blog/2011/02/watson-on-jeopardy-da...

fragmede3• 11 years ago

Well, Jeopardy was 4 years ago, so there that. If Watson were really believed, internally to IBM, to be as revolutionary as their marketing copy says, then I would expect to hear great triumphs of how IBM deployed Watson internally to, say, their sales department (which has got to have communication issues, given their size) and let it absorb information and then let it answer questions sales guys have about their products, turning them into believers.

The fact that we've seen little of Watson since Jeopardy makes me wonder if development hasn't stalled.

sk5t2• 11 years ago

Well, Watson (Watson Q&A) can only "answer" with a set of verbatim selections from the texts it has previously digested and been trained upon. Lots of folks struggle to understand this, and IBM seems not particularly diligent in correcting them, thus the idea that Watson can synthesize novel answers or insights persists.

rondon2• 11 years ago

I left IBM in 2012 because I saw that the division I was working for was never going to be competitive. It is surprising that it took almost 3 years for what was obvious at the bottom to reach the top and be implemented.

quacker• 11 years ago

Wow. 111,800 people is a huge number. That's a whole city looking for work, and over $1 billion saved (in the long run) for each $10000 of employee salary.

The question I have to ask is why isn't Rometty one of the 110k. IBM has seen 11 straight quarters of declining revenue and it's hemorrhaging customers, according to both my source and Cringely.

Yep.

So what should IBM do here? For one, IBM needs a complete makeover. Why should I pick SoftLayer over AWS, Google, Microsoft, etc? They need a new image, something that will draw customers and something other than being the canonical story of corporate bloat and mismanagement.

jurassic• 11 years ago

Where are you getting the $1B savings number?

jmiwhite• 11 years ago

$10000*100000 employeees - I had to think about it too.

eliben• 11 years ago

Keep in mind that a developer being paid $100K gross actually costs the company way, way more. Health insurance and other benefits, cost of office space, electricity, transportation, and so on. It varies greatly between companies and countries, but it's not unusual to have "man year" cost 2x more than what is actually being paid as direct salary to the employee.

eitally2• 11 years ago

Sure, but for every $100k staffer in the west, there's an Indian IBMer making $10-15k.

wavefunction• 11 years ago

Office space+additional overhead could be reduced by remote workers. That would involve transforming management culture though, which is long overdue for it. And I'm not talking about some new crappy book about moving cheese or others of its ilk.

adventured4• 11 years ago

Rometty is the fall person.

Palmisano bailed when he recognized the ship was going down. She got handed the keys to the titanic. IBM has been on this collision course for a decade.

That's not to say she's executing brilliantly (or not), but I don't believe there's anything a new CEO could have done about this mess in the last few years that would have made a difference short-term. The consequences from the last 10 to 15 years of mismanagement were going to be paid for one way or another, sooner rather than later.

hristov• 11 years ago

It would be better if we linked to the original Cringely article. This is basically a retelling of the same.

http://www.forbes.com/sites/robertcringely/2015/01/22/next-w...

dang• 11 years ago

Ok, we changed the url from http://www.itworld.com/article/2875112/ibm-is-about-to-get-h.... Thanks.

bkeroack2• 11 years ago

In many ways I'm a hardware guy. I enjoy building infrastructure in datacenters from bare metal. Yet I can't think of a single use I would have for these IBM mainframes, nor even what they run (DB2?).

IBM's product line just seems completely irrelevant to modern tech companies.

towndrunk• 11 years ago

Modern tech companies sure... but old enterprise companies still use this stuff and it's a tough sell to move them to more modern systems.

cones688• 11 years ago

I think you are underestimating the scale of what a Z system can run... You might not have a use but every fortune 500 and banking institution in the world does - and they need it to work, 5 9's isn't good enough.

IBM Hursley laboratory director Rob Lamb says: “There are 6,900 tweets, 30,000 Facebook likes and 60,000 Google searches per second." The mainframe CICS runs 1.1m transactions per second, which equates to 10bn per day [0]

[0] http://www.computerweekly.com/feature/Can-the-mainframe-rema...

bane• 11 years ago

I have practically zero experience with mainframes, but I've always heard about their insane throughput figures. I've never really seen much on their architecture. Any insight in how they work and do so much?

hueving3• 11 years ago

That equivalence is bogus. If a search was as simple as a single CICS transaction, Google would just run that and be done.

Mainframes are overpriced and inefficient, but they are the only option for a F500 without the in-house talent to build any kind of distributed, fault tolerant system.

mimighost• 11 years ago

A single search on Google could lead to 10x-100x actual requests to the backend system. So the comparison here is not really a fair game.

Second, since I assume, most of the programmers here don't have access to mainframes, it is hard to testify those numbers. Also, since it is a benchmark it will be useful to revel what exactly the task they are using here, otherwise I would simply throw this claim into my 'pure PR mess, don't take it seriously' bin :)

sytelus• 11 years ago

The electrical power ($600/day vs $32/day), floor space (10,000 sq ft vs 400 sq ft), and cooling costs for those mainframes were less than those of distributed servers handling a comparable load. In addition, those mainframes required 80 percent less administration/labor (>25 people vs <5 people); “Mean Time Between Failure” measured in decades for mainframe vs months for other servers.

96 of the world’s top 100 banks, 23 of the 25 top US retailers, and 9 out of 10 of the world’s largest insurance companies run System z Seventy-one percent of global Fortune 500 companies are System z clients Nine out of the top 10 global life and health insurance providers process their high-volume transactions on a System z mainframe Mainframes process roughly 30 billion business transactions per day, including most major credit card transactions and stock trades, money transfers, manufacturing processes, and ERP systems.

The new mainframe delivered in 2010 improved single system image performance by 60 percent, while keeping within the same energy envelope when compared to previous generations. And the newest mainframe which shipped in 2012 has up to 50 percent more total system capacity, as well as availability and security enhancements.

It uses 5.5 GHz hexa-core chips – hardly old technology. It is scalable to 120 cores with 3 terabytes of memory.

[1]

[1] http://www.share.org/p/bl/et/blogid=2&blogaid=234

Shivetya• 11 years ago

modern really?

if you want reliability and solid software you don't go anywhere else other than mainframes and minis from IBM (z, i, and x)

The companies that run these do so because they are proven, the languages they support are all business oriented (math is a specialty), and the code bases are vast and stable. Oh, they all do Web-centric work just fine too.

db2 is just fine with SQL and highly optimized as well. Modern is what they are, quit thinking small is modern

jussij4• 11 years ago

db2 is just fine with SQL

Also people seem to forget IBM invented SQL.

fiatmoney• 11 years ago

"I can't think of a single use I would have for these IBM mainframes"

High throughput transaction processing with ~100% uptime guarantees, and someone to call who will Fix It Now should anything go wrong.

ams61104• 11 years ago

IBM doesn't and never has as far as I can see targeted "modern tech companies." They target large enterprises, and research/academia (in the later case often with mainframes on the administrative side, and linux clusters on the research side).

Edit: I believe that the linux server lines have recently been moved to Lenovo though

stonogo• 11 years ago

Not entirely, not for the purposes you're describing: https://www.olcf.ornl.gov/summit/

devonkim• 11 years ago

Think of them like old, proven architectures of yore that run virtualization stacks with APIs with the same kind of capabilities of Docker and you'll understand how awesome they could be if we as an industry put more effort into adopting them as platforms (sans enterprise BS vendors though). You can run Windows and Linux on modern mainframes as well, so they're handy there as well. Add in features that are very, very mature (like, since the 80s) like hotswap CPUs and memory that VMware has added a few years ago themselves. If you're in a typical F500 with terrible, fragmented IT management, mainframes are a breath of fresh air practically because there aren't roving bands of sales goons trying to sell you more management software driving wedges between different silos of dysfunction.

If you'd like to view them more from a hardware deployment perspective, you can think of them more like the Dell Poweredge VRTX series than your usual decoupled stacks of network, pizza box servers, and SAN chassis. Cisco UCS is more connection-oriented with the emphasis upon making your network topologies far more flexible than with mainframes, so mainframes are compute-oriented versions in that respect with historically weaker support for scaling out with interoperability across the rest of your network infrastructure (not sure if anyone at IBM or CA has seriously taken standards like BGP and OSPF into account for mainframes, that is). People still remote into mainframes with TN3270 commands, I know we had customers still asking for that as of 7 years ago with no expectation of sunsetting.

antics4• 11 years ago

Oh give me a break.

The mainframe market is still $10B, and the fact that you can't think of a good use for one does not mean that IBM's product lines are irrelevant. The market should be addressed by major hardware manufacturers, there is still profit to be made here.

The fact that you are comfortable as a "hardware person" saying things like this publicly is a pretty clear indication that your world is much, much smaller than you think it is, relative to the size of the real world.

johansch4• 11 years ago

Yearly IBM revenue is $100B. It's quite a small part of IBM.

bkeroack2• 11 years ago

No doubt. "Big iron" for me is something like a $30k Dell R910 (pretty beefy for commodity x86). I'm guessing these mainframes go for at least an order of magnitude more per unit. A sibling post added some interesting facts (and without the condescending tone of your post), but the question remains: if the hardware is so superior, why aren't Google et al using it? Surely they can afford it.

jussij4• 11 years ago

At some point in the process of you getting your pay check, there's a good chance a mainframe was involved.

pesenti2• 11 years ago

IBM employee here. I have no idea if the cuts are true or not but keep in mind that Cringely has made dooms day predictions in the past that were widely innacurate, see for example: http://www.pbs.org/cringely/pulpit/2007/pulpit_20070504_0020... or http://www.cringely.com/2012/04/18/not-your-fathers-ibm/

I am part of Watson and we have been hiring a lot (as well as providing great internships).

thesumofall• 11 years ago

I would be very surprised if this report holds true. He writes he heard about it before Christmas. I simply can't believe such information didn't leak deliberately or unintentionally during the month since.

simonebrunozzi• 11 years ago

I do not work at IBM, but from the outside, it seems that the Watson team is doing very well - and working on extremely interesting problems. I wish you the best.

yeison• 11 years ago

Watson is probably one of the most valuable projects that IBM is currently working on. Cutting people from the Watson team would be an extremely bad decision. I have no doubt that you guys are in good shape in that department. Also, all the publicity that IBM has been working on with Watson has been very wise and well executed.

coderintherye• 11 years ago

It's amazing how if someone said blatantly false things over and over again about Google or Yahoo laying off employees then it would get flagged out of existence, yet somehow Cringely makes the same false "prediction" over and over again about IBM and people vote it right up. Check your source people, you are actively spreading disinformation by a known doomsday prophet, and like most doomsday prophets he has been wrong every time.

jsprogrammer2• 11 years ago

Does IBM never do large firings?

teej• 11 years ago

If other HNers Are anything like me, they perceive IBM as this massive, outdated company that's behind the times and only useful for supporting COBOL systems. This is obviously not true, but that's the perception. This makes people quick to upvote "news" that confirms the bias.

JoachimS• 11 years ago

Unfortunately not very uncommon. I'm amazed how much trust people seem to give to business intelligence companies like IDC.

A good example is their predictions on mobile phone OS market share. According to them, windows mobile is poised to take the no2 spot from iOS in just two years. The problem is that they move those two years forward every six months when their latest report on actual market share and updated predictions are published.

enraged_camel• 11 years ago

Even a broken clock is right twice a day. People are hoping that to be the case here, since IBM is largely perceived by HN to be a hopelessly outdated enterprise behemoth.

brianbreslin• 11 years ago

@pesenti, would love to get someone on the Watson team to come down to Miami to give a talk at my group RefreshMiami. email me brian @ refreshmiami .com if you're interested.

clamprecht• 11 years ago

If it happens, I wish they would publish the aggregate stats on the age of employees laid off versus the age of employees not laid off. I remember my dad was laid off from IBM after like 25 or 30 years of service, just before he got full retirement benefits. He's fine, not eating cat food or anything, but I'd really like to see those stats.

acomjean• 11 years ago

Layoffs are generally never easy.

When my friends project got cancelled as conexant, they gave everyone a list of the ages of everyone being let go, likely to avoid an age discrimination suit.

Even if they didn't make it public, one bets they look at age if to just avoid a reason for a lawsuit.

mathattack• 11 years ago

I had heard that Watson had a hiring freeze over the summer. It sounded strange given such a high profile bet on the cloud.

prodigal_erik• 11 years ago

Jeez. That's more than a Google (55,030 in 2014Q3 earnings) plus six Facebooks (8,348 in 2014Q3 earnings). And I have no idea what they may have been doing.

sumnandp3• 11 years ago

Soaking up paycheques and pretending to be busy.

brown9-2• 11 years ago

Cutting storage is also foolish, as we are in the era of Big Data and Data Lakes and storage is vital to these concepts.

Whether or not the layoff rumor is true, this doesn't feel like the most insightful of articles.

anonbanker• 11 years ago

This would certainly explain all the publicity over Watson. Perhaps IBM is looking for someone to buy them, and are trying to put as much makeup as needed to seem valuable?

Anyone who read IBM & The Holocaust[1] is probably celebrating right now.

1. https://en.m.wikipedia.org/wiki/IBM_and_the_Holocaust

carsongross• 11 years ago

Yet another manifestation of the tech worker shortage we keep hearing about...

sumnandp3• 11 years ago

There IS a tech worker shortage ... of those willing to work for third world salaries.

FrankenPC• 11 years ago

ASSUMING this is true...

The information industry in in an exponential power curve right now. Participants are either in the stage of disruption or already evolving democratization. The classic monolithic mega-company just isn't engineered to twist and turn like that. I'm amazed they've lasted this long.

One way to survive is to admit failure and do an emergency fracture. Break off all divisions with any profit potential into their own manageable chunks which don't suffer from upper management overload. Wow that would be an expensive proposition. And IBM stock would burn.

adventured4• 11 years ago

IBM made their bed in switching from being a technology company to a consulting & services company. At best they will grow and shrink with the global economy now.

When the global economy hits a wall, as a consulting & services company you can't innovate your way out of it, you depend on eg growth in government spending and big corp spending, both of which are shaky around the world right now.

dreamfactory2• 11 years ago

I think this is where IBM is trying to go - http://www-03.ibm.com/press/us/en/pressrelease/43523.wss

ninkendo• 11 years ago

Mostly unrelated: I've always wondered how anyone in the tech industry would go to IBM as a business consultant, when they can't even figure out how to have a website that doesn't require things like "www-03.ibm.com" to be the hostname.

And it's not even like they're just maintaining legacy URI's for search engine purposes, either: Go to ibm.com and click on "Services" > "Cloud Services". For me I got sent to http://www-935.ibm.com. Do they know how load balancers work? Do they just not want a global namespace in the HTTP paths, and everything has to be namespaced by the hundreds of different servers it runs on?

JohnHammersley• 11 years ago

"Nobody ever got fired for choosing IBM"[1] ...except as an employer!

I'll get my coat...

[1] http://www.quora.com/What-does-the-phrase-Nobody-ever-got-fi...

j2kun• 11 years ago

I'm really interested to see if they follow suit with Microsoft and close one of their top research labs.

joshvm2• 11 years ago

A rule of thumb I've heard from various companies is that employees should be worth at least three times their salary to the company. That is your turnover should be more than sum(3*salary_i) for i employees.

A nice Fermi problem: IBM's revenue (2014) is around $90bn, from this rule of thumb this could support around 300,000 developers at a mean salary of $100k. From the model above, IBM's 400k employes should be producing a turnover of $120bn. The shortfall of $30bn equates rather nicely to the 100k employees they're laying off.

pjg• 11 years ago

This seems oversimplified. IBM is big internationally. They have as many perhaps even more employees in India than in the US. Using a "mean" salary of $100K seems oversimplification, not just India and US but most other countries have different payscales, though its interesting that you've made the numbers work

Cookingboy• 11 years ago

I highly doubt all IBM's employees are developers, in fact I highly doubt it's even over 30%.

joshvm2• 11 years ago

Of course not, this is a gross oversimplification. I was just surprised at how well the numbers worked. I would argue though, that it is a good rule of thumb, i.e. their revenue is not sustainable given the number of employees that they have.

IBM like any company will employ support staff, admin/HR, cleaners, managers and so on. Plenty of those people earn over $100k and plenty of people earn a lot less. Ultimately we don't know the mean salary of the people they're (maybe) laying off.

But hey, it's a Fermi problem, order of magnitude. I would guess it's not too far off.

anonibmer1112• 11 years ago

For some insight/rumors/thoughts from IBMers you can check out this board:

http://www.endicottalliance.org/jobcutsreports.php

At the moment it seems to be down, probably from being overrun with traffic now that this story is trending a bit.

abalone2• 11 years ago

So yeah, the move to the cloud is hurting IBM's traditional core business. But as to the criticism of the current CEO for "doing nothing", the partnership she just inked with Apple seems like a step in the right direction. It's exactly the thing they should be doing to adapt themselves to the cloud era.

Look at this stuff. It's fucking beautiful: https://www.apple.com/business/mobile-enterprise-apps/

Enterprises don't need as much help setting up and running their disappearing data centers. But they do still need help building better software for their business. And more than ever before there's a focus on the ROI of better designed software. Definitely most enterprises don't have that kind of software expertise in house.

I think it would be mistake to advise IBM to try to just focus on competing with Amazon. The margin in enterprise services has moved up the stack and that's where it looks like IBM is moving. Definitely some pain along the way though.

ams61104• 11 years ago

Not that beauty is a bad thing, per se, but it's never been high on the list of requirements for enterprise software. Functionality and configurability tend to be more important.

rodgerd2• 11 years ago

Things are changing; people see no reason to put up with shitty design and hard to use applications in-house, especially if their employer has nice customer-facing applications. It's analogous to the PC revolution, when people started using their own copy of VisiCalc or Lotus.

abalone2• 11 years ago

I expected this comment.. When I say "beautiful" I'm not just referring to the aesthetics. I'm referring to the user experience design. Good UX helps users be more successful -- we've seen it happen in the personal computing space over the past decade -- and that translates into ROI. That's the theory, at least, that a lot more enterprises are coming around to.

curiouscat321• 11 years ago

Regardless of their corporate mismanagement and lack of a sound business plan, this is incredibly unfortunate. 111,800 people are going to be losing their jobs and many of them may have difficulty finding new ones. To everyone at IBM, good luck and I hope this all works out well for you!

sumnandp3• 11 years ago

Unica.

anonibmer1112• 11 years ago

What about Unica?

kev0093• 11 years ago

I'm always kind of shocked that people are so meek and enamored with the idea of stability that they just shoot themselves in the foot. The tech industry is the wild west and most people in it aren't very good because they either lack drive, talent or the backbone to rise above those who lack drive and talent.

A better outlook is to make IBM (or any other company) work for _you_.

Work there for a couple years. Be bold. Challenge inept management and others that are only looking for stability and a paycheck regardless of outcomes. When you get tired of being stonewalled, bail to a smaller business and poach the people you identified as top talent.

Nobody's looking out for you but you. It's silly to expect an impersonal thing like a corporation to always try and take care of you. Making the company work for you doesn't have any factor in leading an ethical and fulfilling career. You can still deliver real value for a while despite a bloated middle management culture that is scared of the idea of bottom up leadership.

PakG12• 11 years ago

It is truly not fun being that guy: http://randsinrepose.com/archives/a-toxic-paradox/

This is especially true if you're in an organization as large and bureaucratic as IBM and not in a senior position. I think you overestimate how much influence you can really have on upper management. True story when I worked there as a GDF lead, talking to a senior manager.

Me: "Hey, I think I found an error in the formula we use to calculate one of the GDF metrics. This is creating garbage data." SM: "Oh wow, you're right."

Later.

SM: "Actually, we made the formula that way on purpose. It's OK." Me: "What? How? Why?" SM: "It's OK, don't worry about it."

What am I supposed to do then? Escalate to a VP? On a regular basis? I did. A senior manager got in touch with my manager and delivered the message that I need to get in line. I quote: "No more complaining." Depending on the environment where you're working, it's not easy to be the devil's advocate. It's usually not easy in the first place. In certain environments, it's almost impossible, you might as well have not even joined.

edit clarification: GDF was IBM's attempt to create its own version of the Six Sigma program.

winslow• 11 years ago

Thanks for linking to that. I currently feel like I'm the toxic asset currently working at a big medical company. I just wanted to actually make progress and get stuff out the door instead of (not exaggerating) redoing the same work 4 times now...

PhoenixWright• 11 years ago

Dead on. So many companies have modeled themselves after IBM that this type of bureaucracy is pervasive in most large tech companies that aren't Google, Facebook, etc. Nobody wants to rock the boat. Nobody wants to jeopardize the gravy-train. If something is blatantly stupid and you aren't directly responsible for it look the other way. Hell even if you are responsible but as long as it isn't too visible you're encouraged to keep quiet. What if you're given the go ahead to fix it but your team can't do it? What if corporate doesn't like the mistake to begin with? What if you're tasked to fix it but not allocated any time or resources? Nah, just keep your mouth shut.

Honestly I too would hate "that guy." This isn't his fault though it's corporate's fault. Just know this is how things work in tech.

kev0093• 11 years ago

You're most often actually fighting a political battle masqueraded as something else, and a necessary shift is to recognize that early on.

Once you realize it, you can work on those obstacles. By-with-and-through: there will be friends, frenimeies, and enemies that you can use and be used by to advance whatever you set out to do. You can often play political factions against each other and ride between two or more to propel your own. If that sounds deviant, it's not - it's real leadership and starts at the lowest levels.

Set an aim point rather than specific criteria for success, so you may lose some battles but you can win you own long term campaigns.

As long as you are ethical and not simply an outright ass, the penalty for crossing the line is not really a penalty - maybe you get squeezed out of somewhere you don't want to be and are at least as valuable elsewhere. When you get some confidence, you'll find that the line is quite a bit farther than you expected once you enact this outcome based mindset that is in line with the real intent of the organization.

It will never be fun all the time. But you're there for some reason, and the alternative is at best purposeless mediocrity.

Some further sources of reading: * http://www.artofmanliness.com/2014/01/22/john-boyds-roll-cal... * I stumbled across some interesting second hand stuff of a mainframer that brought Boyd inside Big Blue: http://www.garlic.com/~lynn/subboyd.html. Some of it seems interesting.

kethinov• 11 years ago

In other words, "be exceptional."

A fine platitude, but not useful advice that you can reasonably expect everyone to follow.

You can only be exceptional if there is a large group of ordinary people to stand out from.

Being exceptional is nice, but living in a society that nurtures everyone's talents and gives everyone a useful way to contribute is better.

kev0093• 11 years ago

Yeah but that society is rare right now. Again, the only person you _know_ is looking out for you is you.

Remarkably, really caring about outcomes does make you exceptional in a mid to large size business. Most people's vision begins and ends with not rocking the boat and group think of the way things are and always have been.

The more willing you are to do the right thing per outcomes regardless of self-assessment of "keeping a job", the less likely you will worry about finding employment there or somewhere better down the line. Good managers can taste this zeal and will seek you out.

zak_mc_kracken• 11 years ago

Now is a good time to send a resume to IBM...

known• 11 years ago

Impose Tax On Corporate Revenues, Not Profits And See The Result;

Next Week's Bloodbath At IBM Won't Fix The Real Problem

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