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Commentary: Palmisano will boost IBM's visibility

Big Blue has a good combination from its appointment of Samuel Palmisano as its president and COO and John M. Thompson as vice chairman, Gartner says.

By Thomas Bittman, Gartner Analyst

IBM chose a good combination when it appointed Samuel Palmisano as its president and COO and John M. Thompson as vice chairman.

Although not often in the spotlight, Thompson has been one of the most important leaders within IBM. His new role gives him more opportunity to influence the overall direction of the company and indicates the faith the board of directors has in him.

See news story:
More executive changes in wake of IBM shake-up

For years, IBM has groomed Palmisano as the likely successor to Louis Gerstner. Palmisano's assignments have been intentionally varied from sales to global services to personal systems to servers.

Although the Gerstner era will be a difficult one to match, Palmisano's role as president and COO will give him the opportunity to prove his abilities at a corporate level while Gerstner is still in overall control.

The dual appointments open the possibility for the company to split Gerstner's twin responsibilities as chairman and CEO between his successors.

Although Gerstner has been an outstanding business leader for IBM, he is neither a visible industry leader nor a technology visionary. Palmisano is relatively young and well-suited to become a more visible industry leader--comparable to Sun Microsystems CEO Scott McNealy, for example.

Thompson led IBM's massive shift from mainframe-based software to a relatively independent and growing business led by the successful acquisitions of Lotus Development and Tivoli Systems (among many others). Thompson brings deep experience in the software business that will be critical to IBM.

However, the new appointments will not have a dramatic nor immediate effect on IBM's performance. IBM will continue the strategy it has pursued under Gerstner since 1993 of shifting its focus from hardware to software, services and original equipment manufacturer technology.

More important to the immediate future of IBM are changes in leadership at the group level--in particular, the software group, now reporting to Steve Mills; the server group, now reporting to Bill Zeitler; and the personal systems group, now reporting to Bob Moffat. In addition, the storage systems group has been split out from the server business and is now reporting to Linda Sanford.

Zeitler inherits an extremely profitable hardware business that needs changes in positioning and marketing and whose revenue is declining. Although Mills inherits a software business heading in the right direction, it requires more strategic coherence and continues to be threatened by the growth of Microsoft.

Moffat takes over an unprofitable PC business, which requires a kind of thinking traditionally not done by IBM to turn it around (or eventually exit the market). Linda Sanford takes on storage--the business with perhaps the most potential for improving revenue growth.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.