Founded in the year 1911, IBM is multilingual IT Company based in America. The business model of IBM or International Business Machines Corporation revolves around Cloud computing, Artificial intelligence, Computer hardware, and Computer software.
In this post, we will be covering key idiosyncrasies of IBM Business Model, how their business channelizes all across the world and strategies incorporated by the company for revenue generation. So, without delaying any further, let us get started-
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Introduction to the Business Model of IBM
IBM is definitely one of the leading names when we are talking about the amazing and diversified tech companies that are present in the world these days.
There are so many different business offerings that are provided by the company and hence the service segments of the company are also on the increase too.
When we want to tell you about the different capabilities of the company, then we would say that it is here to provide some of the most integrated platforms and solutions to the clients.
The IBM Company has been providing a lot of services of the clients which make it reliable and dependable at the same time. Ever since its existence, the company has been widely adopted in different countries and has about 175 different branches all over the world.
There are also about 400,000 employees who are currently working in the company.
Understanding all about the business model of IBM is one of the most important things for the people who want to know how the company is able to make the money in the best way.
Let us now have a look upon the value propositions of the IBM business model-
Value Proposition comprised of the Business Model of IBM
IBM is dedicated to innovate and develop in the fields of mainframe, nanotechnology, personal computers to digital data management, virtualization and cloud services.
Hence the company’s value proposition also revolves around these factors. Key parts of IBM’s value proposition are-
- Software to Connect Applications
- Hardware to deliver specialized business solutions
- Services to assist companies to deliver IT more efficiently
- Artificial Intelligence
Channelization of IBM business model occurs through direct sales, PR, and advertising. Plus, it is involved in targeting large corporations as their customer segments.
Key Activities of IBM Business Model
The business model of IBM is primarily involved in two types of business activities and they are-
- Research and Development
- Operations
Now, as you are aware of the activities of the IBM business model, the next thing that you need to know is how the channelization of IBM business occurs.
So, five different business segments help IBM to channelize its business and they are-
- Global Technology Services (GTS)
- Global Business Services (GBS)
- Software
- Systems Hardware
- Global Financing
Let us now dive deep into these segments and understand their role in the business model of IBM-
Role of IBM Business Segments in the Business Model of IBM
In order to have a proper understanding of the company, one needs to have an idea about the different business segments which are present in the IBM Company that make it the best.
So, here we are going to talk about the amazing business segments and how they can help out the people in the best way.
In some of the cases, GBS, as well as the GTS, are collectively known as Global Services by the IBM Company. So, these important segments are the ones that are meant to provide the best services to the people.
We are going to understand all that there is to know about these important segments in the following business model of IBM.
This will provide an idea about the company and how it is able to make money with the help of these amazing services to the clients and people who are in the need of the services. So, let us get started with the business model of IBM.
#1. GTS Or Global Technology Services
Most of the amazing businesses which are pretty large in the number have to make sure that there are so many different financial services that are present in the company along with some other industries such as the retail, telecommunication, healthcare, and some other things as well.
Also, the business model of IBM has a pretty robust and amazing IT infrastructure that would be able to serve the customers to provide some results.
The IBM Company is also using such services such as strategic outsourcing, integrated technology, support, Cloud, and other services as well.
These are some of the most amazing things that are provided to the people in order to make some money for the company. This is something that people need to keep in mind for sure if they want to have the results.
#2. GBS Or Global Business Services
There are some amazing services which are provided in the GBS and this is something that can be considered as a pretty great advantage for sure.
When we are talking about the services of the Global Business Services in the best way, there is no doubt that the consulting, as well as the systems integration services, are totally included in the company.
Along with that, there are some other services which are included as well such as the Global Process services, and the Application Management services for the people. These amazing services in the business model of IBM are the ones which help in the creation of the money for the company.
You can also divide it into two categories-
A) Consulting
It offers-
- Expertise on business strategy
- Technology
- Finance
- Marketing
- Operation
- Supply chain
B) Application Management Services
It offers-
- Application management
- Support services for packaged software
- Maintenance
- Custom and legacy application
#3. Software Services
The company of IBM is also offering some of the services to the people who need some software assistance as well. There are some operating systems which are provided to the people along with middleware in the best way.
The Middleware services that are provided are software layers which will be able to connect all the systems that are provided in the company. There is a standards software platform for the company.
These are some services which are provided to the people in the business model of IBM who might need it in the first place to have their solutions for the software related problems.
One of the top-rated Software of IBM is Watson that is the very first cognitive computing platform which is commercially available. It comprises the ability to interact in the natural language, processes the big data and learns from human interactions.
Some of the other key software of IBM are-
- WebSphere
- Rational
- Information Management
- Tivoli
- Mobile
- Social Workforce
#4. Systems Hardware Services
To be honest, there are some hardware services that are provided in the business model of IBM as well and these are the services which are going to help people in the hardware front in the best way.
These are the hardware services which include the amazing system servers along with the storage solutions as well. The business model of IBM also provides some of the best installation services for the people.
In such services, the people will be provided some help when it comes to the installation of the different hardware products that have a pretty complicated nature.
These services make such processes pretty simpler for the people and hence are some of the best options for the generation of revenue for the company. The business model of IBM provides much importance to this service.
It offers the technologies for-
- Data centers
- Semiconductor technology
- Data storage products and products
- Packaging solutions
This segment of the business model of IBM is responsible for providing solutions related to-
- Microelectronics
- System Z
- System X
- Power Systems
- Disk, Tape, and Flash Storage
#5. Global Financing
When it comes to the financing options in the best way, there is simply not a single speck of doubt about the fact that the businesses model of IBM is simply the best option for sure.
That is because the amazing lease, installment payment options, as well as the loan financing options are the ones that are handled in this front and that too in the best way for sure.
That is one of the most important reasons why people tend to have so much faith in the business model of IBM. Three key services offered by this segment are-
- Client financing
- Commercial financing
- Remanufacturing and remarketing
Now, as you have understood about the different segments around which the business model of IBM functions, you also need to understand that these segments also play a pivotal role in the revenue generation of the company.
We will understand this in our next segment- how IBM generates its revenues-
How does IBM make Money?
So, while going through the business segments of IBM, you must be thinking that they must be playing a significant role in helping the company generate good amount of money. – If yes then all your guesswork is quite true.
Business segments of IBM are actually the main players behind the company’s revenue generation.
Let us understand this here and now-
- GTS or Global Technology Services is responsible for generating more than 1/3rd of the total revenue of IBM
- GBS or Global Business Services helps IBM generate its 18+% of revenues
- Software services enable the company to generate around 1/4th of total revenues
- Systems and Hardware services are responsible for generating 15% of IBM total revenue
- Global Financial assists IBM is generating 2% of its revenues
So, the key sources of through which business model of IBM makes money are-
- Hardware Sales
- Hardware installation and Maintenance
- SaaS or Software as a Service
- Annual Outsourcing and Maintenance Contracts
Wrapping it up!
So, these are all the details that you need to know about the business model of IBM and how it is able to make the money in the best way.
Being one of the oldest tech companies in the world, IBM for sure comprises a business model that can be quite inspiring for those who want to make their own moves in this field.
What do you consider the most important reasons that make the business model of IBM become one of the largest multinational Technology Services in the world?
Share your views with us in the comment section below.
In case of any doubts about the IBM Business Model and its revenue generation, then feel free to ask us in the comment.
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