Steve Mills weighs in on IBM's future and the software industry.Steve Mills, senior vice president and group executive of IBMs Software Group, is in the software integration business—integration not only in the sense of expanding the companys current $13 billion software business but also in the sense of integrating the companies acquired as part of the software strategy. eWEEK Editor in Chief Eric Lundquist and Executive Editor Stan Gibson caught up with Mills at his office in Somers, N.Y., to discuss not only IBMs future strategy but also the current state of the software industry.
Why should companies care about software now?
Companies have to think about efficiency as fundamental to differentiating their company from their competitors. When a company asks, "Where am I going to find the next wave of efficiency for my organization?" you have to think about linking the supply chain. This is where the big payback is going to come from, through supply chain efficiency. We use software for supply chain integration; that is what middleware structures do.
Will there come a time when middleware is not enough for IBM in software? When you have to get into the applications business as well?
No. The opportunities in middleware will always be around. The revenues surrounding the applications package are greater than the package. IBM at its size can capture those surrounding revenues. To go after the applications package upsets the ecosystem and angers your partners.
Doesnt Oracle [Corp.] try to be both an applications and infrastructure provider?
I think they have a fundamental flaw in their business model. Many application vendors see Oracle as a competitor. The problem [with Oracle] is they spend too much time looking in the mirror. The big flaw in the Oracle strategy is the relative lack of customer focus.
Has the legal dispute between IBM and [The] SCO [Group] slowed customer deployment of Linux products?
The data speaks for itself. The growth in Linux continues. Customers continue to buy Linux and deploy Linux. You are hard pressed to see any change in buying behaviors based on background noise.
And youve denied the allegations contained in the SCO suit?
Our view is that their allegations are entirely false.
And in the meantime, you are not going to decrease your emphasis on Linux?
Not at all. There is no reason to. Absolutely none whatsoever.
Microsoft [Corp.] seems to claim that Linux and open software are a threat to it. Do you view open software as a threat?
No, we do not. Its obvious by our behavior we do not.
Recently, youve acquired Rational Software [Corp.]. Previously, you acquired Informix [Software Inc.], and before that, Lotus [Development Corp.]. Is your software portfolio complete at this point?
Were still buying companies. Acquisitions are part of what weve always done. The overwhelming majority are small acquisitions, with a modest number of larger ones and Lotus being the largest. Our portfolio is relatively complete.
From a corporate point of view, has Lotus been assimilated at this point?
Entirely. We now assimilate with speed. The Lotus subsidiary lived on for a period of time but ceased to make sense after a while. That was fine in 95, but it doesnt make sense going forward.
What is the future of office-type suites?
The office-system-type approach is where the world was. Where it is going is to collaboration services. The world is going to in-context use, which is where the Lotus portfolio is going.
Application Development 
