Dallas, Texas 04/03/2014 (FINANCIALSTRENDS) – International Business Machines Corp. (NYSE:IBM) has been having a few tough quarters in the recent past, during which time, it has seen its revenue model coming under severe stress due to its traditional customers gravitating towards a cloud based licensing model, even as competitors like Oracle and Microsoft have gained market share in the software segment.
The difficult path in front of International Business Machines Corp. (NYSE:IBM) gets borne out by a recent report by tech analyst firm Gartner, which through its research has pegged the once famed Big Blue Firm into the third spot, behind its one time smaller competitor Oracle which in past couple of years made significant gains in its share of the overall global software market.
The Gartner report which came out last week estimates that in 2013, for the first time in their competitive history, Oracle revenue from software overtook that of IBM. Oracle accounted for close to $29.6 billion of the total $407 billion software market globally last year, where as IBM had to settle for the third spot at $29.1 billion.
Similarly, tech upstart Sales Force.Com has jumped up two positions to 10th from previous 12th position in the rankings, as it has seen its year on year sales almost double. The gains in market share that is being accomplished by this software as a service pioneer is directly at the cost of entrenched players like International Business Machines Corp. (NYSE:IBM) who have struggled to change their go to market plan to incorporate cloud based subscription offerings.
To counter this downward trend, the company announced recently that it is investing close to $100 million into strengthening its other lines of businesses like its consulting division. The change in approach was borne out by the statement quoted below by Bridget van Kralingen who is a Senior Vice President at International Business Machines Corp. (NYSE:IBM). He has been quoted to have said that, “As our clients recalibrate what it means to engage with their customers or employees, we’re bringing them the full spectrum of world-class design and IBM Research, book-ended by strategy consulting and our strength in Big Data.”