IBM plans to build out software business

Virtualization to supplement big iron sales; software overall expected to approach half of annual revenues within four years

The company once virtually synonymous with front-to-back IT infrastructure is making yet another clear statement that its era of relying solely on shipping big iron out the door is long gone. In an investor briefing, IBM recently indicated that they expect their overall profit mix to change considerably over the next four years.

Currently, software makes up about 40 percent of IBM's business. With multi-core, multi-threaded machines becoming ever more commonplace, IBM expects to do brisk business in the field of virtualization, expecting hundreds of millions of pounds in annual profits on virtualization sales alone. That, along with other expansion in business software, could take the company to grow software to account for roughly half of all revenues. The company intends to continue promoting its software business and hopes to make greater inroads in developing nations, where it hopes to double its footprint. As recently discussed, IBM is pursuing a cost-cutting campaign in Global Services in order to boost profitability in that division, which has grown to represent roughly 50 percent of Big Blue receipts.

Reading between the lines, with no plans to pull back in the services field and with software expected to approach half of total revenues, that leaves little room for hardware. In recent years, IBM discontinued its individual computer business, first by dismantling its desktop program and later by selling the ThinkPad product line to Lenovo. IBM continues to develop its Power architecture, with new servers in that line expected soon. But the company's survival is no longer tied to the performance of its hardware in the IT marketplace.

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