International Business Machines Corporation (IBM)

International Business Machines Corporation (IBM)

 

International Business Machines Corporation (IBM), incorporated on June 16, 1911, is an information technology (IT) company. IBM also provides business, technology and consulting services. The Company's major operations comprise a Global Services segment, a Systems and Technology Group, a Software segment and a Global Financing segment. IBM's business comprises three principal business segments: Systems and Financing, Software and Services. The majority of the Company's enterprise business, which excludes the Company's original equipment manufacturer (OEM) technology business, occurs in industries that are broadly grouped into six sectors: financial services (banking, financial markets and insurance), public (education, government, healthcare and life sciences), industrial (aerospace, automotive, defense, chemical and petroleum and electronics), distribution (consumer products, retail, travel and transportation), communications (telecommunications, media and entertainment, and energy and utilities) and small and medium business (mainly companies with less than 1,000 employees).

 

In September 2007, IBM completed the acquisition of DataMirror Corporation. In August 2007, IBM acquired WebDialogs, Inc., a privately held provider of Web conferencing and communications services. In July 2007, IBM acquired Watchfire Corporation, a privately held security and compliance testing software company based in Waltham, Massachusetts. In March 2007, the Company completed the acquisition of Softek Storage Solutions Corporation. Through this acquisition, the Company is assembling complete and unified data mobility offerings, and worldwide delivery capabilities for managing data in storage array, host and virtualized information technology environments. Servers include IBM systems using IBM operating systems (System z and System i), as well as AIX, the IBM UNIX operating system (System p and BladeCenter) and the Microsoft Windows operating system (System x and BladeCenter). Data storage products include disk, tape, optical and storage area networks. Advanced foundry products include integrated supply chain services and a suite of semiconductor manufacturing services using either a client's or IBM's design. IBM also manufactures customized semiconductor products for clients. The Company also manufactures semiconductors designed and manufactured primarily based upon IBM's PowerPC architecture. IBM provides production print solutions, on demand print-related solutions, enterprise workgroup print technologies, print management software, services and maintenance, point-of-sale retail checkout systems, software and solutions. IBM is engaged in Commercial financing, which includes short-term inventory and accounts receivable financing to dealers and remarketers of IT products; Client financing, which includes lease and loan financing to external and internal clients for terms generally between two and seven years, and Remarketing, which includes the sale and lease of used equipment.

 

IBM offers five kinds of software solutions. The Company's software offerings include Information Management Software, an advanced database and content management software solutions that enable clients to leverage information on demand; Lotus Software, a collaboration and messaging software that allows businesses to communicate, collaborate and increase productivity; Rational Software, an integrated tools designed to improve an organization's software development processes and capabilities; Tivoli Software, a software for infrastructure management, including security, change, configuration, job scheduling, storage capability, performance and availability, and Websphere Software, which provides management of a range of business processes using open standards to interconnect applications, data and operating systems.

 

IBM provides a range of services, which includes Business Performance Services (BPS), Business Transformation Outsourcing (BTO), Consulting and Systems Integration (C&SI), Strategic Outsourcing Services (SO), Integrated Technology Services (ITS), Application Management Services and Applications on Demand (AoD). BTO delivers improved business results to clients through the strategic change and the operation and transformation of the client's business processes, applications and infrastructure. ITS provides service offerings that help clients access, manage and support their technology infrastructures, through a combination of resources, software and IBM's knowledge of business processes.C&SI provides consulting services for client relationship management, financial management, human capital, business strategy and change and supply chain management, as well as application innovation and the transformation of business processes and operations.

 

Global Services

Global Services is an important component of the Company's focus of providing insight and solutions to clients. While solutions often include IBM software and hardware, other suppliers' products are also used if a client solution requires it. Contracts for IBM services (signings) can range from less than 1 year to 10 years. Within Global Services there are two reportable segments: Global Technology Services (GTS) and Global Business Services (GBS). GTS primarily reflects infrastructure services, delivering value through the Company's standardization and automation. It includes outsourcing services, Integrated Technology Services and Maintenance. GBS primarily reflects professional services, delivering business value and innovation to clients through solutions which leverage industry and business process expertise. It includes consulting, systems integration and Application Management Services.

 

Systems and Technology Group

 

Systems and Technology Group provides IBM's clients with business solutions requiring advanced computing power and storage capabilities. Approximately 55% of the Systems and Technology Group's server and storage sales transactions are through business partners and approximately 45% are direct to end user clients and more than half are through the Website ibm.com. In addition, the group provides semiconductor technology and products, packaging solutions and engineering technology services to clients and for IBM's own advanced technology needs. Hardware is also deployed to support services solutions.

 

Software

 

Software consists primarily of middleware and operating systems software. Middleware software enables clients to integrate systems, processes and applications across a standard software platform. IBM Middleware is designed to open standards, which allows the efficient integration of disparate client applications that may have been built internally, or provided by package software vendors or system integrators. Operating systems are the software engines that run computers. In addition, Software includes Product Lifecycle Management software which primarily serves the Industrial sector. Approximately 50% of external Software revenue relates to one-time charge (OTC) arrangements, whereby the client pays one up-front payment for a license. The remaining annuity revenue consists of both maintenance revenue sold with OTC arrangements, as well as software sold on a recurring license charge arrangement. Arrangements for the sale of OTC software include one year of maintenance. The client can also purchase ongoing maintenance after the first year, which includes product upgrades and technical support.

 

Global Financing

IBM's offerings include end user IT leasing and financing for the acquisition of primarily IBM hardware, software and services. Client financing provides lease and loan financing to end users and internal clients for terms generally between two and seven years.