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Strengths cutting-edge technology such as their artificial

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Strengths

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Cloud services are evidently one of IBM’s major
strengths. Cloud revenue exclusively increased by 20% between 2016 and 2017,
with an individual quarter being $4.1billion. IBM stated that their annual run
rate for their deliverable cloud service was $9.4billion. This was based on
their third-quarter revenue which had increased by 7 percent in the second
quarter. (Novet, 2017)

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As well as cloud services, IBM has three other
major strengths, known as their strategic imperatives. These are data
analytics, mobile computing and cyber security. Around 46% of the overall company
revenue in this quarter came from the strategic imperatives, showing that they
are clearly a competitive advantage to IBM. These services are continuing to
grow even though IBM’s core business services are declining. This segment has
delivered $8.8billion in revenue, which grew by 11% over the year. (Novet, 2017)

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IBM is one of the strongest brands within the
information technology market. In June 2017, IBM had reached a $102.09billion
brand value (Statista, 2017). IBM are known for
their innovation and developing new cutting-edge technology such as their
artificial intelligence technology Watson.

·        
IBM can benefit greatly from economies of scale
such as financial economies of scale. As a larger firm, IBM will be seen as
more “credit worthy” and so banks are more likely to allow them to borrow with
more favourable rates, in comparison to smaller firms who will pay higher interest.

 

Weaknesses

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IBM’s core business services such as cognitive solutions,
global business services and global technology services have all reported their
individual revenues declining. This may be due to the business beginning to
shift their focus more towards cloud computing and other strategic imperatives.
(Forbes.com, 2017b)

·        
IBM have also reported a decline of revenues for
22 consecutive quarters. In their third quarter revenues for 2017, they
recorded a 0.4% decline in relation to the previous year, which in turn was
actually an improvement from the -2.7% decline recorded for the initial nine
months of the year. (Seeking Alpha, 2017)

·        
IBM depends a lot on large businesses using
their services and purchasing their products in lieu to small businesses. While
this is beneficial because it also means that large business are reliant on
IBM’s services, it can be a weakness due to how much more inexpensive solutions
for smaller businesses would be for IBM.

·        
Within the Information Technology market, IBM
would be seen as very diverse, however in relation to competitors Microsoft,
Amazon and Google, they lack diversification. Microsoft provide cloud services,
gaming consoles, PCs and laptops, office applications such as word processing
applications, as well as other business services. (Microsoft.com,
2017)

·        
In May 2017, IBM were reported to be letting go
of at least 5000 employees in India over several quarters. This makes the
company unpopular within not only employees as they would have been worrying
over becoming unemployed, but also customers who are made aware of the significant
amount of losses being made within the company. (Dayama,
2017)

 

Opportunities

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IBM released a supercomputer named Watson in
2010.  The supercomputer combines artificial
intelligence and analytical software which are becoming much more available. Watson’s
big data and analytics could be used innovatively by not only IBM but other
companies to benefit from artificial intelligence. (Rouse,
2016a)

·        
In addition to Watson, Internet of Things (IoT)
is computing devices and digital machines which are interrelated and provided
with unique identifiers. IoT can transfer data over a network with no human or human-to-computer
interaction. IBM combine this with Watson to provide insight and intelligence
into IoT with Watson. (Rouse, 2016b)

·        
IBM have come up with “Express System x servers”
specifically for small-medium businesses who may not be able to afford a larger
system and have little need for a larger system. IBM could also continue to
focus on smaller business as they would be less likely to need expensive
systems. (www-03.ibm.com, n.d.)

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Another opportunity that IBM can continue to
exploit is the mobile computing segment. They have developed “MobileFirst”
which allows users to develop applications and allow users to engage with them
easily.

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With IBM having been originated in 1911, it
could be seen as quite an ‘old’ company. They need to market their company more
toward the younger generation, which they have been doing through the use of
social media, showing millennials how they can benefit from IBM’s technology. (Taube, 2015)

 

Threats

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Although Watson may be popular within large
businesses, they have not yet broken into the market of household devices. Competitors
such as Amazon and Google who currently have household AI devices on the market
may be a threat to IBM, particularly with losing out on such a strong market.

·        
Another threat to IBM is the competition within
the market of cloud computing. With three main competitors being Amazon,
Microsoft and Alphabet, IBM need to ensure they continue to advance like their
20% increased revenue in the third quarter of 2017. (Beaver,
2017)

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With Artifical Intelligence and analytics becoming
much more popular now within businesses, IBM need to be careful as some
businesses may begin to imitate Watson as a model for their own artificial intelligence
systems and make it more available for themselves at a much lower price.

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Although IBM have a team of designers who try to
fight hacking and cyber threats, being in an information technology industry
will always come with the threats of viruses and hackers who try to obtain
entry into IBM’s data servers in order to steal information. (Quito, 2017)

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