IBM's Earnings Buoy Channel
IBM's latest financial report pretty much blew away expectations and raised optimism within channel circles. Global services are IBM's largest revenue generator, increasing 16 percent to $15.2 billion for the quarter.
Even more significantly, the company signed $14.7 billion in new service deals and reported a whopping backlog of $117 billion in service business. In fact, new service business is up 12 percent from one year ago. A lot of this new business is coming from overseas, especially in developing market. IBM's latest figures certainly show the value of international diversification for the channel, not to mention the continuing strength of technology services, which comprised two-thirds of itsoverall service business. Some analysts called this the best quarter IBM has ever had, heady words indeed considering the growing economic gloom.
IBM's numbers come shortly after both HP and Dell showed growth for the quarter in their channel sales and are battling for PC-sale dominance. (IBM's quarterly hardware sales grew about 2 percent from last year.) There's plenty of reason to be cautious about the economy, but all of this suggests there is still plenty of IT service business around (even if large U.S. enterprises appear to be hunkering down.) Historically, in lean times the channel turns to the small and medium businesses to pick up the slack and this will likely be the strategy that is used by channel players again.