IBM 2011 Annual Report Download - page 26

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24
Management Discussion
International Business Machines Corporation and Subsidiary Companies
Systems and Technology provides clients with business solutions
requiring advanced computing power and storage capabilities.
Approximately half of Systems and Technology’s server and storage
sales transactions are through the company’s business partners;
with the balance direct to end-user clients. In addition, Systems and
Technology provides leading semiconductor technology, products
and pack aging solutions for IBM’s own advanced technology needs
and for external clients.
Systems and Technology Capabilities
Systems: a range of general purpose and integrated systems
designed and optimized for specific business, public and scientific
computing needs. These systems—System z, Power Systems and
System x—are typically the core technology in data centers that
provide required infrastructure for business and institutions. Also,
these systems form the foundation for IBM’s integrated offerings,
such as IBM Smart Analytics, IBM Netezza, IBM SmartCloud Entry
and IBM BladeCenter for Cloud. IBM servers use both IBM and non-
IBM microprocessor technology and operating systems. All IBM
servers run Linux, a key open-source operating system.
Storage: data storage products and solutions that allow clients to retain
and manage rapidly growing, complex volumes of digital information.
These solutions address critical client requirements for information
retention and archiving, security, compliance and storage optimization
including data deduplication, availability and virtualization. The
portfolio consists of a broad range of disk and tape storage systems
and software, including the ultra-scalable disk storage system XIV.
Retail Store Solutions: provider of market leadership solutions that
include hardware, software and services for the retail industry,
including point-of-sale and self-service systems and peripherals.
Solutions leverage industry standards and interfaces enabling
efficient rollouts and superior integration.
Microelectronics: semiconductor design and manufacturing primarily
for use in IBM systems and storage products as well as delivering
semiconductors and related services to external clients.
Global Financing facilitates clients’ acquisition of IBM systems,
software and services. Global Financing invests in financing assets,
leverages with debt and manages the associated risks with the
objective of generating consistently strong returns on equity. The
primary focus on the company’s offerings and clients mitigates many
of the risks normally associated with a financing company. Global
Financing has the benefit of both a deep knowledge of its client base
and a clear insight into the products and services that are being
financed. This combination allows Global Financing to effectively
manage two of the major risks (credit and residual value) that are
normally associated with financing.
Global Financing Capabilities
Client Financing: lease and loan financing to end users and internal
clients for terms generally between one and seven years. Internal
financing is predominantly in support of Global Services’ long-term
client service contracts. Global Financing also factors a selected
portion of the company’s accounts receivable, primarily for cash
management purposes. All internal financing arrangements are at
arm’s-length rates and are based upon market conditions.
Commercial Financing: short-term inventory and accounts receivable
financing to dealers and remarketers of IT products.
Remanufacturing and Remarketing: as equipment is returned at
the conclusion of a lease transaction, these assets are refurbished
and sold or leased to new or existing clients both externally and
internally. Exter nally remarketed equipment revenue represents sales
or leases to clients and resellers. Internally remarketed equipment
revenue primarily represents used equipment that is sold or leased
internally to Systems and Technology and Global Services. Systems
and Technology may also sell the equipment that it purchases from
Global Financing to external clients.
.