The Web 2.0 age is all about creating dynamic websites with AJAX and watching the new companies that will spring up in this renascent flowering of creativity. It is about enhancing the customer experience, creating new value for existing companies, and delivering new opportunities for myriad creative start-ups.
Yet, try as I might, I can’t get my mind off of IBM and Microsoft these days. Why? A quick look at the numbers provides a hint.
IBM is well into its second decade on the comeback trail, and has re-established itself in recent years as the most important company in the world of enterprise IT. It has total revenue of about $90 billion, a market cap of $129 billion, a P/E ratio in the 16 range, and $12.5 billion of cash sitting around (along with another $1 billion in short-term investments). Nice.
Microsoft’s revenue is less than half of that of IBM, at about $40 billion, but has a market cap of $242 billion with only a slightly hire P/E ratio in the 18 range, due to the extreme margins it gets with its core Windows and Office product lines. This leads to the spectacular reality of Redmond having a stash of $4.8 billion in cash supplemented by another $33 billion in short-term investments.
One would think it’s time for these companies to see how this clout can be put to useful uses while maintaining the relentless fidelity to shareholder value that capitalism demands.
To some degree, both companies’ chairmen have done this. Bill Gates is now known as much for philanthropy and tremendously useful causes such as working to get children inoculated from dread childhood diseases. The task must seem overwhelming, because a person of even Gates’s wealth and clout can only make so big a dent. But cheers anyway. Bill 2.0 seems to be a good idea well-executed.
IBM Chairman Sam Palmisano remains tasked with CEO responsibilities. As such, he must remain focused on the business itself. As such, he recently authored a very nice article in Foreign Affairs about “The Globally Integrated Enterprise,” in which he stated his opinion that multinational companies are moving to a new era that he says is “promising for both business and society.”
Palmisano attempts to de-fang the debate over globalization and put it in serious, earnest terms that position IBM as a leader in a rising tide that will lift all boats. Call it Globalization 2.0, you know, the era when the subject becomes less polemicized and more utilitarian.
Technology industry executives can sometimes sound smugly arrogant as they outline futures characterized by all the great innovations created by all the incredibly smart people they employ. Palmisano’s article was nothing like this, but rather, a refreshing overview from a responsible-sounding adult who modestly believes that his company—and thousands of others like it—can make a dent in attacking the problems of the world.
(Gates recently sat down with China’s premier Hu Jintao in a meeting that was presumably more about hard-headed business than saving the children of the world. So he hasn’t lost his edge completely! Bill 1.0 lives! But note that even this was in the context of China’s reputation as an intellectual property thief of the highest order. Should Gates get Lenovo, now selling IBM-branded computers coincidentally, to pay to get Microsoft software on every system it sells, he will have made a dent in this problem, too, a dent that should embolden companies in many industries to make their own dents.)
Yet, returning to the daily news grind, one sees that Microsoft’s main objective these days is something decidedly less enlightened, ie, to run Google out of business! Commentators and analysts are pointing out that its last monopolistic foray, against Netscape, resulted in Microsoft spending enormous resources to support a browser that the market didn’t need, a carbuncular albatross around the necks of the company and developers as well. What will prevent history from repeating itself?
It is time for Microsoft management to act more like Bill Gates when he’s thinking of children and Sam Palmisano when he’s thinking of re-framing the globalization debate. Vicious reaction to the latest perceived threat is a strategy that cannot last, that will not last.
Web 2.0 is here and will presumably stay here for awhile. Yet certain fundamentals remain, as always. Regardless of where they lie within the Web 2.0 continuum, all companies, and especially companies with the mass of an IBM or Microsoft must integrate The Big View into their Web 2.0 vision.
The Big View is mission-critical in maintaining Big Revenues and Big Cash Stacks. It is good for business. It also happens to be good for society. Microsoft, where are you going today?
About Roger Strukhoff Roger Strukhoff (@IoT2040) is Executive Director of the Tau Institute for Global ICT Research, with offices in Illinois and Manila. He is Conference Chair of @CloudExpo & @ThingsExpo, and Editor of SYS-CON Media's CloudComputing BigData & IoT Journals. He holds a BA from Knox College & conducted MBA studies at CSU-East Bay.
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AjaxWorld News Desk commented on 8 May 2006
All companies, and especially companies with the mass of an IBM or Microsoft must integrate The Big View into their Big Revenues and Big Cash Stacks. It is good for business to do so. It also happens to be good for society. Microsoft, where are you going today?
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