IBM 2001 Annual Report Download - page 51

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•In high-end data storage, the product we call “Shark”
continued its strong comeback. We grew Shark revenue
32 percent and gained share.
Our major challenges in 2001 came in the two busi-
nesses that were most affected by the industry downturn.
Our Technology Group
— which sells component tech-
nologies to high-tech companies and telecommunications
firms
— was hit hard by the industrywide slump. We also felt
the effects of a declining market for personal computers.
Throughout 2001 and continuing into this year, we’ve
taken steps to improve our long-term competitiveness
—
rebalancing resources and cost structures in both units.
We expect these businesses to show better results in 2002,
regardless of economic conditions.
Looking ahead to 2002, we are, like everyone else,
watching the economy and anticipating a slow recovery.
However, we have not built our 2002 plans around an
economic rebound that’s not within our power to control.
We’re executing plans to help our customers thrive in
this environment; to continue to gain share against our
competitors; to drive turnarounds in our underperform-
ing businesses; and to keep advancing productivity gains.
Beyond that, we’re building on what we learned in
2001. Because in addition to being a “show me” year, it
was also a “shake out” year. I’m not only talking about all
the dot-coms that were flushed out of the system. More
important than that, 2001 was a year when the reality of
e-business
— the serious, pragmatic reality IBM has been
talking about for years
— finally took hold. As that has
happened, more and more people have come to see the
strategic vulnerabilities of many of our one-product, or
“pure play,” competitors.
This is important to understand, because the setbacks
our competitors have experienced
— and the share gains
IBM has achieved
— are not primarily driven by short-
term economic conditions. As Lou Gerstner explains
in his letter to you, the I/T industry is undergoing
fundamental change. We see the new competitive and
customer landscape taking shape around three domains.
INFRASTRUCTURE
The demands of real e-business computing have launched
a full-blown movement toward open, secure, reliable,
enterprise-scale systems built on integrated, industrial-
strength technologies
— in other words, the kinds of
computing systems that have defined IBM’s franchise.
We gained share in every key segment of hardware and
software infrastructure last year.
BUSINESS INSIGHT
Customer investment decisions increasingly are being
made in favor of partners who can provide industry-
specific insight (e.g., on financial services, or life sciences,
or retail), in addition to technical expertise. One implica-
tion of this shift is obvious: Companies that deliver this
kind of industry-based know-how will be able to influence
customers’ technology investment decisions.
TECHNICAL INNOVATION
We know — and more important, our customers know —
that the computing infrastructure for e-business will be
orders of magnitude more complex and sophisticated
ceo’s letter