IBM 2007 Annual Report Download - page 7

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5
very optimistic. At IBM, we have a different view. The reason why
is best understood in terms of five key factors that differentiate our
company today.
1. Our global reach and scale. IBM’s global operations are
accelerating our company’s growth. IBM today does business in
170 countries and enjoys an increasingly broad-based geographic
distribution of revenue. In 2007, 63 percent of our revenue came
from outside the United States.
Many people think of “emerging markets” as the so-called
BRIC countries of Brazil, Russia, India and China
—
and last year our
revenue increased 26 percent in those markets. But our global
footprint extends much farther. Consider more than 50 countries
—
including Czech Republic, Poland, Malaysia, Singapore, South Africa,
Venezuela and Mexico
— in
each of which we grew more than
10 percent in local currency in 2007. In aggregate, IBM’s business in
this group grew at a rate of more than 20 percent in local currency
last year and comprised 15 percent of our geographic revenues.
2. Our infrastructure leadership. IBM arguably invented the concept
of the data center, and today our solutions provide a foundation for
more of the world’s IT infrastructure than any other company. So we
are well positioned to serve businesses across the world’s emerging
markets that are installing their first data centers
—
as well as those
in the developed world that are upgrading and transforming their
existing infrastructure.
However, today’s opportunity is not simply about replicating or
upgrading what already exists. The data center itself is going through
its most significant transformation in decades. According to one
IT analyst firm, more than 70 percent of Global 1000 companies will
have to modify their data centers significantly during the next five
years. This is driven not only by new technology but by new business
imperatives: constraints on power and real estate; systems that are
grossly underutilized; and the need for greater flexibility to innovate
business processes and models.
These needs have shaped our transformed portfolio. Our
green data center solutions dramatically impact energy efficiency
and physical space constraints, while also helping our planet.
Demand is climbing for these solutions, and we hit more than
$400 million in signings last year, after introducing the offering in the
third quarter. Virtualization, which significantly improves system
utilization, generated about $200 million in incremental gross profit
for us in 2007. And our industry-leading solutions in SOA enable
clients to reinvent their entire business model.
Clients in both the developed and developing worlds will
be migrating to this new data center model, and IBM is very
well positioned.