Reference Code: 2CCC78C4-8E BC-AE12C4655D2C. Datamonitor Germany Kastor & Pollux Platz der Einheit Frankfurt Deutschland

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1 Company Profile Reference Code: Publication Date: Jan Datamonitor Europe Charles House Finchley Road London NW3 5JJ United Kingdom t: f: e: Datamonitor Americas 245 Fifth Avenue 4th Floor New York, NY USA t: f: e: Datamonitor Germany Kastor & Pollux Platz der Einheit Frankfurt Deutschland t: f: e: deinfo@datamonitor.com Datamonitor Asia-Pacific Room , 24/F Shui On Centre 6-8 Harbour Road Hong Kong t: f: e: hkinfo@datamonitor.com Datamonitor Japan Aoyama Palacio Tower 11F Kita Aoyama Minato-ku Tokyo Japan t: f: e: jpinfo@datamonitor.com

2 ABOUT DATAMONITOR Datamonitor plc is a premium business information company specializing in industry analysis. We help our clients, 5000 of the world's leading companies, to address complex strategic issues. Through our proprietary databases and wealth of expertise, we provide clients with unbiased expert analysis and in-depth forecasts for six industry sectors: Automotive, Consumer Markets, Energy, Financial Services, Healthcare and Technology. Datamonitor maintains its headquarters in London and has regional offices in New York, Frankfurt, Hong Kong and Japan. Datamonitor's premium reports are based on primary research with industry panels and consumers. We gather information on market segmentation, market growth and pricing, competitors and products. Our experts then interpret this data to produce detailed forecasts and actionable recommendations, helping you create new business opportunities and ideas. Our series of company, industry and country profiles complements our premium products, providing top-level information. While they do not contain the highly detailed breakdowns found in premium reports, profiles give you the most important qualitative and quantitative summary information you need - including predictions and forecasts. All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Datamonitor plc. The facts of this profile are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. Datamonitor (Published Jan 2005) Page 2

3 Table of Contents TABLE OF CONTENTS Facts & Overview... 4 Business Description... 5 History... 7 Major Products & Services... 9 Revenue Analysis Key Employees Key Employee Biographies Locations & Subsidiaries Company View SWOT Analysis Top Competitors Datamonitor (Published Jan 2005) Page 3

4 Company Overview COMPANY OVERVIEW International Business Machines (IBM) is the world s largest information technology (IT) company. It offers a variety of services ranging from business transformation consulting to software, hardware, fundamental research, financing and the component technologies used to build larger systems. IBM has operations in over 160 countries worldwide including the UK, Japan, Italy, Germany, France, China and Canada. The company is headquartered in Armonk, New York and employs about 340,000 people. The company recorded revenues of $89.1 billion during the fiscal year ended December 2003, an increase of 9.8% over The increase was primarily attributable to stronger demand associated with the improving US economy and continued market share gains. The gross profit of the company during fiscal 2003 was $33 billion, an increase of 9% over fiscal The net profit was $7.6 billion during fiscal year 2003, an increase of 110.6% over KEY FACTS Head Office New Orchard Road Armonk NY USA Phone Fax Web Address Ticker New York: IBM # Employees 337,462 Turnover (US$ Mn) 89,100 Financial Year End December Datamonitor (Published Jan 2005) Page 4

5 Business Description BUSINESS DESCRIPTION IBM is world s largest IT company. IBM holds more than 22,000 patents and markets more than 100 products and services. IBM s clients include sole proprietorships, large organizations, government organizations and companies from sectors ranging from financial services, public, industrial, distribution and communications industries. The company is organized into five business divisions; global services segment; three hardware product segments - systems group, personal systems group and technology group; software segment; global financing segment, and enterprise investments segment. The global services division manages the company s IT services business and offers a wide variety of business and IT services including consulting, software and system implementation, and outsourcing. The unit is organized into business consulting, infrastructure services and On Demand services. The business consulting group comprises the PriceWaterhouseCoopers consulting unit, which IBM acquired in The infrastructure services group includes implementation, hosting and strategic outsourcing. The On Demand services draw from IBM s consulting and infrastructure capabilities to offer utility computing capabilities. The IBM hardware segment includes servers, storage devices and intellectual property licensing. IBM reports revenue from three sub segments in hardware: systems, personal systems and technology. The systems group includes servers, storage and technology. The main systems products are Z Series mainframes; X Series Intel-based servers; I Series Servers, which run IBM s OS 400; P Series UNIXbased servers; blade servers; and storage devices (mainly disk systems, SANs, and tape and optical drives). The personal systems group includes all notebooks, desktops and related peripheral hardware such as monitors. IBM ThinkPad notebooks include the R, T, X and G series. The IBM desktop line includes the A, M and S series. The technology group generates revenue by licensing IBM s more than 22,000 active patents. IBM is a leading provider of PCs and servers. IBM has number three position in the PC market and top share in the server market. IBM has increased its share of the server market to 31% in 2003 from 27% in The IBM software segment comprises five major brands: WebSphere, DB2, Lotus, Tivoli and Rational. IBM also sells a wide variety of data management tools and other middleware. IBM is the second-largest software company in the world in terms of revenue. Datamonitor (Published Jan 2005) Page 5

6 Business Description IBM provides financing for customers and records the fees generated from these activities as global financing revenue. IBM is the world s largest vendor of IT financing services, offering a wide variety of programs to 125,000 customers in 40 countries. Global financing consists of three lines of business: customer financing, commercial financing and remarketing. Customer financing provides lease and loan financing to end users and internal customers for terms generally between two and five years. Internal financing is predominantly in support of global services long-term customer service contracts. Commercial financing provides primarily short-term inventory and accounts receivable financing to dealers and remarketers of IT products. The enterprise investments and other segment include all revenue from strategic investments and other non-operating income. The enterprise investments segment develops and provides industry-specific IT solutions supporting the hardware, software and global services segments of the company. Primary product lines include product life cycle management software and document processing technologies. Product life cycle management software primarily serves the industrial sector and helps clients manage the development and manufacturing of their products. Document processor products service the financial services sector and include products that enable electronic banking. Datamonitor (Published Jan 2005) Page 6

7 History HISTORY IBM was incorporated as the Computing Tabulating Recording Company in The company was formed as a result of the consolidation between the Computing Scale Company of America, the Tabulating Machine Company, and The International Time Recording Company of New York. In 1924, the company changed its name to International Business Machines Corporation. In 1981, the company introduced the IBM Personal Computer or PC, allowing the use of computers in schools, homes and businesses. Components for the computer were sourced from outside the company. The processor chip came from Intel and the operating system, called DOS (Disk Operating System), came from Microsoft. The IBM token-ring local area network, introduced in 1985, permitted personal computer users to exchange information and share printers and files within a building or complex. IBM introduced the ThinkPad in 1992, the first in a series of notebook computers to be manufactured by the company. In 1995, IBM acquired Lotus Development and Tivoli Systems. In 1997, IBM demonstrated computing s potential with Deep Blue, a 32- node IBM RS/6000 SP computer programmed to play chess on a world class level. In 2002, IBM acquired PWC Consulting, the global management consulting and technology services unit of PriceWaterhouseCoopers. IBM sold most of its hard disk drive operations to Hitachi in The sale involved the creation of a joint venture called Hitachi Global Storage Technologies, which was 70%-owned by Hitachi. IBM acquired Rational Software in February Rational Software was a provider of open, industry standard tools, best practices and services for developing business applications and building software products and systems. In November 2003, Microsoft announced that it would be using IBM chips in its next generation Xbox game and consumer electronics devices. In the same month, IBM bought Productivity Solutions, a maker of automated self-checkout software used in retail and grocery stores. IBM acquired Green Pasture Software, a privately-held provider of document management software in December In March 2004, IBM acquired the Australian and New Zealand operations of network services integrator Logicalis Group. This was followed by the announcement of plans to acquire Daksh, India s third largest business outsourcing company. Datamonitor (Published Jan 2005) Page 7

8 History In April 2004, IBM completed the acquisition of Trigo Technologies. Trigo s product information management capabilities and technology were integrated into the IBM software group. Later in the same month, IBM acquired the business continuity services unit of Schlumberger. In June 2004 the company acquired Candle Corporation, a service provider. The company was integrated into IBM s software group. In July 2004 the company acquired Alphablox. During December 2004, IBM sold its PC hardware division to Lenovo of China and acquired KeyMRO, a French Internet-based procurement service firm, for an undisclosed sum. Datamonitor (Published Jan 2005) Page 8

9 Major Products & Services MAJOR PRODUCTS & SERVICES IBM is world s largest information technology (IT) company. It offers a variety of services ranging from business transformation consulting to software, hardware, fundamental research, financing and the component technologies used to build larger systems. The company s products and services are categorized under the following different segment divisions: Products: Personal computing: Monitors Handhelds Servers: Blades Mainframe Intel processor-based Midrange UNIX Clusters Storage: Disk systems Hard disk drives Microdrives Tape systems SAN, NAS and iscsi Storage software Software: Application and web development tools Applications - desktop and enterprise Application servers Business integration Collaboration and knowledge Database and data management Datamonitor (Published Jan 2005) Page 9

10 Major Products & Services e-learning software Enterprise messaging Host transaction processing Networking Operating systems Portals - commerce - personalization Security Storage management Systems management Wireless - voice - pervasive Other: Upgrades, accessories and parts IBM certified used equipment Microelectronics Networking Printing systems Point-of-sale systems and kiosks Services: Business Consulting Services: Application management Business intelligence Customer relationship management e-business integration Financial management Portals, knowledge and content management Procurement Product lifecycle management Security and privacy Strategic change Supply chain and operations Wireless e-business Infrastructure Services: Application management e-business hosting Technical support Continuity and recovery Datamonitor (Published Jan 2005) Page 10

11 Major Products & Services Maintenance Networking Security and privacy Storage Strategic outsourcing Wireless On-Demand Services: Applications and infrastructure Business processes Organization and culture Other Services: PC services Financing Technology design services Technical training Datamonitor (Published Jan 2005) Page 11

12 Revenue Analysis REVENUE ANALYSIS IBM recorded revenues of $89.1 billion during the fiscal year ended December 2003, an increase of 9.8% over The increase was primarily attributable to stronger demand associated with the improving US economy and continued market share gains. For the fiscal year 2003, revenues from the US, the company s largest geographical market, were $38.1 billion, an increase of 4.5% over fiscal ABC generates revenues through its five business divisions: global services (47.8% of total revenues during fiscal 2003), hardware group (31.8%), software (16%), global financing (3.2%) and enterprise investment/others (1.2%). Revenues by Division During the fiscal year 2003, global services recorded revenues of $42.6 billion, an increase of 17.3% over fiscal The increase was driven by strategic outsourcing revenues and the business consulting group revenues as a result of the acquisition of Pricewaterhouse Coopers. The software group recorded revenues of $14.3 billion, an increase of 9.2% over fiscal The hardware group recorded revenues of $28.3 billion, an increase of 2.9% over fiscal The increase was driven by increase in sales of pseries, xseries and zseries servers and Storage Systems. The global financing division recorded revenues of $2.8 billion, a decrease of 12.6% over fiscal The decline in revenues was due to lower interest rates and decline in the average asset balance. The enterprise investment division recorded revenues of $1.1 billion, an increase of 5.3% over fiscal Datamonitor (Published Jan 2005) Page 12

13 Key Employees KEY EMPLOYEES Name Job Title Board Total Annual Comp. Samuel Palmisano Chairman of the Board and Chief Executive Board - Executive Officer (Since: 1997) Cathleen Black Director Non Executive Board - Kenneth Chenault Director Non Executive Board - Carlos Ghosn Director Non Executive Board - Nannerl Keohane Director Non Executive Board - Charles Knight Director Non Executive Board - Lucio Noto Director Non Executive Board - John Slaughter Director Non Executive Board - Joan Spero Director Non Executive Board - Sidney Taurel Director Non Executive Board - Alex Trotman Director Non Executive Board - Charles Vest Director Non Executive Board - Lorenzo Zambrano Director Non Executive Board - Nicholas Donofrio Senior Vice President, Technology & Senior Management 1,820,000 (USD) Manufacturing (Since: 1995) Douglas Elix Senior Vice President, Sales and Distribution Senior Management 2,390,000 (USD) (Since: 2004) Bruce Harreld Senior Vice President, Strategy Senior Management - (Since: 1995) Jesse Greene Vice President and Treasurer Senior Management - (Since: 2002) Paul Horn Senior Vice President, Research Senior Management - (Since: 1996) Jon Iwata Senior Vice President, Communications Senior Management - (Since: 2002) John Joyce Senior Vice President, Global Services Senior Management - (Since: 2004) John Kelly Senior Vice President and Group Senior Management - Executive, Technology Systems and Technology Group (Since: 2000) Abby Kohnstamm Senior Vice President Senior Management - (Since: 1998) Michael Lawrie Senior Vice President and Group Senior Management - Executive, IBM Global Sales and Distribution (Since: 2002) Edward Lineen Senior Vice President and General Counsel (Since: 2002) Senior Management - Datamonitor (Published Jan 2005) Page 13

14 Key Employees Mark Loughridge Randall MacDonald Steven Mills Robert Moffat Daniel Donnell Linda Sanford Stephen Ward William Zeitler Senior Vice President and Chief Financial Officer (Since: 2004) Senior Management - Senior Vice President, Human Senior Management - Resources (Since: 2000) Senior Vice President and Group Senior Management - Executive, Software Group (Since: 2000) Senior Vice President, Integrated Supply Senior Management - Chain (Since: 2002) Vice President Assistant General Senior Management - Counsel and Secretary (Since: 1998) Senior Vice President, Enterprise On Senior Management - Demand Transformation and Information Technology (Since: 2000) Senior Vice President and General Senior Management - Manager, Personal Systems Group (Since: 2003) Senior Vice President and Group Senior Management - Executive, Systems and Technology Group (Since: 2000) Datamonitor (Published Jan 2005) Page 14

15 Key Employee Biographies KEY EMPLOYEE BIOGRAPHIES Samuel Palmisano Board: Executive Board Job Title: Chairman of the Board and Chief Executive Officer Since: 1997 Age: 52 Mr Palmisano was elected chairman in 2002, and has served as chief executive officer since Prior to the current appointment, he was president and chief operating officer. Mr Palmisano has held a number of positions during his IBM career, including senior vice president and group executive for IBM s Enterprise Systems Group. Prior to that, he was senior vice president and group executive for IBM Global Services. Mr Palmisano has served as senior vice president and group executive for IBM s Personal Systems Group; led IBM s strategic outsourcing business; and was president of the Integrated Systems Solutions Corporation (ISSC), an IBM wholly owned subsidiary, and now part of IBM Global Services. Before joining ISSC, he was IBM senior managing director of operations for IBM Japan. Cathleen Black Board: Non Executive Board Job Title: Director Ms Black is president of Hearst Magazines. Kenneth Chenault Carlos Ghosn Board: Non Executive Board Job Title: Director Mr Chennault is chairman and chief executive officer of American Express Company. Board: Non Executive Board Job Title: Director Mr Ghosn is co-chairman, president and chief executive officer of Nissan Motor Company. Nannerl Keohane Datamonitor (Published Jan 2005) Page 15

16 Key Employee Biographies Board: Non Executive Board Job Title: Director Mr Keohane is president of Duke University. Charles Knight Lucio Noto Board: Non Executive Board Job Title: Director Mr Knight is chairman of Emerson Electric Company. Board: Non Executive Board Job Title: Director Mr Noto is managing partner of Midstream Partners. John Slaughter Joan Spero Sidney Taurel Alex Trotman Board: Non Executive Board Job Title: Director Mr Slaughter is president and chief executive officer of National Action Council for Minorities in Engineering. Board: Non Executive Board Job Title: Director Mr Spero is president of Doris Duke Charitable Foundation. Board: Non Executive Board Job Title: Director Mr Taurel is chairman, president and chief executive officer of Eli Lilly and Company. Board: Non Executive Board Job Title: Director Datamonitor (Published Jan 2005) Page 16

17 Key Employee Biographies Charles Vest Mr Trotman is retired chairman of Imperial Chemical Industries. Board: Non Executive Board Job Title: Director Mr Vest is president of Massachusetts Institute of Technology. Lorenzo Zambrano Board: Non Executive Board Job Title: Director Mr Zambrano is chairman and chief executive officer of CEMEX, S.A. de C.V. Nicholas Donofrio Bruce Harreld Jesse Greene Board: Senior Management Job Title: Senior Vice President, Technology & Manufacturing Since: 1995 Age: 58 Mr Donofrio leads the strategy for developing and commercializing advanced technology across IBM s global operations. He also heads the IBM Technology Team, is a member of the IBM Strategy Team, and is chairman of the board of governors for the IBM Academy of Technology. Mr Donofrio joined IBM in 1967 and spent the early part of his career in integrated circuit and chip development as a designer of logic and memory chips. He held numerous technical management positions and, later, executive positions in several of IBM s product divisions. Board: Senior Management Job Title: Senior Vice President, Strategy Since: 1995 Age: 53 Mr Harreld leads IBM s Strategy Team and is a member of the Technology Team. Prior to joining IBM in 1995, Mr Harreld was President of Boston Chicken and an adjunct professor at Northwestern University s Kellogg Graduate School of Business Administration. He held senior positions at Kraft General Foods, and began his career at The Boston Consulting Group. Datamonitor (Published Jan 2005) Page 17

18 Key Employee Biographies Paul Horn Jon Iwata John Kelly Board: Senior Management Job Title: Vice President and Treasurer Since: 2002 Age: 58 Mr Greene was previously with Compaq Computer Corporation (now a part of Hewlett-Packard Company), as senior vice president and chief financial officer until joining IBM in Before joining Compaq, he served as corporate senior vice president and director of business strategy and information technology at Eastman Kodak Company. Before joining Kodak, Mr Greene spent 23 years at IBM in a variety of financial positions including assistant treasurer. Board: Senior Management Job Title: Senior Vice President, Research Since: 1996 Age: 57 Dr Horn was named senior vice president of the and director of research, in He has held key management positions in science, semiconductors, and storage. Prior to his present appointment, Dr Horn was vice president and lab director of the Research Division s Almaden Research Center in California. Prior to joining IBM in 1979, he was a professor of physics in the James Franck Institute and the Physics Department and at the University of Chicago. Board: Senior Management Job Title: Senior Vice President, Communications Since: 2002 Age: 41 Mr Iwata is a member of the IBM Worldwide Management Council and the IBM Strategy Team. He is also a member of IBM s Global Marketing Board and its Privacy Executive Council. He joined the communications function of IBM in 1984 at the company s Almaden Research Center. He was named director of corporate public relations in 1994 and was appointed a vice president the following year. Board: Senior Management Job Title: Senior Vice President and Group Executive, Technology Systems and Technology Group Datamonitor (Published Jan 2005) Page 18

19 Key Employee Biographies Since: 2000 Age: 50 Dr Kelly was general manager of IBM s Microelectronics Division prior to assuming the current role. In 1990, he was named director of IBM s Semiconductor Research and Development Center. In 1994, he was appointed vice president of business process reengineering for the Microelectronics Division. In 1995, he was named vice president of systems, technology and science for the IBM Research Division. The following year, he was named vice president of strategy, technology and operations for the Microelectronics Division. In 1997, he was appointed vice president of server development (from work stations to supercomputers) for IBM. In 1999, Dr Kelly became general manager of the Microelectronics Division. Dr Kelly is a board member and former chairman of the Semiconductor Industry Association, a Fellow of the Institute of Electrical and Electronics Engineers, and member of the Union College Board of Trustees. Abby Kohnstamm Board: Senior Management Job Title: Senior Vice President Since: 1998 Age: 50 Ms Kohnstamm is a member of the Strategy Team and the Executive Committee. Prior to joining IBM, she held a number of senior marketing positions at American Express, beginning in She also served as executive assistant to the president of American Express in 1986 and Her last position at American Express was senior vice president, Cardmember marketing. Abby Kohnstamm is a member of the following boards: Tiffany & Company, The Association of National Advertisers, the Board of Trustees and the Board of Overseers for Arts and Sciences at Tufts University, and the Board of Overseers at New York University s Stern School of Business. Michael Lawrie Board: Senior Management Job Title: Senior Vice President and Group Executive, IBM Global Sales and Distribution Since: 2002 Age: 50 Mr Lawrie was serving as General Manager, Europe Middle East Africa (EMEA) beginning in 1998, prior to assuming his current role. Mr Lawrie began his IBM career in Since then, he has held a number of sales, marketing, development and Datamonitor (Published Jan 2005) Page 19

20 Key Employee Biographies financial management positions, with experience in the Asia Pacific area as well as EMEA. In 1995 he was named vice president, software, for Asia Pacific; then served as vice president, industries. In 1997, he was appointed general manager, Personal Software Products, and later headed the Network Computing Software Division. Edward Lineen Board: Senior Management Job Title: Senior Vice President and General Counsel Since: 2002 Age: 63 Mr Lineen joined IBM in 1970 as an attorney on its litigation staff. He subsequently held a variety of legal positions, including counsel for IBM s Sales and Distribution Division in 1983, group counsel for IBM Communications and Technology Group in 1985, and general counsel of IBM s Personal Computer Group in He was named senior vice president and general counsel in 2002, after serving as vice president and assistant general counsel for products and intellectual property. He is executive leader for IBM s People with Disabilities Executive Task Force and also supports Jawonio, an organization which advances the independence and well-being of the disabled. Randall MacDonald Steven Mills Board: Senior Management Job Title: Senior Vice President, Human Resources Since: 2000 Age: 55 Mr MacDonald joined IBM in 2000 as senior vice president, human resources. Prior to joining IBM, he was the executive vice president of human resources and administration for GTE (now Verizon Communications). Mr MacDonald was with GTE for 17 years holding positions of increasing responsibility. Before joining GTE, he held human resources positions at Ingersoll-Rand Company and Sterling Drug. He serves on the board of directors of Covance. He is a member of Cornell University s Center for Advanced Human Resources Study and is chair of its executive board; the Cowdrick Group; the Personnel Roundtable; the HR Policy Association and serves on its board of directors as vice chairman. Board: Senior Management Job Title: Senior Vice President and Group Executive, Software Group Datamonitor (Published Jan 2005) Page 20

21 Key Employee Biographies Robert Moffat Linda Sanford Since: 2000 Age: 52 Mr Mills was appointed senior vice president and group executive, IBM Software, in He was general manager of IBM Software Group Strategy and Solutions. He joined IBM in 1974 as a sales trainee in New York City and was a marketing representative until In 1981, he joined the business planning staff of the Data Processing Division and became manager of that function a year later. In 1984, he was named administrative assistant to the IBM vice president and assistant group executive of plans and controls in the information systems group. He became director of planning in the Information Systems and Communications Group in He became director of financial planning at corporate headquarters in Board: Senior Management Job Title: Senior Vice President, Integrated Supply Chain Since: 2002 Age: 47 Mr Moffat was senior vice president and group executive of IBM s Personal and Printing Systems Group, prior to his current appointment. Before that, he was vice president, finance and planning for the Enterprise Systems Group. Mr Moffat joined IBM in 1978, and has spent the majority of his career in the PC business. Positions held at IBM include assistant general manager, finance, planning, and business support for the IBM PC Company in Europe, controller of customer fulfillment, and vice president of finance and planning. He currently serves as IBM s partnership executive for Aetna, Bell South, Carolina Power & Light, Ingram Micro, Progress Energy and information technology product distributors CDW and Insight Direct. Board: Senior Management Job Title: Senior Vice President, Enterprise On Demand Transformation and Information Technology Since: 2000 Age: 51 Ms Sanford was senior vice president & group executive, IBM Storage Systems Group, prior to assuming her current role. Prior to assuming that position, Ms Sanford headed Global Industries. Before that, she was general manager of IBM s S/390 Division, which develops, manufactures and markets large-enterprise systems. She has held a number of executive positions at IBM, including executive assistant to the chairman of the board and director of IBM Networking Systems. Ms Sanford serves on Datamonitor (Published Jan 2005) Page 21