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BIG RED

IBM’s painful transition is far from over

AP Photo/IBM
“IBM’s revenue gap is *this* big.”
  • Mike Murphy
By Mike Murphy

Technology editor

Published Last updated This article is more than 2 years old.

IBM announced its quarterly earnings today, and as many analysts expected, the technology giant posted its 16th quarter in a row of falling sales, when compared to the same quarter the year before. IBM’s revenue for the first quarter of the year was $18.7 billion, down about 5% from a year earlier, the company said in a release.

The company is in the midst of realigning its businesses. CEO Ginni Rometty is attempting to return IBM to greater profitability with a series of initiatives, which she calls ”strategic imperatives,” that include cloud computing, analytics, and its artificially-intelligent cognitive-computing software, Watson. IBM has been in the process of shifting away from its declining and expensive hardware and services divisions, and it’s been reported that the company recently ramped up layoffs in the US—potentially replacing many workers with cheaper labor in India—although IBM claimed reports that up to a third of US workers are being laid off were untrue.

In the short term, IBM is betting the internet of things, video streaming, internet security, and Watson will help right the ship. Rometty has pledged over $1 billion to the Watson business unit, and has opened Watson offices in New York, the Bay Area, and Cambridge, Massachusetts. Watson has gone from a parlor trick developed by IBM researchers to take on humans at the quiz show Jeopardy to an artificial-intelligence system with the ability to sort through massive amounts of unstructured data, analyze sentiment in written and verbal communications, and recommend information based on finding patterns. It’s being used for cancer diagnoses and tax-code queries, and may one day be used to predict earthquakes, and possibly even the weather.

IBM has been around for over a century, and has experienced many peaks and valleys in that time, and for Wall Street investors playing the long game, IBM still offers some hope. At the same lab in upstate New York that gave birth to Watson, groups of scientists are working on a range of technologies, and cracking any of them could have massive implications on both IBM’s revenues, and the world. From trying to unlock quantum computing, to what comes after the silicon computer chip, and bringing artificial intelligence into the workplace—the distant future of IBM looks promising, if the company can hold on that long.

Correction: An earlier version of this story implied that IBM was not profitable. 

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