Perhaps we can use IBM as an example here. Years ago IBM was 'the' hardware company. Over the past 4 years or so, if you look at their annual reports, they have shown either no growth or actual declines in most of their 'core' hardware businesses, including the cash cow mainframe business. However, services is 'the' bright spot, and CEO Gerstner is now saying services will show double digit growth for IBM. Notice how IBM is also starting to divest itself of more and more of it's businesses, they have sold off printers and are now shopping their network. Some say perhaps they may someday source the desktop PC business and stick to laptops, where they can use their technology strengths. Point is, services is increasingly where their bread is buttered, and the Street is treating them 'just fine', even with little or no hardware growth.
John |
