IBM 1998 Annual Report Download - page 8

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m e e t ings and whenever I meet with customers, I am asked
where IBM stands on a wide variety of technology issues. I’d
like to cover a few of these, because I believe they are the ones
on which the new leaders will be focusing more and more over
the next two years. At IBM, we are.
• The Internet isn’t just creating new businesses. It ’ s
creating new business models.
Businesses and institutions are finding that the Net is the most
potent tool they’ve ever had to build competitive advantage .
I don’t mean just online retailing, which has been getting a lot
of attention lately. Many of the most impactful e-business
s o l ut i o n s we are building with our customers are aimed at
transforming l e s s glamorous but extremely important processe s
like supply chain management, customer service and support,
and distribution.
But the important point is that e-business is not simply a
matter of adding another distribution channel or introducing
some new efficiencies. It is driving customers to do business in
a fundamentally different way.
This feverish search for new business models is having
another interesting effect. It’s creating a breeding ground for a
new generation of startup companies. This may not be surprising.
What has been unexpected is that every business and institu-
tion now has a chance to rethink what it does.
IBM is in a strong position to help. In our solutions business
we have amassed thousands of experts who understand the inner
w o r k i n gs of 2 6 major industries, from banking to entertainment
to education. In working with thousands of customers, we
come to understand which issues are common from industry
to industry – and we can leverage that knowledge for our
customers very quick l y.
• The greatest competitive advantage in the information
t e chnology industry is no longer tech n o l o g y.
Without question, strength in basic and applied research
remains essential in our industry – not only to achieve the
b r e a kt h r o u g h s that make new products possible, but also
because they give the discoverer a unique ability to foresee, and
shape, the future.
However, technology changes much too quickly now for
any company to build a sustainable competitive advantage
on that basis alone. Someone is always inventing some software
code or device that is a little faster or ch e a p e r. More and
more, the winning edge comes from how you help customers
use technology – to steal a march on their competitors, to
implement entirely new business models. That means creating
integrated solutions that draw on the full range of products
and, increasingly, services. And it means connecting the
dots between what you learn in the lab and what you learn in
the marketplace.
We understood this when we decided six years ago to keep
IBM together. And we’ve seen it borne out most clearly where
all the pieces of information technology come together – in
NEW PRODUCTS Nearly half of 1 9 9 8’s $ 3 5 . 4 billion in
h a rd w a r e re v e n u e was generated by products intro d u c e d
in the past 1 2 m o n t h s .
S T O C K P E R F O R M A N C E 1 9 9 8
End-of-week closing prices
$ 1 0 5 . 6 3
Jan. 2, 1998
$184.38
Dec. 31, 1998