IBM 1999 Annual Report Download - page 7

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game-changing open-source operating system
Linux, which we’re moving aggressively to support
across our entire product line. And we will continue
to build on IBM’s e-commerce lead, increasing
sales and distribution through ibm.com. In 1998,
e-commerce generated $3.3 billion in sales;
in 1999, that rose to $14.8 billion. We expect to
double that this year.
Finally, as the Net shifts computing workload,
applications and data from PCs to large server
systems, more and more computing solutions will be
delivered as a service, over the Web. We’ve already
got a significant Web hosting business, from
complex sites for customers like Macy’s and the
Olympics, to small businesses. And our acquisition
of Whistle Communications last June strengthened
our ability to offer network computing services to
smaller customers.
[2] In all things, innovate. By innovation I don’t
just mean technology – though of course I
mean that, too. With our seventh straight year of
patent leadership and another record total (2,756
U.S. patents in 1999), IBM’s position as the
world’s premier commercial center of technology
innovation is unchallenged. We will continue to
invest in that. We will also continue to speed those
innovations – such as copper chips and record-
setting hard disk drives – into products (our own,
and those of our customers). And we’ll continue
taking on “grand challenges” that bring technology
breakthroughs to bear on previously intractable
problems. For example, in December 1999,
IBM Research announced a $100 million push to
build a supercomputer named “Blue Gene” –
500 times more powerful than today’s fastest
computers – that initially will be used to model the
mysterious folding of human proteins.
But innovation at IBM has never been about
technology alone, or for its own sake. Especially now,
when the competitive environment demands that we
create radically new ways in which we go to market,
attract new employees and structure relationships
with customers and partners.
For instance, we have stepped up our efforts
to reach out to Internet startups – through novel
incubator programs and more than $700 million in
planned startup financing and venture capital
investments. We form relationships with dot-coms
while they’re still in the incubator, so we can
help them make technology decisions before they
launch. Just as important, we get to see beyond
the current technology horizon, understand the
trends and deploy that learning directly in IBM.
(And, by the way, we’ve already seen a tidy return
on our investments.)
We’re also innovating in how we build
relationships with such important communities as
software developers (via our developerWorks
Web site, a resource for the Web’s 10 million-plus
developers worldwide) and future employees
(witness last summer’s “Extreme Blue” internship
program, which gave some of the world’s brightest
computer science students a chance to work on
real, cutting-edge IBM projects).
Finally, we continue to drive innovation in
total expenses as a percentage of revenue
’95 ’96 ’97 ’98 ’99
28.8 28.3 27.5 26.7
23.0
05