IBM 2005 Annual Report Download - page 36
Download and view the complete annual report
Please find page 36 of the 2005 IBM annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26 -
27 -
28 -
29 -
30 -
31 -
32 -
33 -
34 -
35 -
36 -
37 -
38 -
39 -
40 -
41 -
42 -
43 -
44 -
45 -
46 -
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
 |
 |
ManagementDiscussion
INTERNATIONALBUSINESSMACHINESCORPORATION ANDSUBSIDIARYCOMPANIES
_35
drivenbygrowthinBusinessContinuityandRecoveryServices
of29percent,partiallyoffsetbythereductionforsalesofthird-
party hardware in Japan. BCS revenue increased 6.3 percent
driven by strong growth in BTO. BCS continued to improve its
revenuegrowthrate whenadjustedfor currencyineveryquarter
oftheyear.Maintenancerevenueincreased4.4percentprimarily
drivenbyfavorableimpactsofcurrencymovements.
HARDWARE
SystemsandTechnologyGrouprevenueincreased7.9percent
(4.4percent adjusted forcurrency).zSeriesrevenueincreased
14.9percentduetoclientscontinuingtoaddnewworkloadson
the zSeries platform as they build their on demand infrastruc-
tures,aswellastakingadvantageofthecapabilitiesofthez990
server for consolidations. Mainframes remain the platform of
choice for hosting mission-critical transactions, as well as for
consolidationsandinfrastructuresimplification.Thetotaldeliv-
eryofzSeriescomputingpowerasmeasuredinMIPS increased
33percentin2004versus2003,offsettingpricedeclinesof23
percentperMIP.xSeriesserverrevenueincreased(24 percent)
due to strong growth in both high-end and1&2 Way Servers.
xSeries-related Blade-Center revenue had strong growth, up
over150 percent,as the companyisleading and shapingthe
blademarket. In the fourth quarter of 2004,the companysaw
strong demand for the new POWERBlade, which can run
Windows,LinuxandAIXondifferentserversintheBladeCenter.
pSeriesserverrevenueincreased7.3percent,reflectingclients’
very strong acceptance of the POWER5 systems. The new
pSeries high-end system started shipping in November 2004,
markingthecompletionofatop-to-bottomrefreshofthepSeries
serverproductlineinjustthreemonths.iSeriesserverrevenue
declineddrivenbylowersalesasthetransition to POWER5 is
takinglongerthaninpreviouscycles,as clients musttransition
theiroperatingenvironmenttothenewlevel.
Storage Systems revenue increased 1.6 percent due to
increaseddemandforexternalmidrangedisk(13percent)and
tapeproducts(9percent).Theseincreaseswerepartiallyoffset
bydecreasesinhigh-enddiskproducts(18percent)asclients
anticipatedtheshipmentofthecompany’snewPOWER5high-
endstorageproductwhichwillshipinthefirstquarterof2005.
E&TS hadstrongrevenuegrowthof 93 percentduetoincreased
design and technical services contracts and Microelectronics
revenueincreasedmodestly (1 percent) asyieldsinthe300-mil-
limeterplantimproved.
RetailStoreSolutionsrevenueincreased17.6percentdueto
strongdemandforthecompany’sproductsandtheacquisition
ofProductivitySolutionsInc.inNovember2003.Thisacquisition
drove 6.9 points of the unit’s revenue growth in 2004. Printing
Systems maintenance revenue declined due to lower annuity-
basedrevenueonadeclininginstalledbase.
Personal Computing Division revenue increased14.8 per-
cent (10.5 percent adjusted for currency). The increase was
driven by strong performance worldwide by the company’s
ThinkPad mobile computer (22 percent). Desktop personal
computer revenue increased (4 percent) in 2004 when com-
paredto2003dueprimarilytofavorablecurrencymovements.
SOFTWARE
Softwarerevenue increased5.5percent(0.6percentadjusted
for currency). Middleware revenue increased 6.5 percent (1.5
percentadjusted forcurrency).TheWebSpherefamily ofsoft-
wareofferingsrevenueincreased14percentwithgrowthinbusi-
nessintegrationsoftware(14 percent),WebSpherePortalsoft-
ware (12 percent) and application servers (20 percent). Data
Management revenue increased 7 percent with growth of 12
percentinDB2Databasesoftwareonboththehost(13percent)
and distributed platforms (11 percent), DB2 Tools (8 percent),
and distributed enterprise content management software (22
percent).Rationalsoftwarerevenueincreased(16 percent)with
growth across all product areas. Tivoli software revenue
increased(15percent),aidedbytheCandleacquisition,which
was completed in the second quarter of 2004. Tivoli systems
management, storage and security software all had revenue
growthin2004versus2003.Lotussoftwarerevenueincreased
3percentandOtherFoundationmiddlewareproductsrevenue
alsoincreased2percentduetofavorablecurrencymovements.
Operating system software increased 0.9 percent due to
growthinxSeriesandpSeries,whichcorrelatestotheincreases
intherelatedserverbrands.zSeriesoperatingsystemrevenue
declined1 percentdespitethegrowthinrelatedhardwarevol-
umesduetoongoing softwarepriceperformancedeliveredto
enterpriseclients.iSeriesoperatingsystemsoftwaredeclined6
percentinlinewithrelatedhardwarevolumes.Overall,operating
systems software revenue increased primarily as a result of
favorablecurrencymovements.
GLOBAL FINANCING
Seepage 44 foradiscussionofGlobalFinancing’srevenueand
grossprofit.
ENTERPRISE INVESTMENTS
Revenue from Enterprise Investments increased 10.7 percent
(4.2 percent adjusted for currency). Revenue for product life-
cyclemanagementsoftwareincreasedprimarilyintheautomo-
tiveandaerospaceindustries,partiallyoffsetbylowerhardware
revenue(48percent),primarilyfordocumentprocessors.
GlobalServicesgrossprofitmarginwasflatyeartoyearat
24.2 percentduetocontinuedinvestmentinondemand infra-
structure and business transformation capabilities, and less
contribution from the higher margin Maintenance business.
These declines were offset by improved profitability in BCS
drivenbyimprovedutilization,reducedoverheadstructureand
animprovedlabormix.
TheincreaseinHardwaremargins of0.8pointsto31.0per-
cent wasprimarilyduetoyieldimprovementsintheMicroelec-
tronicsbusiness andmarginimprovementsin zSeries servers,
xSeriesservers,storageproductsandpersonalcomputers,as
well as the impact of certain hedging transactions (see
“AnticipatedRoyaltiesandCostTransactions” onpage 72).
The Software margin at 87.2 percent increased 0.8 points
due to growth in Software revenue, as well as productivity
improvementsinthecompany’ssupportanddistributionmodels.
Thecostsavingsgeneratedbythecompany’ssupply-chain