IBM 2008 Annual Report Download - page 12

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
1. Several years ago, we saw change coming.
Value was shifting in the IT industry, driven by the rising
tide of global integration, a new computing paradigm and
new client needs. These shifts meant the world was
becoming not just smaller and “flatter,” but also smarter.
80
60
40
20
0
10 0% 25 Software
Services
Financing
Hardware
28 42 34 35 42 40 40 40
40 46
44
41 35
30 37 37 42
10
10
14
12
13 14 11 9
9
24
16 13 18 15 13 14
9
080706050403020100**
2000
Pre-tax Margin
12.0%
2000
Pre-tax Income
$10.2B
2008
Pre-tax Margin
16.1%
2008
Pre-tax Income
$16.7B
* Segment mix excludes Enterprise Investments and stock-based compensation.
Economies of developing
nations were growing rapidly,
driven by historic investments in
fundamental business infrastructure.
Enterprises were looking to tap
skills and capabilities available
all over the world and to integrate
their operations globally.
A new computing architecture
enabled pervasive instrumentation,
unprecedented computing power
and advanced analytics to transform
oceans of data into insight and
intelligence.
Companies were seeking to
integrate advanced technology
with their business processes
and operations, not only to reduce
costs, but to enable innovation
and growth.
2. We remixed our businesses in order to move to the emerging
higher-value spaces.
IBM has divested commoditizing businesses like
personal computers and hard disk drives, and
strengthened its position through strategic investments
and acquisitions in higher-value segments like
business intelligence and analytics, virtualization
and green solutions.
From 2000 to 2008 we acquired more than
100 companies to complement and scale our portfolio
of products and offerings. This has changed our
business mix toward higher-value, more profitable
segments of the industry.
SEGMENT PRE-TAX INCOME MIX
Generating Higher Value at IBM