International Business Machines Corp. (IBM) Outperforms Analyst Expectations

Future Strategy

IBM’s results prove that the company’s strategic initiative to slowly move out of the hardware business and towards a new business model relying mainly on software products and services is successful. Growth markets, Analytics, Cloud Computing and Smarter Planet Solutions were mainly responsible for the large growth in EPS.

The economic conditions around the world are unstable. Europe is still struggling with recession, the US economy is recovering but is still weak, and growth in China is slowing down. In these circumstances IBM has managed to achieve such magnificent results managing the fierce competition at the same time. This is an evidence of strong leadership and market credibility for this technology giant. Its global market presence, strong economies of scale, and diverse technology solutions make it a strong player in the global war for success.

IBM is in need of defining a clear strategic roadmap of its future objectives and segments in which it has an upper hand over the established market players.

The company is moving deeply into Software Sales and services, dissolving its hardware segments due to global economic slowdown and reduced demands. Competition from established players in the field of software products and services is a key challenge in the times to come. The company is depending heavily on growing economies, its analytics business, and developing future technologies.

Conclusion

The future of IBM will depend on how effectively it is able to define new segments based on emerging technologies, because the growth patterns that are being targeted by the company can be achieved on a more sustainable basis in these ares. The markets that already exist provide low growth opportunities against established competitors. This calls for a large investment in Research and Development to create new and innovative technologies, software systems, and solutions. Research has been IBM’s strength for a very long time and will strongly support it in the coming era. IBM’s strategy of diversification can be a turning point for the company, as the risk is highly mitigated by diversification, and it offers tremendous growth prospects.

The article IBM Outperforms Analyst Expectations originally appeared on Fool.com and is written by Sujata Dutta.

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