22 May 2007

James Govenor of RedMonk observes that the tide is changing in the software industry. Where many have viewed Web 2.0 as simply eye candy or a different class of applications for consumers, James cuts right to the heart and soberly declares that IBM is on the path to loosing a software battle much like they lost the PC hardware battle. I concur.

At IBM, we systemically divide "consumer" and "enterprise". Our entire culture, everything from sales (pricing of services, hardware, and software and incentive structure) to services to product group to research, focuses on what IBM claims they know best...the enterprise. And we've been very successful. But there is no way we are  ready for an ecomony where micropayments are king. 2 cents a transaction? Sales won't touch an engagment unless it is in the millions.

But what about emerging economies? I don't mean emerging countries. I'm talking about Web 2.0. Om Malik is quoted saying "On this Web 2.0 highway, there are three exits: Microsoft, Yahoo, and Google." Where is IBM? Well, have we completely positioned ourselves out of the consumer business? Are there enough experts or thought leaders in this space at IBM to make a splash?

If Web 2.0 means anything to me it is that consumers are demanding convergence. IBM may get paid by enterprise customers, but who pays IBM's customers? In a time where IBM's customers' customers are demanding a digital lifestyle to follow them wherever they go, IBM seems to be raising barriers of entry to new customers and potential community members. Increasing complexity for the sake of complexity to win over service agreements.

Further, with the lure of next-gen frameworks such as Django and Rails, smaller shops are more effective. This may be a blip on IBM's radar right now, but what really matters is what what is the favored tools of college kids. I've heard many call this class of developers and their tools "toys".

True, nobody got fired for buying IBM, but in this emerging economy, will we be in position to be bought?