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COLUMN: Why Doesn’t Anyone Talk About IBM Anymore?

The Channel Company's Executive Chairman Robert Faletra covered IBM during the 1980s, and now he wonders why the technology giant no longer wants to step to the forefront and be part of the conversation.

When I first started in the business in the early 1980s, IBM was the company to watch. Compaq and Microsoft were in the mix and certainly Oracle, Dell, Apple and others were equally present. But it was Big Blue that ruled.

Today, we hardly talk about the Armonk legend any longer. It’s just not the dominant leader it was 30 or 40 years ago, and it is others we look to understand where the market is headed. This is despite the fact that while IBM is no longer a company with north of $100 billion in sales, it remains one of the largest companies in high tech with sales approximating $80 billion this year.

I’m not arguing that IBM is not significant, but it seems to miss more opportunities to lead these days and its public relations is almost nonexistent. It just doesn’t seem to want to step to the forefront and be part of the conversation, and it’s not for lack of opportunity.

Back in 2013 it paid $2 billion for privately held SoftLayer as cloud computing was beginning to ramp. That $2 billion was eight times revenue for a company that had sales in the $280 million range. Has it capitalized on that investment? It’s hard for me to assess in dollar terms if the acquisition has returned a profit on what it paid five years later.

What I do know is that we don’t talk about SoftLayer—now known as IBM Cloud—in the same way we talk about Amazon Web Services or Microsoft Azure or even Google Cloud. Why? Shortly after the SoftLayer acquisition, I was part of several meetings with IBM executives talking about how Big Blue was going to go big with SoftLayer. Did it leverage its channel to accomplish that? Did it work the PR or marketing angle to declare itself a leader and challenge Amazon or Microsoft? In short, did it do everything it could to take a leadership position in public cloud?

Back in my days as a high-tech reporter, I covered IBM extensively. It was fun because it strutted its stuff and when IBM spoke you had to listen. Even in its darkest days when Lou Gerstner and Jerome York swooped in and saved the company from going bust, it commanded our attention.

Sure, there was lots wrong with the company then but there was just as much interesting technology and great products to build on. The same thing holds true today. IBM has lots of problems, but there are great technologies, products and services available today.

Which brings me to the announced acquisition of Red Hat. In this case, IBM is paying $34 billion, or more than 11 times Red Hat’s $3 billion in sales. That’s a lot of money for a company that has EBITDA of somewhere in the range of $571 million.

So how does IBM get its money’s worth from this? How does it make sure its shareholders get their money back?

Only time will tell if this move makes sense, but to me it’s an opportunity for IBM to get back in the game and show its leadership capabilities. To do that, IBM has to become vocal and that means step out front and make some noise on the PR side as well as the marketing side. It has let competitors take the ball and run with it in influencing the Strategic Solution Provider channel to push business to everyone but IBM. It needs to fix that.

Spending $34 billion to acquire $3 billion in sales is easy. Making it pay off is hard. Unless we are talking about IBM more, it’s hard to imagine it is going to influence enough of the industry to jump back into its camp.

BACKTALK: Make something happen. Robert Faletra is Executive Chairman of The Channel Company. You can contact him via email at rfaletra@thechannelcompany.com

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