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Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: Robert Scott Diver who wrote (3037)	5/5/1998 10:50:00 AM
From: Arrow Hd.	Read Replies (1) \| Respond to of 8218

Robert, a very good point. Making money on technology comes in many forms and though IBM, on balance, does not grow with the industry as a whole they tend to mitigate business areas that are under pressure by balancing off against strong areas and new business opportunities. The OEM business you mentioned was only a after thought in the early 90s. It quickly grew from a few hundred million to a billion per year in 1993 and in 1997 it was a 5.6 billion dollar business with the true success story being small and mid-range DASD. Enterprise DASD still has problems with IBM using other supplier's products but that will ultimately change down the road. The other focus of interest is intellectual property. Gerstner gushes about how IBM is the leader in patents like it is some race that produces great sound-bites but it is a much more pervasive strategy since the battleground of the 21st century is intellectual property. IBM already receives more than a billion dollars a year from licensing IBM patents and other intellectual property to technology companies from their current inventory of over 30,000 patents worldwide. There are tens of thousands of patents pending. Patents and licensed intellectual property protect IBM's investments, generates revenue, protects technology techniques and architecture and forces competition to cross-license not only generating revenue for IBM but raising the cost of doing business for IBM's competitors which levels the field, protects margins, and lessens price attrition. If IBM is making any mistake here it is the fact that for every patent they file there are ten more they could file but the internal incentive system is not adequate to promote this activity. This leaves a hole for clever competitors to file within the patent range of a technology. So more focus is needed here. But it is not bad to have 1 billion of revenue basically flow to the bottom line since the development activity would be funded anyway for IBM's own technology growth. This is why spending over 5 billion in research and development in 1997, a 300 million dollar increase over 1996 is described in their releases as an investment in not only IBM's future but also in revenue and profit growth. So some very important business areas are gaining significant market share but the street analysts are mostly old timers who have not adjusted to this paradigm shift and still focus on mainframe margins and so on. This is a quiet transformation in many ways unlike to attention Gates is bringing on Microsoft through his arrogant public displays of power. Microsoft will be bracketed at some point. NCs, Java, patents, intellectual property, copper chips, networking alliances, server technology from PCs to Mainframes, OS/390 software legacies, middleware, applications, utilities software, application aids, services, outsourcing and total solution offerings and management, among other strengths. So, as I mentioned in another post, this is a very complex equation and poorly understood but it will work because it is broad based and the sum of the pieces feed on each other creating efficiency and a more productive environment. It just takes time.

To: Robert Scott Diver who wrote (3037)	5/5/1998 2:09:00 PM
From: J R KARY	Read Replies (1) \| Respond to of 8218

IBM buys credit card modems from Psion Scott a different form of IBM's tech leverage using Psion to supply a US$100 mln of modems : biz.yahoo.com Psion also markets a hand held PDA and IBM bought a OS license from ARM a month ago to run 32 bit instructions (OS/2 ?) on a 16 bit chip . A speculation , as Psion has a European base in remote banking: members.aol.com Ironically IBM supplies currency consolidation services to the EU where IBM has a sizeable ATM presence using OS/2 . Psion may have a opening . See IBM has a true ecumenical , sharing , spirit . Jim K.