IBM’s Challenge to Compete in a Cloud-Based World

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Feb. 26 (Bloomberg) -- Bloomberg Contributing Editor David Kirkpatrick and Bloomberg tech reporter Alex Barinka discuss the challenges faced by IBM CEO Ginni Rometty and her comments at the Mobile World Congress on Bloomberg Television’s “Bloomberg West.”

Speaking with her?

We rarely hear her speak publicly so it is fascinating to hear what she has to say about the transitions happening within ibm.

It is interesting that she chose to make one of her first big talks at the conference in barcelona.

It underscores how mobile has become a central to all technology.

Ibm is recognizing that that is a shift.

She also announced that there was a watson mobile challenge today.

The signature technology that they are so proud of, they are applying it to mobile.

They are asking people to submit ideas and they will give prizes to the winning at.

I think she has the right vision of the right changes, data, clout.

She calls an engagement, and others might call it social.

These changes do not happen simultaneously.

Ibm realizes that she has a giant aircraft carrier that she has to shift.

She is not all the way there, but she is doing them or things.

-- important things.

Ibm is cutting jobs.

The revenue has dropped.

To what extent the she inherited these problems?

She is nearing 1.5 years in her role leading the company.

You could argue that some of these issues were inherited.

She has tried to right this ship and get rid of some of those money-losing hardware businesses.

She is trying to bring ibm through that transition that she talked about.

You would say that she inherited them of these challenges.

Some of them, they did, long when she took over.

The shift in technology has really -- it began before she came in.

She had to bring her company into this new clout era in terms of keeping up with the tech space.

David, what is your sense on what ibm is now and what ibm is becoming?

-a lot of the revenues that are very low margin are from the hardware business.

The company could possibly shrink and become more profitable.

Revenues have gone down, but rabbits have not.

Earning per share is quite good.

I do not have any billion-dollar industry standard service businesses they sold lenovo, but they are shrinking by choice in some respects.

The keys to figure out how to grow in more profitable areas of our.

It is becoming a software and services company.

10-50% of their services are hardware, and that is a lower number than it was recently.

In terms of jobs, they recently committed to keeping 3100 jobs in new york a through 2016. one analyst says that they could cut 13,000 jobs this year.

Is that what you are hearing?

The company has had to shift and they need to become smaller and more focused.

When they sold the computer business to lenovo, now they are offering the server business.

They have to shift their focus to clout and social and mobile areas, away from the legacy hardware business.

That might mean cutting some jobs.

We have heard from employee groups that they are already earning to cut overseas in europe and asia.

Job cuts are supposed to start coming in in the u.s. as early as this he.

It does drive -- jive with ibm moving into this new era.

Some of the things we've heard about watson, it sounds really great.

It sounds like it could revolutionize industries.

But some clients of said that it is too difficult to teach watson everything it needs to know.

It takes too long.

What about those kinds of concerns?

They are up against -- when you think about it, they are going up against google and amazon.

These are much more modern companies that have an intrinsic web dna.

They know how to operate superhigh volume analytical systems.

I have not used it, but i have a feeling it is one of those technologies that is going to take a long time to prove it out.

It would not surprise me that turned out to be good.

They're pretty proud of this thing they keep talking about.

They are trying to diagnose various cases.

That took them a long time.

None of the cool thing about it.

The more information you put into it, the better it gets.

It is a lot like google in that sense.

How well-equipped is ibm to compete with google and amazon?

-depends on the space.

We see them opening up their cloud platform and opening up watson to developers to build the ecosystem with outside help.

Investors and analysts will tell you that amazon got in ahead in the cloud space.

Ibm might be trying to keep up.

They're making a big effort.

It is a bit of a race here.

They are really pushing to get that company there.

We will see if they can really expand as much as amazon has.

Bloomberg contributing editor david kirkpatrick in barcelona,

This text has been automatically generated. It may not be 100% accurate.

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