Friday, August 21, 2009

There’s more to the picture …

I took the Corvette to the dealer for maintenance and while it was up on the lift, we found a big hole in the panel wrapped around the windshield-washer reservoir. It’s always an adventure-land for me, whenever the car is on a lift, as I get to wander underneath and look at the “unseen components” that contribute to making the car go, corner, and stop. And I am always amazed at the almost miraculous technology that goes into today’s cars, and at how little we pay for them these days. But what punctured the panel, pictured above, is anyone’s guess!

Technology may keep changing, but maintenance remains a constant – today’s automobile requires routine servicing. Some manufacturers offer better programs than others, with longer service intervals but, no matter the program offered, all cars eventually find themselves in the service center sooner or later. Tires and brakes wear out, suspensions begin to sag and to lose their responsiveness, oils need to be changed, rust needs to be treated, chips in the glass have to be patched, and even the software managing the engine, transmission, brakes, and so forth, requires revising – nothing escapes maintenance these days.

But if the automobile didn’t work so well and it ceased being affordable, and what we find so entrancing that we just “had to have it” proved unreliable leaving us stranded by the side of the road, then all of the technology in the world wouldn’t see us rushing to write a check. No matter how much R&D was expended! Looking under the Corvette, up on the lift, I could almost hear the songs on the Neil Young album – Rust Never Sleeps!

Borrowing the marketing message of a paint manufacturer, this was a great album where most of the songs were recorded only a few miles from Silicon Valley – at the venerable Cow Palace. As I continued to poke and to pull at different components, I thought of the words of his opening song, “My, My, Hey Hey (Out of the Blue)” that begins with:
“Out of the blue
and into the black
They give you this,
but you pay for that”

And I think everyone who has ever taken a car into service, and then looked at the invoice for the service, can sympathize with Neil Young and, as they begin to lose patience with their service technicians, perhaps see his lyrics in an entirely new light!

As this was taking place, I was still thinking about the financial quarterly results of IBM and HP that have been reported over the past couple of weeks. Mid July saw IBM come out with pretty good results and then last week, HP came out with its results. These too looked solid and helped HP maintain its number one rank as an IT vendor – but I have to add, thank goodness for currency fluctuations! Both scored well when the final figures were presented in US dollars!

Putting that thought to one side, what did amuse me was the comments made by IBM’s CFO Mark Loughridge: “we have operating leverage even when revenue is a headwind.” According to the ZDNet blogger Larry Dignan, “Loughridge noted that IBM’s decision to exit commodity products such as PCs and printers has allowed it to transform its business.” He also reported how Loughridge had added that “IBM is reloading for future growth and investing in cloud computing and business analytics.”

Dignan pointed out how “IBM’s positioning in software and services and away from hardware has been a boon in the downturn.” He then wrote of how “as usual, software and services paced IBM” to these better results. Revenue is a headwind? Paced, by software and services? When I paid to read this, they gave me that! Thanks, Neil Young!

But IBM doesn’t appear to be putting too much distance between itself and hardware, or shedding R&D budgets in support of hardware components. Just as HP was preparing to release its Q3 results, IBM announced it was entering Nanotechnology. Disruptive? Stealing the media limelight? Perhaps! And more evidence that IBM was reloading for the future? Yeah, right!

In an update from Zacks Investment Research, it reported that IBM had announced it will utilize DNA molecules for building next generation microchips, adding “the company’s innovative DNA molecules will shrink microchip sizes, thereby reducing manufacturing costs … it is expected that the technology will facilitate transition to sub-22 nm lithography.” And, almost as an afterthought the writer added “although manufacturing complexities are always a consideration … IBM – through its technology leadership, superior cash generation and significant investment in R&D – would be in a position to capitalize on the opportunity.

Nanotechnology! Using the DNA double helix as a kind of “scaffolds, or miniature circuit boards, for the precise assembly of computer-chip components,” according to CalTech and IBM scientists. One roadblock to the use of this technology is that the structures are made in a saltwater solution. Remember the reports, back in the early ‘90s, of how (from Stan Augarten’s book, State of the Art), “scientists at IBM have been experimenting with an exotic class of ICs called Josephson junctions, which are designed to operate in tubs of liquid helium at temperatures only a few degrees above absolute zero.”

What is it with IBM’s preoccupation with liquids? This earlier report didn’t quite have the impact initially anticipated - should we remain patient and let IBM steal the headlines with something not likely to have any impact on IT for at least ten years? And I find the timing of these announcements coming, as they did, just as HP prepared to release its Q3 results, pretty interesting. Neil Young added another verse:
“My my, hey hey …
It's better to burn out
Than to fade away
My my, hey hey.”

For many of us, the line in this song reminds us of the Highlander movie and the television series it spawned. As immortals, locked in battle until only one remained to claim the prize (which was mortality), they battled each other. And it was Kurgan, an immortal warrior of immense proportions, who berated a priest with the line “I have something to say! It's better to burn out than to fade away!” Perhaps IBM’s investment in hardware, locked as it is in a timeless battle with other, equally as powerful foes is just their latest attempt at letting us know they still have something to say!

For as long as I have been in IT, IBM had been the leader, the company so far ahead of every other vendor, that there was more discussion about who was in second place than about the possibility of IBM’s position as leader ever being challenged. Today, it’s such a different story. HP, the company that for so many years was always credited with being technologically savvy, but with work to do in marketing and sales, now has become the leading IT provider, and IBM has to contend with second place. Fading away? Not likely!

In commentary provided by the “The Motley Fool,” as HP released its Q3 results, analyst Anders Bylund reported on how HP CEO Hark Hurd had said: "HP's performance this quarter is a result of our strong business portfolio, efficient cost structure and scale." Contrast these remarks with what I had previously quoted with IBM entering “Nanotechnology.” The writer had made the observation of IBM being helped by “its technology leadership, superior cash generation and significant investment in R&D”

Whereas HP is concerned about strengthening its business portfolio and getting fully on top of its cost structures so that as business requires more from it, HP can scale up to meet the demands; IBM dwells on what it has been doing and how it’s simply generating cash to just keep doing what it has been doing. Yet, for most of us, it’s still about the budget; about what we can afford. Yes, “they give you this, but you pay for that!”

In his last column for Car and Driver (August, ’09), columnist Patrick Bedard wrapped up by observing how his “loyalty is to what works …. Man is the cleverest of the critters. Have some patience, set up the necessary incentives, lay on the teraflops, and mankind will dazzle you with invention … Patience is the key. Costs come down pennies at a time. There’s no market for miracles people can’t afford.”

So was IBM’s entry in Nanotechnology all that important or was it just another case of distracting financial analysts? And of reminding everyone that IBM remained a major force that still had to be reckoned with. Did they loose patience after all? It’s always a hard call but I am not all that convinced about where IBM’s headed. Perhaps, with both companies doing pretty well, given the economic climate everyone operates in these days, IBM is doing everything it can to stay in the limelight.

And perhaps, it can be summed up, after all, in the last verse of Neil Young’s song:
“There's more to the picture
Than meets the eye.
Hey hey, my my.

2 comments:

Anonymous said...

22nm is all well and good providing you can adequately cool the chipset - which will prove to be a big issue, high voltage in such tight tracks will also increase the susceptibility to random failures from cosmic events/radiation.

Just my 1 cents worth.

Richard Buckle said...

And I suspect that's why they are turning to a biological model rather than continuing to pursue traditional silicon approaches. Again, let's just watch this space as I don't expect breakthroughs any time soon ... but the timing of this news from IBM was what really interested me!