Software and Services Lead the Way

By Darryl K. Taft  |  Posted 2008-10-17 Print this article Print


Meanwhile, once again, software and services led the way for IBM's growth in the quarter.  "Software had the best growth rate," at 12 percent earnings growth and 19 percent income for the quarter, Loughridge said. "Services drove us to good performance, there was strong demand for high-end systems, and global financing was up 6 percent," he said.

"Demand continues for software products that that deliver short-term return, like virtualization," Loughridge said.

Loughridge also said that during a weekend meeting with IBM general managers, Steve Mills, senior vice president and general manager of the company's software business, said this is the best pipeline he's ever had for software. "And this quarter ... if you look at the pipeline, there's a chance for software to have double-digit growth again," he said.

Revenues from the IBM Software segment were $5.2 billion. Revenues from IBM's total middleware products, which primarily include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $4.1 billion, up 12 percent versus the third quarter of 2007, IBM officials said. Operating systems revenues of $594 million increased 5 percent compared with the prior-year quarter.

For the WebSphere family of software products, which facilitate customers' ability to manage a wide variety of business processes using open standards to interconnect applications, data and operating systems, revenues increased 4 percent, the company said. Revenues for Information Management software, which enables clients to leverage information on demand, increased 26 percent. Revenues from Tivoli software, infrastructure software that enables clients to centrally manage networks including security and storage capability, increased 2 percent, and revenues for Lotus software, which allows collaborating and messaging by clients in real-time communication and knowledge management, increased 10 percent year over year. Revenues from Rational software, integrated tools to improve the processes of software development, increased 23 percent compared with the year-ago quarter, IBM said.

Total IBM Global Services revenues grew 8 percent, the company said. Global Technology Services segment revenues increased eight percent to $9.9 billion, with strong growth in Integrated Technology Services. And the company's Global Business Services segment revenues increased 7 percent.

On the hardware side, "System z continues to sell very well in a tough environment" because of its ability to subsume the workloads of several servers into one, Loughridge said.

However, revenues from the Systems and Technology segment, which totaled $4.4 billion for the quarter, were down 10 percent. Yet, revenues from IBM System z mainframe server products increased 25 percent compared with the year-ago period, with double-digit growth in all geographies, the company said.

Overall, despite the turbulent financial times, IBM is positioned to ride things out with a mix of protections, Loughridge said. "This is a tough market," but IBM is ready for it, he said.

For his part, Samuel Palmisano, IBM's chairman, president and CEO, in a statement, said:

"Our results demonstrate that the combination of a steady base of recurring revenue and profits, a range of products and services that deliver value to clients worldwide, and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times." 

Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

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