IBM reported exceptionally strong numbers, and so one of our critical data points for the future of tech has been obtained, and in a positive direction. IBM revenue growth accelerated to 13%, EPS grew by 28%, but the US sector was last among the major markets with only an 8% growth rate.
EMEA led with 20% and Asia showed 16% growth. The growth was in software and services (about 17% in each category); computer hardware grew at only 2% overall but systems grew at 10%. IBM’s branded middleware grew at 21%, and WebSphere by 9%.
We believe the IBM numbers, particularly its service numbers, show that projects on SOA-driven modernization and the mashup process are pulling through software purchasing, thus creating the normal behavior for the IT cycle we believe to be driving the market at the moment.
We note that IBM’s information management tools expanded by 30%, showing that changes in IT directions are also changing the information content of worker experiences. All of this points to a positive data point for recovery of enterprise networking in 2009 and the need to prepare for this immediately. We believe that the strategic management changes by Cisco and Juniper are designed in part to prepare for the coming year’s changes in opportunity.