IBM Unix revenues fell 25% last quarter and 32% the quarter before that. At the same time the cost to stay near the front of the pack in the chip biz just keeps going up.
IMO this is a clear sign from IBM that the status quo for Power is no longer sustainable. If they can't attract new wafer starts from external customers for Power silicon then drastic action will be needed. IBM has shown itself to be ruthless in terms of rapidly exiting or spinning off businesses that lose pricing power and margins (disk drives, DRAM, PCs, printers etc). I bet that before the end of the decade that IBM becomes fabless and outsources the manufacture of Power and Z processors to TSMC or GloFo.
He's referring to IBM's promise to deliver $20 earnings per share by 2015, a program internally called Roadmap 2015. Some IBM employees have told Business Insider that this promise is causing IBM to take drastic measures to control or reduce costs and that some employees call the plan "Roadkill 2015." For instance, IBM is laying off thousands of employees. Plus, IBM told some employees in its hardware divisions that they would have to take a week off of work with reduced pay, Bloomberg's Sarah Frier reports. Executives in the division will not be paid during the week at all, Frier reports. The furlough is an attempt to stop margins in the hardware business from a free fall. Sales in the Systems and Technology unit slid 11% to $3.76 billion in the second quarter compared to the year earlier quarter. Gross margins declined 12%.
IBM is teaming up with Google and a handful of other tech companies to license IBM's Power chip technology, in an effort to attract more users.
Gee, remembering back... What was it? 93? 94? when folks were so convinced that the combined genius of IBM, Apple and Motorola had created the perfect CPU that would destroy x86 once and for all. Kind of like the ARM groupies of today...
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