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Is IBM dying? Employee rant warns of an imminent collapse
IBMIBM(IBM) Finbold·2024-09-28 14:24

Core Viewpoint - An alleged IBM employee claims the company is in a "slow, painful death" due to outdated technology and corporate inertia, warning that "IBM is dying and we know it" [1][2]. Group 1: Company Strategy and Market Position - The employee argues that IBM "monetizes on confusion" and relies on legacy contracts, suggesting that the company sells complexity and then solutions for problems it created [1][3]. - IBM Cloud reportedly holds a small market share because clients are trapped by legacy systems rather than choosing IBM for its merits [3]. - The 34billionacquisitionofRedHatiscitedasanexampleofIBM′sfailuretoinnovateinternally,withtheemployeestatingthecompanyoptsto"acquiresomethingdecentandslapourlogoonit"[3].Group2:FinancialPracticesandClientDependence−TheemployeecriticizesIBM′srelianceonmaintainingSystemZmainframesandcharginghighfeesforsoftwareandmaintenance,claimingthistrapscompaniesinacycleofdependence[3].−Softwarelicensingpractices,includingEnterpriseLicenseAgreements,aredesignedtoextractmaximumrevenueandfurtherlockclientsintoproprietarysystemslikeDB2andWebsphere[3].Group3:WorkforceandInnovationConcerns−Workforcemoraleisreportedlylowduetocost−cuttingmeasureslikeoffshoringandreplacingexperiencedemployeeswithlower−wageworkers,whichtheemployeearguesharmslong−termproductivityandprofitability[3].−TheattempttoentertheAImarketwithwatsonxisdismissedasadesperatemovelackinggenuineinnovation,withtheemployeestating,"WearejustridingoffthecoattailsofMetaandotheropen−sourcemodels"[3].Group4:MarketPerformanceandStockAnalysis−Despitethenegativeclaimsfromtheemployee,IBM′sstockclosedat34 billion acquisition of Red Hat is cited as an example of IBM's failure to innovate internally, with the employee stating the company opts to "acquire something decent and slap our logo on it" [3]. Group 2: Financial Practices and Client Dependence - The employee criticizes IBM's reliance on maintaining System Z mainframes and charging high fees for software and maintenance, claiming this traps companies in a cycle of dependence [3]. - Software licensing practices, including Enterprise License Agreements, are designed to extract maximum revenue and further lock clients into proprietary systems like DB2 and Websphere [3]. Group 3: Workforce and Innovation Concerns - Workforce morale is reportedly low due to cost-cutting measures like offshoring and replacing experienced employees with lower-wage workers, which the employee argues harms long-term productivity and profitability [3]. - The attempt to enter the AI market with watsonx is dismissed as a desperate move lacking genuine innovation, with the employee stating, "We are just riding off the coattails of Meta and other open-source models" [3]. Group 4: Market Performance and Stock Analysis - Despite the negative claims from the employee, IBM's stock closed at 220.84 per share on September 27, setting a new all-time high and showing a gain of 169.42% since 2004 [4]. - The stock market may react to the employee's rant in the following week as traders and investors digest the message [5].