A friend of mine was an employee at a technology support company that supported Walmart's servers, registers, and probably more that I was not aware of. That company recently lost it's contract to IBM. They offered many of the employees contracts at IBM, but the general feeling was that many of them are just there until they finish training their overseas replacements. I tried to find a source to backup this info, but did not find anything. My only source is a reference check from IBM for one of the employees.
I'm not sure how much of an impact a contract of this size has on IBM's value, but it indicates to me that their competitors are a contract renewal away from being absorbed by IBM.
Pretty common practice at IBM to get an account, migrate all the people over and then transition them to india, brazil, and mexico at dirt cheap rates. Only 1/10 of converted employees will be left after 2 years.
Watson is trying to force a solution to a typically unknown problem and not the reverse. Projects like this always fail. IBM has failed to make a cloud presence with there own products. Buffet's own investing rules is to understand the product, so maybe he's finally coming to his senses even IBM doesn't understand it's own products and the market demand.
Can confirm. I'm Brazilian and my first job out of college was for IBM supporting a US company systems. I was not even an employee of IBM, I was officially a contractor serving IBM serving a US company. Engineering was all in India and support in Brazil because we had timezone overlap and better English accent.
It's a solid business plan if you ask me. There's a lot of money to be made on outsourcing operations that don't need to be in the US.
IBM is running on the fumes of their brand. If IBM was not named IBM they'd be perceived as just another Infosys. IBM hasn't been developer friendly for a long, long time.
No. NCR probably supports the new self checkout hardware. This company supported the Windows infrastructure. AFAIK most of the registers are old and still run Windows.
Seems like Warren believes a big reason IBM hasn't done well is because of AWS:
"What they [IBM] have run into is some pretty tough competitors. And What I would say is Amazon, which, I've never seen a guy succeed in two businesses simultaneously that are really divergent in terms of customers and operations [Retail and AWS]"... he then praises Jeff Bezos even more.
He's wrong this time. The similarities were more important than differences. Amazon was a logistics company great at moving lots of stuff on the cheap. That made them a retail powerhouse. Then the did the same for server hardware, networks, and VM's. They already had a lot of that, too, from being big eCommerce site.
I'd suggest that a big reason for the success of AWS is not the efficiency of their data center operations, but the quality of their software. AWS is a software company that happens to sell cloud software. The pricing of their core services is not necessarily lower than the IBM/Google/Microsoft equivalents. People choose AWS because of the breadth and depth of the ecosystem compared to Google/IBM/Microsoft.
The old quote "Nobody ever got fired for choosing IBM" had some truth to it, as IBM was the safe default choice. In the cloud, the truth seems to be "Nobody ever got fired for choosing AWS". AWS is the safe default choice... you'd really need a good reason to go with IBM in the cloud.
How is Amazon a logistics company? They use the major carriers like everyone else. Their distribution centers are nothing amazing, and only now are starting to be automated. They're only just starting to run their own last-mile delivery and I can tell you from experience they're pretty awful at it. They run the logistics trope as a pitch for Wall Street. They are regular e-commerce, with massive scale on the back of being able to raise a lot of money and poor labor practices.
There exist a ton of old economy businesses built on terrible legacy systems, so just being an eCommerce company doesn't necessarily mean that they would have robust enough systems architecture to be able to open it up and sell it as a service to the world.
I guess Buffet isn't that bullish on AI, Watson seems to be one of the leading contenders there.
Edit: Given that this is HN, I suppose I should clarify that I'm using "AI" as a catch-all term for Machine Learning/Language Processing/Deep Learning/etc. I apologize for any confusion or emotional distress my use of a commonly understood general term apparently caused...
While I haven't done a deep dive on Watson's utility, here's an example of a scenario where Watson was successful in matching humans, but the implementation was challenging, customer interest was low, and the IBM Watson cut didn't get past a pilot phase.[0] This came after spending $50-100 million.
To your question, the hospital wasn't "done" with teh effort and is still shopping around for IBM Watson competitors as a substitute to go forward with.
Yeah seems pretty damning, at least for that effort given how much money was spent. Perhaps not damning Watson's capacity, but without a good integration strategy you can have the best AI on the planet and it'll be a race car without any gas.
From the article: "He also added IBM "wasn't responsible" for integrating Watson with MD Anderson's new electronic medical records."
Also: "The way medical information is stored and labeled can differ widely, even between departments at the same institution, he said. For instance, "there's no standard way to record a heart rate, a blood-glucose value or temperature measured at the bedside," he said. If the way data is stored or labeled changes, often the artificial-intelligence software must be retrained, he said. "
All valid complaints, but clearly IBM failed to properly consider the implementation challenges. That's never a good thing from a business perspective.
Except Watson, Siri, Alexa, etc aren't real AI. They are very specific applications for a specific task. The idea that they are AI has been great for marketing and creating another "Strong AI is around the corner bubble."
But look at how slowly they have evolved. Siri is barely better than she was 5 years ago. I haven't seen Watson really do much beyond the same language processing and information lookup stuff it did on Jeopardy years ago. The other assistants are somewhat evolved versions of Siri. But they all require special coding to teach them any new task. None of them is really anything like true AI. They are AI only in the sense that they are programs which appear to exhibit intelligent behavior in a very narrow and specific role, like an AI opponent in a video game. But I strongly believe we are not appreciably closer to true AI than we were 10 years ago. We are just in another bubble like the 80s because the people with money don't understand the massive gap between Siri and Hal.
From the Wikipedia article on Artificial Intelligence:
"In computer science, the field of AI research defines itself as the study of "intelligent agents": any device that perceives its environment and takes actions that maximize its chance of success at some goal."
I guess you're one of the people to whom there is no "real" AI below general purpos, human-level intelligence. To me, the "simple" language processing and information lookup that Watson does is most definitely AI. Jeopardy is not an easy game and beating the best humans at it was an amazing break-through.
I don't know about "just in another bubble" but I agree with the general sense of your comment.
The voice recognition of digital assistants has gotten decent (for appropriate speakers and languages). But we don't seem to be remotely close to, for example, a digital assistant that can compete with the most marginally competent human admin--even for digital-native tasks.
Watson does do marketing well. There may be some domain-specific tasks, e.g. in medicine, that it turns out to be good for. But, again, at IBM's scale the business opportunity has to be huge to move the needle.
At SXSW one year IBM had Watson come up with a bunch of new recipes to try. I thought they all tasted awful. Some things are just not suited to the current AI tools.
I'd say they have the leading household name and a good amount of marketing behind it, but I don't see any of their offerings as superior to Google's, and AWS is catching up quickly.
Perhaps not superior, but they're there and have the capacity to compete, which is more than can be said for basically everyone else. If voice and natural language processing truly are the future then I wouldn't think IBM would be a bad bet. But then again I don't own a massive chunk of IBM and am reliant on public info. So perhaps they're less competitive than it appears. I suppose they have roughly the same problem Apple has with a general lack of information (or willingness to use said information) about their customers.
"Watson seems to be one of the leading contenders there" ... Could you elaborate? I'm interested to know why. The only group of people I know who are interested in Watson are government folks, everyone else seems to be into AWS of Google Cloud products.
I'm surprised Buffet didn't dump all of his IBM stock holdings. When you have 20+ straight quarters of not making your numbers something is seriously wrong with the direction the CEO has charted. Ginni Rometty should have been fired long ago for her incompetence.
> Ginni Rometty should have been fired long ago for her incompetence.
Although I agree, I'm sure the 5 layers of clueless, infighting management deserve no blame. There's too much dead wood for even the best CEO to make a difference
They could always offshore their 5 layers of clueless management. This would enable better synergy between the offshore employees and the clueless offshore management.
Buffett's holdings all see decreased IBM spending on the horizon. Buffet knows IBM will need a massive bond infusion as a life raft. Sell the stock now, lend proceeds back to IBM at 12% interest, and buy the shares back at half price.
> "I think if you look back at what they were projecting and how they thought the business would develop, I would say what they've run into is some pretty tough competitors."
What market segment is he talking about, and who are the competitors?
AFAIK, he hasn't been any more explicit than that, but my guess is that he's talking about cloud providers especially Amazon, Google, and Microsoft.
IBM made a push to be a cloud provider fairly early on. However, aside from the fruits of its Softlayer acquisition, none of that has really panned out--at least not at a scale relevant to IBM's financials.
While IBM is rotating through futuristic themes each year (Smart Cities, Watson, Predictive Analytics), its enterprise customers are lagging behind. Attend an average IBM user group meeting in your area, and you'll see that these customers are busy maintaining core systems with an increasingly outdated tooling. They're struggling with more mundane issues such as integration, reliability, compliance - all of these under cost pressures.
Also, Power is not selling that well in the mid-range segment. The new workloads are being designed for horizontal scalability which is where Linux comes in.
IBM could be the best cloud foundry in the world but they refuse to open their gates to hobbyists, ignoring that they will become influencers and influencers bring more users to their platforms.
If I was a Bluemix head honcho I'd create a twin foundry 'Hobbymix' free for all, no questions asked, no credit cards, no resource limits, watson enabled, just play and get addicted with all the cool toys. Then when you're ready, just transfer it all to our enterprise-ready, pro-version at Bluemix with pro level support.
That's how MS took the world by storm. That's how Android is taking it from Apple who's ignoring the poor bases focusing only in the 10% which in the long run will cost them the whole market. That's how Whatsapp took the messaging markets.
Technology is a winner takes all approach, like Google or Facebook. You have to have the whole world using your services no matter what, whether they bring money in or not. Then you can figure out how to milk them, how to show them your new toys and convince them to pay for them, or at least how to praise you for being the cool guy on the block. They have the resources, they need the vision.
I still have test pages I developed on Google App Engine a decade ago. It costs them nothing for I seldom use them, but they have a loyal follower and I go to them for my quick hacks. Instead, Bluemix first didn't allow me to have test pages, now they allow me but with a warning that they will be deleted after a year, plus they charge me for everything I try to use like databases. Bye Bluemix, moved to Heroku now for my tests with free space and free databases. Now you want me to use your new free database? Too late. See? Make it all free, everything, and I may give it a last try once again.
Some may say they focus on enterprises because hobbyists are an annoyance. Sure we are, but we also are the ones who write blogs, twits, who shake the social webs. And people listen to us.
Do you want to know why I learned Python? Because it was free on Google App Engine. Why I learned Go? Free on Google. Why Java? Free on Google. So with the tools I know, where do you think I'll go to try my next ideas? Yep. Google. Now, let me try Swift on Bluemix, then Kotlin, then Rust, then DB2, then Watson, then I'll go to build whatever new project I need on your platform, with your tools. I won't go before, I'll go during and after I learn them. But not on your platform if you won't let me try it.
So, tl;dr; open Bluemix for the whole world to try with an eternal free tier without limits or expiration dates and I'll go with you to try all your new toys. Then we'll help you conquer the world, again.
That's exactly the wrong mentality in the business. How much does it cost to allocate a million dockers for a million developers to play? A million dollars? Take it as a huge advertisement billboard that will pay a million fold when they tell their bosses how cool that platform is.
But developers, too? I mean are you really going to pick DB2 when it's much easier to trial Postgres or MSSQL? (Never mind the fact that IBMers themselves can barely get hold of DB2 internally, and when they do it's impossible to install yourself) Same with MQ vs RabbitMQ? Ditto WebSphere, Rational Tools etc. Of course not!
But even if you do, the horrible documentation, bad configuration and sheer technical debt apparent in those products will make you run for the hills ASAP. Because that's what happens when you're best devs leave, and then you fire the average ones to keep your stock price up.
Readit News
I'm not sure how much of an impact a contract of this size has on IBM's value, but it indicates to me that their competitors are a contract renewal away from being absorbed by IBM.
Watson is trying to force a solution to a typically unknown problem and not the reverse. Projects like this always fail. IBM has failed to make a cloud presence with there own products. Buffet's own investing rules is to understand the product, so maybe he's finally coming to his senses even IBM doesn't understand it's own products and the market demand.
It's a solid business plan if you ask me. There's a lot of money to be made on outsourcing operations that don't need to be in the US.
"What they [IBM] have run into is some pretty tough competitors. And What I would say is Amazon, which, I've never seen a guy succeed in two businesses simultaneously that are really divergent in terms of customers and operations [Retail and AWS]"... he then praises Jeff Bezos even more.
Question/quote starting at around 11:00
http://video.cnbc.com/gallery/?video=3000616150
The old quote "Nobody ever got fired for choosing IBM" had some truth to it, as IBM was the safe default choice. In the cloud, the truth seems to be "Nobody ever got fired for choosing AWS". AWS is the safe default choice... you'd really need a good reason to go with IBM in the cloud.
Edit: Given that this is HN, I suppose I should clarify that I'm using "AI" as a catch-all term for Machine Learning/Language Processing/Deep Learning/etc. I apologize for any confusion or emotional distress my use of a commonly understood general term apparently caused...
To your question, the hospital wasn't "done" with teh effort and is still shopping around for IBM Watson competitors as a substitute to go forward with.
[0] https://www.wsj.com/articles/hospital-stumbles-in-bid-to-tea...
Yeah seems pretty damning, at least for that effort given how much money was spent. Perhaps not damning Watson's capacity, but without a good integration strategy you can have the best AI on the planet and it'll be a race car without any gas.
From the article: "He also added IBM "wasn't responsible" for integrating Watson with MD Anderson's new electronic medical records."
Also: "The way medical information is stored and labeled can differ widely, even between departments at the same institution, he said. For instance, "there's no standard way to record a heart rate, a blood-glucose value or temperature measured at the bedside," he said. If the way data is stored or labeled changes, often the artificial-intelligence software must be retrained, he said. "
All valid complaints, but clearly IBM failed to properly consider the implementation challenges. That's never a good thing from a business perspective.
But look at how slowly they have evolved. Siri is barely better than she was 5 years ago. I haven't seen Watson really do much beyond the same language processing and information lookup stuff it did on Jeopardy years ago. The other assistants are somewhat evolved versions of Siri. But they all require special coding to teach them any new task. None of them is really anything like true AI. They are AI only in the sense that they are programs which appear to exhibit intelligent behavior in a very narrow and specific role, like an AI opponent in a video game. But I strongly believe we are not appreciably closer to true AI than we were 10 years ago. We are just in another bubble like the 80s because the people with money don't understand the massive gap between Siri and Hal.
From the Wikipedia article on Artificial Intelligence: "In computer science, the field of AI research defines itself as the study of "intelligent agents": any device that perceives its environment and takes actions that maximize its chance of success at some goal."
The voice recognition of digital assistants has gotten decent (for appropriate speakers and languages). But we don't seem to be remotely close to, for example, a digital assistant that can compete with the most marginally competent human admin--even for digital-native tasks.
Watson does do marketing well. There may be some domain-specific tasks, e.g. in medicine, that it turns out to be good for. But, again, at IBM's scale the business opportunity has to be huge to move the needle.
Edit: typo
Although I agree, I'm sure the 5 layers of clueless, infighting management deserve no blame. There's too much dead wood for even the best CEO to make a difference
What market segment is he talking about, and who are the competitors?
IBM made a push to be a cloud provider fairly early on. However, aside from the fruits of its Softlayer acquisition, none of that has really panned out--at least not at a scale relevant to IBM's financials.
Also, Power is not selling that well in the mid-range segment. The new workloads are being designed for horizontal scalability which is where Linux comes in.
If I was a Bluemix head honcho I'd create a twin foundry 'Hobbymix' free for all, no questions asked, no credit cards, no resource limits, watson enabled, just play and get addicted with all the cool toys. Then when you're ready, just transfer it all to our enterprise-ready, pro-version at Bluemix with pro level support.
That's how MS took the world by storm. That's how Android is taking it from Apple who's ignoring the poor bases focusing only in the 10% which in the long run will cost them the whole market. That's how Whatsapp took the messaging markets.
Technology is a winner takes all approach, like Google or Facebook. You have to have the whole world using your services no matter what, whether they bring money in or not. Then you can figure out how to milk them, how to show them your new toys and convince them to pay for them, or at least how to praise you for being the cool guy on the block. They have the resources, they need the vision.
I still have test pages I developed on Google App Engine a decade ago. It costs them nothing for I seldom use them, but they have a loyal follower and I go to them for my quick hacks. Instead, Bluemix first didn't allow me to have test pages, now they allow me but with a warning that they will be deleted after a year, plus they charge me for everything I try to use like databases. Bye Bluemix, moved to Heroku now for my tests with free space and free databases. Now you want me to use your new free database? Too late. See? Make it all free, everything, and I may give it a last try once again.
Some may say they focus on enterprises because hobbyists are an annoyance. Sure we are, but we also are the ones who write blogs, twits, who shake the social webs. And people listen to us.
Do you want to know why I learned Python? Because it was free on Google App Engine. Why I learned Go? Free on Google. Why Java? Free on Google. So with the tools I know, where do you think I'll go to try my next ideas? Yep. Google. Now, let me try Swift on Bluemix, then Kotlin, then Rust, then DB2, then Watson, then I'll go to build whatever new project I need on your platform, with your tools. I won't go before, I'll go during and after I learn them. But not on your platform if you won't let me try it.
So, tl;dr; open Bluemix for the whole world to try with an eternal free tier without limits or expiration dates and I'll go with you to try all your new toys. Then we'll help you conquer the world, again.
But even if you do, the horrible documentation, bad configuration and sheer technical debt apparent in those products will make you run for the hills ASAP. Because that's what happens when you're best devs leave, and then you fire the average ones to keep your stock price up.