IBM 2000 Annual Report Download - page 10

page no.
eight
chairman’s foreword
power, expertise and innovation. IBM is already
one of the world’s largest hosting companies, with
revenue that doubled in 2000. And we are working
rapidly with telecom partners to build new IBM
e-business hosting centers worldwide.
Finally, often overlooked in IBM’s portfolio is
a capability our customers and business partners
value highly, because it makes e-business real and
financially manageable. IBM Global Financing
is the world’s largest provider of I/T financing —
a $4 billion business managing over $40 billion
in assets.
UNDER THE HOOD
When you look at these industry trends, at our strate-
gies and at what’s happening “under the hood”
within IBM, not only did our company have a good
year in 2000, but prospects for 2001 are even better.
As I’ve reported here, not only is the marketplace
ready for IBM, but we’re ready for it. A whole lot
of hard, disciplined work turning our strategic
plans into reality is now coming to fruition. And in
helping our customers build their computing
infrastructure, we have the advantage of having a
strong position in all its major parts — middleware,
enterprise servers, component technology and
enterprise storage. In every one of those fields,
we’ve made major gains.
•In software, value continues to shift from the
operating system to middleware, which links all
kinds of servers and all the applications with every
kind of client device. A few years ago, IBM set out
to build a software business focused on middle-
ware. It wasn’t glamorous. We just quietly
invested billions of dollars to create a set of open
products that work with every industry-leading
platform. And what’s happening? Explosive
growth. Our DB2 database revenue was up more
than 70 percent on UNIX and Windows NT plat-
forms in 2000. MQ Series messaging software was
up more than 60 percent. And WebSphere, our
e-commerce middleware, tripled year over year.
Industry analysts estimate that the middleware
market
— already $77 billion today — is growing at a
14 percent annual clip.
•In servers, after years of investment and
invention, we transformed our products from the
inside out, integrating our offerings with common
technologies, common chip architecture, a common
development platform in Linux, interoperability
with dozens of leading applications — and took
them to market as the IBM eServer family.
Customer reaction has been swift and enthusiastic.
•After deciding a couple of years ago to exit the
enterprise application software business, we have
put into place a powerful set of partnerships. In
2000, we established strategic alliances with 50
leading independent software companies, most of
whom had previously been going to market mainly
with some of our top competitors.
•In component technology, we are getting our
innovations to market not just inside our own
products, but inside the products of other high-
tech companies. At the same time, we made a key
shift from increasingly commoditized, general-
purpose DRAM chips to high-end microprocessors
for servers, chips for pervasive computing devices
and chips for networking equipment. It’s taken us
time to build up our technology portfolio, but now
we have it, and demand is white-hot. In the market
for pervasive device chips alone, our revenue
increased 80 percent last year. Revenue from net-
working infrastructure chips grew 137 percent.
•The list goes on. We reanimated our enterprise
storage business with a product we call Shark;
restructured our PC unit and returned it to prof-
itability in the second half of the year; drove the
growth of Linux inside and outside IBM; and
staked out new ground in emerging markets, such
as life sciences.
•Finally, there’s services, which in many ways is our
trump card. We provide consulting, implementation
services, outsourcing and now e-sourcing, aimed at
the heart of the hosting and service provider oppor-
tunity. After years of hard work, we’ve got the most
capable services business in the world. In fact, IBM
is now the largest business and technology consul-
tancy. We have 50,000 consultants who billed more
than $10 billion in revenue in 2000. We have