IBM Optimistic on the Economy

November 6, 2008  

International Business Machines chairman and chief executive Samuel J. Palmisano, making a rare public appearance, said that he anticipates the current financial crisis will be “a short term issue.” He declined to say how short.

IBM thinks the downturn will be short lived

In a nod to former Treasury Secretary Robert Rubin, who introduced his speech to the Council on Foreign relations in New York, Palmisano said “I assume Bob and his colleagues will fix it. Then we’ll get back to the real issues.”

Palmisano said those real issues include improving a vast swath of public and social systems, including health care, energy, education and even traffic congestion. Unsurprisingly, he suggested that computer technology, such as that made by IBM, would play a big role.

Palmisano said that the world is becoming smarter because more and more people and things are “instrumented” with radio-frequency-identification tags, sensors and communicating devices. He said: “consider the world where there are one billion transistors per human,” a milestone he predicted we’ll reach in 2010. Coupled with two-billion people having internet access and four-billion cell-phone users, the world can become “more efficient, more productive and responsive,” he said.

IBM has been building its service capabilities to provide and run infrastructure that takes advantage of such information. Palmisano said that he is optimistic that many customers — particularly in developing countries where “today they have a better balance sheet than we have here” — will continue to buy products and services from companies like IBM.

He said that companies like IBM have to weather the financial storm by preserving their balance sheets but he said the widespread eagerness for change means that there are opportunities for growth as well. He said IBM is looking for those opportunities because “the best way to play the game is to go to the future rather than defending the past. IBM tried defending the past in the 1980’s and we went from 407,000 employees to 212,000 employees. Now we’re back to 400,000,” he said.

William M. Bulkeley