IBM Is Focusing On Developing Economies

More and more of the IT industry is focusing on the emerging countries and their developing economies for various reasons: cheaper labor force, bigger market shares and increased profits. One of the IT giants and the father of the desktop PC, IBM, is currently receiving a big part of its impressive revenues from emerging countries like China, Brazil, India, and Russia and the vendor is looking for ways to double them over the next four years.

"These emerging countries are among the fastest growing IT markets in world -- and we're investing to capture growth," Mark Loughridge, IBM's chief financial officer, told analysts during a Wednesday conference call to discuss the vendor's latest financial results for the three months ended June 30 and was cited by the Web news site InfoWorld. Only in China and India, IBM's revenues increased with over 30% this year compared to the same time period in 2006. Previously, IBM's overall services business had shown little or stagnant growth. Second-quarter revenue growth for the unit was up 10 percent to $13.1 billion on the year-ago quarter. Eleven deals signed in the quarter were larger than $100 million, according to Loughridge. IBM is also seeing more revenue growth from its existing customer base as it invests in the vendor's services, he said. While not one of the champions of outsourcing, IBM saw increased profits in that area too, even more so in India where the increase nearly hit the 150% mark.

Not all news is good news, as IBM was hit by a very low demand for chips that power console games and external disk storage devices. On the other side, IBM received very good performance from its tape storage operations, where revenues increased by nearly 20%. On the software side, IBM experienced another "very strong quarter," Loughridge said, with the vendor's WebSphere middleware and its Tivoli systems, storage and security management products all performing very well. Overall, Loughridge was a happy man. "This was a really great quarter," he said. "I think every CFO waits for a quarter like this."