In 2005 and 2014, IBM sold its PC business and X86 server business, gradually fading out of the public eye and becoming a quiet 2B vendor.
As the only 100-year-old manufacturer in the IT industry, IBM has been leading technological change and concept innovation since the launch of mainframe mainframes in the 60s and personal computers in the 80s. In 1997, IBM's "Deep Blue" defeated chess champion Kasparov and brought AI to the center of the public for the first time.
Over the past two decades, however, IBM has generally been silent. It wasn't until December last year that the world's first Condor superconducting quantum processor with more than 1,000 qubits was officially released, and IBM returned to the radar screen of the technology world and once again achieved leadership.
In the "quiet" 20 years, IBM has invested $6 billion a year in research and development, and has long dominated the global patent list. In 2018, IBM invested another $34 billion to acquire Red Hat, the world's largest Linux open source software company, to fill its own technology gap.
Focusing on realistic reporting balance, IBM bets on hybrid cloud technology to compete with the three giants of cloud computing: Amazon, Microsoft, and Google. With an eye to the future, IBM is betting on quantum computing in an attempt to dance another elephant and overtake in corners.
Quantum computing follows the laws of quantum mechanics and realizes parallel computing through the principles of quantum superposition and quantum entanglement, and the basic processing unit is qubits (also known as qubits). Since quantum computing can achieve exponential acceleration, it is recognized as one of the main directions for the leapfrog development of computing power in the future. On the roadmap of quantum computing, there are three key indicators: the number of qubits, the computing speed, and the fault tolerance.
IBM's Condor quantum processor contains 1,121 qubits, the first to cross the 1,000-qubit threshold. At the same time, IBM released a Heron quantum processor with higher performance but only 133 qubits, which controlled the single-qubit quantum gate error rate at 2 per 10,00072, in the leading position in the world.
On the occasion of the release of "Vulture" and "Heron", IBM once again updated the development roadmap of quantum computing, setting target parameters before 2028: the number of qubits of quantum processors is maintained at 156, and seven processors are linked to achieve a quantum processor of 1092 qubits, while continuously improving the reliability of quantum gates and developing fault-tolerant quantum computing.
In fact, in the field of quantum computing, IBM has maintained its leading position, launching the world's first quantum computer** platform in 2016 and the world's first commercial quantum computer in 2019.
For quantum computing, Chinese manufacturers are also struggling to catch up. At the beginning of last year, Origin Quantum delivered the first quantum computer to a customer. At the beginning of 2024, the third-generation superconducting quantum computer "Origin Wukong" developed by Origin Quantum will be put into operation, equipped with a "Wukong core" containing 198 qubits, which can be programmed and commercially delivered, which is regarded as a historic breakthrough in the industry.
Of course, not everyone is bullish on quantum computing. At the end of last year, Yang Likun, chief scientist of Meta, one of the three giants of artificial intelligence deep learning, publicly stated that the problems that quantum computing can solve, classical computing can also effectively solve.
Also at the end of last year, the Ali Dharma Academy, which had invested huge resources, also announced that it would abandon quantum computing, causing an uproar in the industry. There are two reasons for the withdrawal of Ali Damo Academy: first, the technical problems such as the stability of qubits, quantum error correction, and quantum communication need to be solved, and huge costs need to be invested to break through; First, large-scale application scenarios have not yet appeared, and the prospect of commercialization is uncertain.
These two major problems also plague IBM, which has invested the most in quantum computing and has studied it the most. IBM's technology roadmap consists of six intersecting technology roadmaps: hybrid cloud, artificial intelligence, data, automation, security, and quantum computing. Among them, the stability and reliability of quantum computing need to be proven urgently, and it will not enter the hybrid cloud environment until 2027 at the latest. In IBM's view, multi-cloud computing and borderless computing will become mainstream after 2030, and investing in quantum computing is investing in the future.
Balancing current reporting, IBM focuses on hybrid cloud + AI.
In the transformation of cloud computing, IBM once lagged behind, and perfectly missed a feast of the public cloud, with the result that revenue fell for six consecutive years and the stock price fell to the lowest level in a decade. The $34 billion acquisition of Red Hat in 2018 was seen as a major turning point in IBM's bet on hybrid cloud. At the time, Bloomberg commented that the acquisition of Red Hat made IBM a reliable player in cloud computing. Today, Red Hat's OpenShift is one of IBM's core hybrid cloud offerings, contributing 8% of IBM's software business in the fourth quarter of last year.
Since then, IBM has completed a series of small mergers and acquisitions, such as Apptio and Manta last year, gradually enriching its hybrid cloud technology reserves. Following the rise of generative AI, IBM has made artificial intelligence a strategic priority, announcing its enterprise-grade AI and data platform Watsonx in May last year. WatsonX seamlessly integrates with IBM's original AI Watson products and provides a toolkit that includes an AI development platform, a lakehouse, and AI governance, helping customers quickly train and deploy AI capabilities across business scenarios.
IBM's Q4 and full-year financial reports for fiscal year 2023 released last week showed that last year's revenue was $61.9 billion, a year-on-year increase of 2%; Net profit was $7.5 billion, up from $1.6 billion in 2022. In the fourth quarter, IBM's revenue was $17.4 billion, up 4% year-on-year, with growth in all three business segments: software, consulting and infrastructure.
This quarter, driven by Watsonx, IBM's generative AI business doubled**. An analyst at Global X said IBM is undergoing a strategic shift from an old business model to one driven by AI.
2024 marks the 40th anniversary of IBM's entry into China. The modernization of China's IT infrastructure, with IBM's deep involvement, was once irreplaceable in the fields of finance, finance and taxation. IBM's mainframe, Oracle's database, and EMC's storage system, known as IOE in the industry, have long been the standard configuration of large-scale systems in China.
In 2013, the "Prism Gate" incident** was a turning point. Guided by a series of policies, localization has been accelerated again and again, and the de-IOE of core systems related to the national economy and people's livelihood has long been a consensus in the industry. On the other hand, with the rapid development of cloud computing, public cloud technology has advanced by leaps and bounds and has become the mainstream of technology, IBM, which bets on hybrid cloud technology, has gradually been marginalized, and the domestic cloud computing trend is led by Alibaba Cloud, Huawei Cloud, and Amazon Web Services.
Under the crisis, IBM China had to change its course and turn enemies into friends and deepen cooperation with public cloud vendors such as Tencent Cloud. Last year, Tencent Cloud launched a high-performance computing (HPC) solution, which was jointly developed with IBM. In 2022, IBM China will achieve another management change, and recruit veteran Chen Xudong from Lenovo to serve as chairman and general manager of Greater China, launching another round of market offensive.
In November last year, IBM Chairman and CEO Arvind Krishna visited China again to deliver a keynote speech at the Wuzhen Internet Conference, promoting the AI platform WatsonX to Chinese customers.
However, after years of silence, the influence of the "blue giant" in the domestic IT circle has long been unparalleled. When mainstream cloud vendors have repeatedly emphasized the "public cloud first" strategy, IBM's long-standing hybrid cloud technology can really bring it back from the edge to the center?