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To: willcousa who wrote (165302)	5/11/2001 10:48:48 AM
From: John Koligman	Read Replies (2) \| Respond to of 176387

No, he is making money selling servers, services, 'the whole package' to large business.... Here are some additional predictions from IBM on the future of computing as they see it... One of the reasons IBM stock has not collapsed like most tech is due to their huge services business - they have a very large multi billion dollar backlog and this cushions them from the vagaries of the hardware side... Regards, John May 10, 2001 Dow Jones Newswires IBM CEO: Cos To Spend 'Massive' Money On Networking Tech Dow Jones Newswires By Donna Fuscaldo Of DOW JONES NEWSWIRES NEW YORK -- The market opportunity for integration services will be $250 billion in a "few years" and will be the most important technology sector, said International Business Machines Corp. (IBM) Chairman and Chief Executive Louis Gerstner. Services is gaining traction, he said, because corporations are having a hard time finding skilled technology professionals. Coupled with businesses' need for speed, there will be "explosive demand for services," Gerstner said Thursday at the company's spring analyst meeting here. Part of IBM's strategy in the services space, said Gerstner, is to partner with the leading applications developers. For example, Gerstner said Big Blue has 600 consultants worldwide, who focus solely on I2 Technologies Inc. (ITWO) software, and three times more Siebel Systems Inc. (SEBL) consultants than its nearest competitor. In the future, services will "carry the vessel in which most hardware and software will be delivered," he said, adding that technology buying decisions will be driven by services not hardware. Gerstner stressed, however, that IBM will still sell "loads" of software and hardware. According to Gerstner, services is an attractive business because it can run counter to economic downturns. Services can help reduce costs at businesses, he said, pointing to the fact that last year IBM's services business in Japan grew 24%, while the country's economy only grew 1%. Another reason to be in services, said the chairman, is that the business never becomes obsolete. Services companies can reinvent around the technology, he said. During the analyst meeting, Gerstner laid out his vision of where he thinks technology is heading. The chairman said despite the dot-com collapse institutions of "of all sizes and types will, over the next few years, make massive investment in networking technology." Gerstner also said the computing model is changing to one in which the workload moves off the desktop and back to the server. "Its not a throw back to the 70's model of centralized CPUs," he said, it's about an array of servers designed to handle specific tasks like load balancing and security. That model of computing, said Gerstner, will demand a "enormous" increase in intelligence and self management in the network. Regarding PC's, Gerstner said the world is moving quickly to wireless. He said handheld computing devices will dwarf PCs by "orders of magnitude." Gerstner even predicted that in a couple of years there will be 700 million PCs in the world, but 2 billion wireless Internet devices. When asked by an analyst during a question and answer session if Big Blue will ever have double digit revenue growth, Gerstner said it's possible revenue will go up higher than single digits in the future, but that IBM doesn't need that. He said it's more focused on earnings growth, market share and cash flow. Gerstner did not provide any financial forecasts at the meeting.