How Rometty Will Get IBM's Groove Back

| About: International Business (IBM)

Arne Alsin's recent IBM (NYSE:IBM) piece drew a lot of comment, and a reply from yours truly.

But neither I, nor Arne's critics, talked much about how IBM would get from its present low point to renewed prosperity.

Some of the answer can be seen in a product announced quietly yesterday, called MessageSight.

It doesn't look like much, just another blade server. And, in fact, it's basically software, designed to implement the MQ Telemetry Transport or MQTT protocol. MQTT isn't designed to connect people, but machines, specifically sensors connected to actuators on machines of all kinds. The machine will go to service providers, who will create applications and sell them as services to consumers and businesses.

I began writing about what's now called the "Internet of Things" a decade ago. The idea is that every device around you can have intelligence built-in, that these computers can connect, and collect, the data around them, and report back via the Internet not just to you, but to others as well.

  • Home security cameras can detect a break-in and report to the police, while motes in your grass can detect moisture levels and report to your garden hose.

  • RFID chips on your yogurt can tell you when you need to buy more, and one on your keys can tell you where they are.

  • Devices on your body can measure changes in your blood, and get the ambulance to you before the heart attack even starts. I consider this a "killer app."

The point is that this takes a lot of system integration to work properly. It takes the slow creation of open protocols, like MQTT. IBM has been doing that work, and it's now ready to go.

This is the way IBM works. It sees something exciting, reports back on it for publicity purposes, then quietly goes about figuring out how money might be made from it. Its tiny movie of "A Boy and His Atom" is a demonstration of what's possible.

The technology in this case is called a Scanning Tunneling Microscope, or STM, and done using a $150,000 device that's presently limited in use to high-end scientific research. But who's to say when this product might get cheap enough for industrial use, or that a biotech company might find an application worthy of that price?

Each year the company designates five technologies it thinks might change our lives in five years. It then spends those five years seeking ways to monetize these inventions, through its own efforts and those of others. This year it's all about replicating, and using, what we consider our five senses, through computerized devices.

We don't know what will come from all this, or whether anything will at all. It takes a long-term view, and a practical bent, to find out. IBM constantly shows that it has those attributes, at which point everything depends on execution.

The message from all this is that you don't look at IBM as a day-to-day, or even quarter-to-quarter, investing proposition. You hold it, you take short-term problems as an opportunity, and you believe in the company, not its leader of the moment.

Disclosure: I am long IBM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.