The First Lady

Virginia Rometty becomes IBMs first woman CEO at the beginning of 2012. On Oct. 25, 2011, IBM announced that its board of directors had elected Virginia M. Ginni Rometty president and chief executive of the company, effective Jan. 1, 2012. She was also elected a member of the board of directors. Before being named CEO, Rometty served as senior vice president and group executive for sales, marketing and strategy. She succeeds Samuel J. Palmisano, who currently is IBM chairman, president and chief executive. Palmisano will remain chairman of the board.

IBM started out the year with a bang, as its Watson thinking computer obliterated human competitors in a series of Jeopardy matches in February. Watson went on to make the rounds, trouncing human competitors at some of the nations top universities, including Harvard, MIT, Carnegie Mellon and the University of Pittsburgh, to name a few. The Watson technology will surface in commercial applications such as health care and more.

On June 16, IBM marked the 100th anniversary of its founding. To celebrate the milestone, the company released a book, “Making the World Work Better: The Ideas That Shaped a Century and a Company,” debuted a new film, “Wild Ducks,” and rang the opening bell at the New York Stock Exchange. During its first century, IBM has played a leading role in transforming business, science and society. The company’s history can be seen as a succession of key milestones—from investing in a research lab in the depths of the Great Depression, to developing the first hard disk drive that created the data storage industry, to working with the U.S. government to develop the Social Security System. It continued with such “big bets” as a radical new computing model, the System/360 mainframe; the invention of the UPC code; the invention of the IBM Personal Computer that launched the PC revolution; and the recent development of Watson, the computer that triumphed on Jeopardy.

Smarter Commerce is a smarter way for companies to buy, sell and market their products by integrating operations and enhancing interactions through community, collaboration, process and analytics—all within an industry context. The new category of Smarter Commerce is focused on helping companies swiftly adapt to rising customer demands in today’s digitally transformed marketplace. IBM’s new software and services offerings, supported by global sales and marketing resources, will address the spectrum of enterprise commerce activities, including new ways to buy, sell and secure greater customer loyalty in the era of mobile and social networks. With its Smarter Commerce initiative, IBM is defining and leading a new market that it estimates will grow to $20 billion in software alone by 2015.??í

In January at its Lotusphere conference, IBM announced an initiative to help organizations become social businesses with the broadest support for smart phones and cloud-delivery models. IBM introduced new software, services and programs to help organizations integrate social-networking concepts into business processes to accelerate collaboration, deepen customer relationships, generate new ideas faster and enable a more effective workforce. In August, IBM announced new software designed to help organizations embrace social networking using the broadest range of mobile devices. IBM delivered its Connections social-networking software for mobile devices. Customers can easily download the software from major application stores, including Android, Apple and BlackBerry, and gain immediate access to blogs, employee data, status updates, wikis, as well as share files, videos and photos.

This year also saw IBM take a major focus on emerging markets, particularly Africa, by chasing core business on the continent and setting up new offices in several countries, including Kenya, Ghana, Tanzania and others. Big Blue also established a major presence with famed IBM PC inventor Mark Dean as CTO of IBM Middle East and Africa. IBM also announced it would double the number of emerging leaders it sends on pro bono assignments to Africa during the next three years. As part of the company’s Corporate Service Corps (CSC) program, aimed at developing IBM leaders and providing skilled assistance to local governments and non-government organizations in emerging markets, IBM will send about 600 employees to Africa through 2015.

Throughout 2011, IBM added to its portfolio of cloud computing services and technologies. In October, IBM introduced cloud services and software designed from the ground up for enterprise clients. New IBM SmartCloud services and capabilities introduced unprecedented choice, security and portability as businesses shift critical activities to the cloud and use it as a platform for business.??íIBM plans to support about 200 million users by the end of 2012 as clients shift core applications and processes to the IBM SmartCloud. According to a new IBM survey of more than 500 business and IT leaders, only 33 percent have deployed more than a cloud pilot today, but that number is expected to more than double in the next three years. By 2015, 40 percent of the respondents say cloud will bring “substantial change” and 30 percent say cloud will drive the invention of business models and revenue streams.??í??í

In November, business magnate and billionaire investor Warren Buffett announced his Berkshire Hathaway had quietly taken a 5.4 percent stake in IBM by investing $10.7 billion in Big Blue. Buffetts company began secretly amassing shares of IBM stock in March 2011. The investment in IBM marked a turn for Buffett, who had typically eschewed investing in technology companies. However, Buffett said IBMs stock is one he intends to hold onto indefinitely. The so-called Oracle of Omaha said in a CNBC interview announcing his investment that he liked IBM because it is a company that helps IT departments do their jobs better. It is a big deal for a big company to change auditors, change law firms” or to switch to a new technology vendor, said Buffett, adding: “I don’t know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM.

Dont call it a comeback. Its been here for years. There is the Energizer bunny and the Timex watch, but the IBM mainframe has them beat by a mile. The next IBM mainframe project might as well be code-named Lazarus. IBM continues to extend the life of the mainframe with new form factors, new extensions and new blood. IBM announced a new IBM zEnterprise 114 mainframe server in July 2011. The new server, which allows midsized organizations to enjoy the benefits of a mainframe as the foundation for their data centers, costs 25 percent less and offers significantly more performance than its predecessor, the System z10 BC server. At a starting price of under $75,000, IBM’s lowest-ever price for a mainframe server, the zEnterprise 114 is an attractive option for emerging markets experiencing rapid growth in new services for banking, retail, mobile devices, government services and other areas. In December, IBM announced that technology allowing IBM zEnterprise System users to integrate Microsoft Windows applications into the mainframe environment—an industry first—would become available Dec. 16. Also in December, IBM announced that 1,067 schools worldwide are recognizing the vast number of job opportunities available in enterprise computing and the importance of teaching students key systems technology like the IBM System z mainframe.

In 2011, IBM began gaining momentum in Systems and Technology while Oracle and HP stumbled. For example, in the third quarter, IBM posted 14 percent revenue growth in the Unix server market and gained 5.1 points of market share to reach a 46.3 percent stake, according to IDC. HPs revenue fell 17 percent, and its market share fell 5.2 points to 23.1 percent. Meanwhile, Oracle’s revenue decreased 4.5 percent, and the company’s share dipped 1.4 points to 23.2 percent. IBM’s share of the Unix market is now as big as both HP’s and Oracle’s combined.

In 2011, IBM created a new security division within its Software Group in recognition of the growing importance of security for its customers. In October, in announcing its intent to acquire Q1 Labs, IBM also announced the newly formed IBM Security Systems division, representing IBMs comprehensive security portfolio. IBM said the unit would be led by Brendan Hannigan, CEO of Q1 Labs. The new division will target a $94 billion opportunity in security software and services, which has a nearly 12 percent compound annual growth rate, according to IBM estimates. Q1 Labs joins the more than 10 strategic security acquisitions IBM has made in the last decade and the more than 25 analytics-related purchases, including the recently announced acquisition of security analytics software firm, i2.