IBM Stands Tall: Blue is Big Again

For the past two days, I’ve been at IBM’s (NYSE: IBM) Information on Demand conference. I had a chance to talk to IBM executives, as well as top technical geniuses. I also got a good look at a major product launch: the Information Server.

It’s the result of over a decade of thousands of client engagements, internal coding and savvy acquisitions (such as for Ascential, Unicorn Solutions and Ventica).

So, given all the activity at IBM, it was not a surprise that today the company announced a blow-out quarter. Net income surged 50% to $2.22 billion.

As for revenues, these increased from $21.53 billion to $22.62 billion. Actually, the software division showed an impressive 9% growth rate for the quarter.

True, there was weakness in the services category. But, over time, this should improve because of the focus on software. After all, when IBM sells software to customers, they will also need ongoing services.

Also, Information Server should be a nice growth driver.

Simply put, major companies have difficult problems managing data. The joke is: “If I ask my software the same question twice, I don’t want to get two different answers.”

Basically, with Information Server, the goal is to allow for a single version of information. Sounds kind of simple? Well, in big organizations, this is no easy feat.

But, it looks like IBM has a solution – and it appears to already be getting traction, as indicated by early adopters like Cognos (Nasdaq: COGN), Hyperion (Nasdaq: HYSL) and MicroStrategy (Nasdaq: MSTR).

In a way, the “information server” (as a technology category) looks like what app servers were like in the 1990s; that is, a must-have technology that turned into a multi-billion dollar business.

IBM 1-yr chart: