It is hard to explain away IBM’s latest quarterly report, which shows revenue falling by 4 percent compared to the year before. Executives probably would like us to believe a series of small strategic errors led to the decline, but it is hard to point to any specific error in what is generally a carefully managed company. There were no major glitches or embarrassments such as a botched product release or data leak. Sales were down in every segment and every region. IBM referred to the quarter and, by extension, the year as a period of unprecedented changes in corporate information technology, but there is little to support that assertion either.
Sales were down, it seems, just because IBM’s customers in the corporate sector were less inclined to spend, particularly in September. It must be remembered that the year-ago September was a time of retrenchment as businesses of all sizes tended to wait out the effects of the federal government shutdown. There was no shutdown looming this past quarter, yet somehow spending fell even lower. The corporate sector is doing better financially last year, so it it can hardly be said that IBM’s customers have no money to spend. My sense is that it must be a combination of corporations have gotten what they needed, so that there is no urgency in buying more, and not getting what they needed, then holding back with a sense that something is wrong. Of course, that is not much of an explanation. IBM sells mainly into the enterprise budget, but desktop budgets have faced even sharper cuts.
Perhaps it is just that corporate IT spending went too far too fast without enough of a business justification to support it. Few of the promised gains in productivity and market positioning ever materialized. Whatever the story, the changes in the computer business go far deeper than just the end of the PC era.