Brief Overview of IBM.......................................................................................................

3
Worldwide Business Operations.........................................................................................3
Strategy V/s the Industry....................................................................................................4
STOCK Watch.....................................................................................................................5
Business areas.....................................................................................................................6
Generating higher value at IBM (From IBM Annual Report 2006):..............................8
Brief Overview of IBM

International Business Machines Corporation (known as IBM or "Big Blue"; NYSE: IBM) is a
multinational computer technology and consulting corporation headquartered in Armonk, New
York, USA. The company is one of the few information technology companies with a continuous
history dating back to the 19th century. IBM manufactures and sells computer hardware and
software, and offers infrastructure services, hosting services, and consulting services in areas
ranging from mainframe computers to nanotechnology.
It has been known through most of its recent history as the world's largest computer company.
With over 350,000 employees worldwide, IBM is the largest information technology employer in
the world. IBM holds more patents than any other U.S. based Technology Company. It has
engineers and consultants in over 170 countries and IBM Research has eight laboratories
worldwide. IBM employees have earned three Nobel Prizes, four Turing Awards, five National
Medals of Technology, and five National Medals of Science. As a chip maker, IBM is among the
Worldwide Top 20 Semiconductor Sales Leaders.

Type: Public (NYSE: IBM)

Founded: 1889, incorporated 1911
Headquarters: Armonk, New York, USA
Key people: Samuel J. Palmisano, Chairman and CEO
Mark Loughridge, SVP and CFO
Dan Fortin, President (Canada)
Frank Kern, President (Asia-Pacific)
Nick Donofrio, EVP (Innovation and Technology)
Bruno Di Leo, President IOT Northeast Europe
Dominique Cerutti, President IOT Southwest Europe
Industry: Computer Hardware
Computer Software
Consulting
IT Services
Revenue: US $ 91.4 Billion (FY 05-06)
Employees: 355,766 (2006)
Website: http://www.ibm.com
Subsidiaries: ADSTAR
FileNet
Informix
Iris Associates
Lotus Software
Rational Software
Sequent Computer Systems
Tivoli Systems, Inc.
Apollo Computers

Worldwide Business Operations

IBM has operations in over 170 Countries.

Strategy V/s the Industry

Two years ago, IBM was stumbling. Its financial performance in the first quarter of
2005 was well below expectations, and the culprit was its big technology services
unit, a business under increasing pressure from lower-cost Indian outsourcing
companies. “It wasn’t just the miss, it was that revenues were slowing in services,”
Samuel J. Palmisano, IBM’s chief executive, recalled in an interview. Since then, IBM
has made impressive progress. It has increasingly moved up the ladder to offer
higher value corporate packages of research, software and services. This is also
higher-margin business, where specialized skills matter more than price.

IBM has also hired aggressively in India to narrow the cost advantage of its offshore
rivals in traditional technology services like operating data centers for customers and
upgrading and maintaining their software. IBM has been reorganized from a classic
multinational company with country-by-country operations, working in isolation, to a
more seamless global enterprise with centers of expertise in industries, scattered
around the world, each a hub in a global network for delivering services. The
changes, according to Palmisano, amount to “a huge reinvention” of the company. Its
experience offers a textbook case of a company successfully navigating the twin
challenges of globalization and technological change.

So far, it seems to be working. Profit margins at IBM have risen steadily, and it
reported record earnings and cash flow in 2006. Wall Street expects the trend to
continue when IBM reports its quarterly figures Wednesday. The consensus estimate
of analysts has earnings increasing 13 percent from the year-earlier quarter, to about
$2.15 billion, or $1.47 a share, on a 5 percent rise in revenue, to $23.1 billion.

Despite the recent improvement, IBM still faces daunting long-term challenges --
particularly in its services business, which last year contributed 52 percent of the
company’s revenue and 37 percent of pretax income. The Indian insurgents in the
technology services business continue to enjoy a sizable cost advantage. The leading
Indian outsourcing companies, like Infosys, Tata Consulting Services and Wipro, have
average operating profit margins of more than 20 percent, according to a recent
analysis by Sanford C. Bernstein & Co. The margins at IBM, according to Bernstein,
are less than half that -- though a bit higher than the average for the next six largest
American technology services companies including EDS, Accenture, BearingPoint and
Computer Sciences.

The leading Indian companies are gaining ground at an impressive pace. Infosys
reported that its quarterly revenues rose more than 40 percent. IBM, the world’s
largest technology services company, dwarfs any of the Indian outsourcers and offers
a much wider range of services. But the Indian companies see themselves as the
wave of the future in services, and they say their Western rivals, who are hiring by
the thousands in India, are struggling to cope. “We are leading, and the old-line
players like IBM are forced to copy our model,” said Nandan M. Nilekani, co-chairman
of Infosys.

In software, IBM started to build up that high-margin business mainly with

acquisitions of small companies in fields like security, data management and Web
commerce. Since 2003, IBM has spent $11.8 billion on 54 acquisitions: 36 software
and 18 services companies. The transition into services has been the most ambitious
and difficult, involving a wholesale reorganization and a change in the culture of a
business that now has 200,000 employees worldwide.
The traditional multinational company, Palmisano explained during an interview at
IBM’s headquarters in Armonk, N.Y., was a collection of local fiefs, while networked
teams will be the hallmark of the global corporation of the future. IBM has set up
global centers for tasks like software development and maintenance, which is a
reason IBM employs 53,000 workers India today. It has also created global teams of
skilled experts in particular industries, from airlines to utilities, who travel as needed
on projects.
Artificial Intelligence is IBM’s new mantra:
Software major IBM has announced launch of innovations such as artificial
intelligence in vehicles and traffic management systems, voice recognition
technology and traffic-related information transfer through cell phones. By
introducing these revolutionary transport innovations, IBM believes these could
revolutionize the transport system. The innovations would make travelling by planes,
trains or automobiles a more convenient and hassle free experience within the next
few years, a company release said.

It would also curtail fuel wastage and incidence of accidents. "Researchers and
strategists at IBM think that the cure for transportation problems is not building more
roads or adding flight," IBM India Research Laboratory director Daniel Dias said. The
emerging technologies especially in communication will make travel safer, more
streamlined and able to accommodate ever-increasing growth demands, he said.

Under the driver-assist technologies, automobiles would behave as if they have

reflexes. They could sense other cars and avoid hazards. They would also be able to
exchange information with each other, take corrective action where it was
appropriate and provide essential feedback to drivers. The voice recognition systems
in vehicles would al. low drivers to get real-time flight updates, respond to e. mails
and get directions through simple voice commands, the company said.

STOCK Watch

Industries:
Automotive
Aerospace and Defense
Banking
Chemicals and Petroleum
Consumer Products
Electronics
Energy and Utilities
Financial Markets
Government
Healthcare and Life Sciences
Insurance
Retail
Telecommunications

Business areas
Services Products
Application Development and Integration Websphere Application Server
Application Management Graphical Data Display Manager
Business Process Services PLM – Catia
Business Continuity and resiliency Lotus
Integrated communications Rational
IT Strategy and Architecture Tivoli
Maintenance and Technical Support CMS – Filenet, DB2 Content Manager
Middleware services DW – OmniFind
Outsourcing/Hosting AML – IBM Anonymous resolution
Security and Privacy
Server Services
Site and facilities
Storage and Data
Asset Recovery
Engineering Solutions
Software Services
Services for small businesses
Services for medium businesses

The list of IBM products is huge. Please have a look at the following link and choose products
according to your preference:
http://www-306.ibm.com/software/sw-bycategory/

Competitors:

Company
Accenture
HP
Microsoft
EDS
Sun Microsystems
Company
TCS
Infosys
Wipro
Generating higher value at IBM (From IBM Annual Report 2006):