IBM 1999 Annual Report Download - page 6

is and how huge the stakes are. It’s tough to be
fast, focused and surefooted in a period of
explosive change. But that’s what we have to do.
As the race begins, these are our top three goals:
[1] Accelerate our growth. A hyperdynamic
marketplace such as we see today values trajectory
– that is, the potential for growth – more than current
market position. That’s good for IBM, because
we’re entering a period of explosive demand for
everything we have – hardware, software, services,
component technology, expertise – the whole
portfolio. There’s no question the opportunity is
there, but thus far we haven’t captured our rightful
share across all segments.
However, when we set our targets high – to grow
not with the market, but faster – we’ve proved that
we can deliver. In 1999, for example, our revenue
for database products on UNIX and Windows NT was
up 56 percent, more than three times the industry
growth rate; our custom-logic chip business growth
exceeded 70 percent year over year, as we focused
on the communications industry; and shipments
of our Netfinity line of Intel-based servers increased
more than 30 percent. Shark, our new enterprise
storage subsystem, was ordered by half of the
Fortune Global 100 within the first 100 days of its
introduction. In the first three months of the RS/6000
S80 e-business server, we sold as many as Sun
shipped of its competitive offering in its first one and
a half years. And e-business services, the most
exciting growth opportunity since we started our
services business, reached more than $3billion in
1999 revenue, a 60 percent increase.
We will continue to shift our portfolio toward
the highest-growth e-business opportunities. In
this regard, we passed an important milestone last
year. Our three major growth engines – services,
software and component (OEM) technology – now
provide more than half (in fact, nearly 60 percent)
of IBM’s revenue. Conversely, we are exiting
businesses where we can’t achieve our growth
objectives, or where partnership is the preferred
strategy. That’s why we formed a networking
solutions alliance with Cisco Systems last year. And
it’s why we scaled back our enterprise application
software efforts in 1999, instead partnering with
leading software developers like Siebel Systems,
i2 Technologies, SAP and Telcordia Technologies.
We are stepping up our work with the NetGen
and dot-com companies and aggressively pursuing
opportunities in online trading hubs, application
service providers and the whole area of pervasive
computing. One standout opportunity is in wireless
devices, particularly in Europe and Asia, where the
number of data-enabled cell phones is expected
to surpass the number of PCs in just a few years.
We recently signed a deal with Vodafone AirTouch
to design, build and manage an Internet portal
that will allow businesses and individuals to access
content and services over the Internet using a
variety of wireless devices.
We’re targeting the emerging “white spaces”
of the networked world, such as storage, which is
being transformed through the emergence of
Net-driven storage area networks (SANs); and the
revenue —[ $ in billions
’95 ’96 ’97 ’98 ’99
71.9 78 .5
75 .9
87.5
81.7
net income —[ $ in billions
’95 ’96 ’97 ’98 ’99
04 letter to shareholders
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6.1
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