WHY SOFTWARE IS IBM’s MOST IMPORTANT BUSINESS

Source: SOFTWARE MAGAZINE Published: Jul 1989

Analyst George Schussel actively followed IBM’s businesses for 30+ years. In this article he accurately portrays the importance of software to the technology giant. Some comments from the article follow:

With 1988 software and services sales of approximately $20 billion, IBM is by far the largest software company in the world. IBM‘s dominance in software is actually greater than in hardware.

Large, competing independent software vendors like Cullinet Software, Inc., Westwood, Mass., and Oracle Corp., Belmont, Calif., have sales of a few hundred million dollars per annum.

Computer Associates International, Inc., Garden City, N.Y., the largest independent, has an annual revenue of about $1 billion.

IBM needs to do well in software because software sales drive the sales of hardware, and the profit margins and growth prospects for software are greater than the hardware business Based on current projections, it seems likely that IBM‘s attention to its software businesses is only likely to increase (see Table 1).
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