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IBM Sells Point-Of-Sale Business To Toshiba

Soulskill posted more than 2 years ago | from the big-blue-gets-smaller dept.

IBM 120

ErichTheRed writes "Yet another move by IBM out of end-user hardware, Toshiba will be buying IBM's retail point-of-sale systems business for $850M. Is it really a good idea for a company defined by good (and in this case, high-margin) hardware to sell it off in favor of nebulous consulting stuff? 'Like IBM's spin-offs of its PC, high-end printer, and disk drive manufacturing businesses to Lenovo, Ricoh, and Hitachi respectively in the past decade, IBM is not just selling off the RSS division but creating a holding company where it will have a stake initially but which it will eventually sell.' Is there really no money in hardware anymore? "

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Who knew (3, Funny)

Anonymous Coward | more than 2 years ago | (#39717243)

I doubt most /. readers even knew IBM had a POS division...

Re:Who knew (4, Informative)

SomePgmr (2021234) | more than 2 years ago | (#39717295)

Why? I see their hardware in checkout lanes everywhere. I assumed others have noticed too.

Re:Who knew (4, Insightful)

lanner (107308) | more than 2 years ago | (#39717731)

Because of smartphones and tablets. Or, more specifically, the miniaturization and commercialization of the components. It is the same reason you are seeing things like the Ecobee thermostat. The price of POS equipment is really high, but super-cheap commodity tablets could be used to replace almost all of that. You still need the cash drawer and some other accessories, but IBM has wisely seen that POS is being threatened by software replacements on tablets.

As an example, there is a hot dog stand that I go eat at once or twice a week and the guy takes credit cards via his iPhone and a Square CC reader. He has no POS gear. That's today. In ten years, those POS equipment vendors could be very disrupted by newcomers to that industry.

Re:Who knew (3, Insightful)

hairyfeet (841228) | more than 2 years ago | (#39718867)

Well between those and units based off cheap PCs (which i see quite often as well) the days of POS being a high margin business are coming to an end and IBM knows it. from the looks of things the future will be small ARM and X86 based touch screens all made from commodity parts and as cheaply as possible.

Frankly this is a smart move unless IBM is willing to play in cutthroat markets which we've seen no indication of, I mean who know would have thought that IBM staying in PCs would have been a good idea when Dell and HP are making on average $8 a unit on the low end which is their biggest sellers? Surviving on scraps is just not something big blue cares to do so they are bailing while the bailing is good. If anything is shocking its the fact they got someone to pay that much money for their POS business.

Re:Who knew (1)

unixisc (2429386) | more than 2 years ago | (#39719897)

Yeah, where does Toshiba expect to find that market? Japan? Would they be more willing to sink good yen for POS boxes, when they can achieve the same from PCs and touch-screens? Or do they think that the maintenance contracts on the existing installed base makes it worth buying?

Re:Who knew (1)

hairyfeet (841228) | more than 2 years ago | (#39722467)

Nice to see I'm not the only one who finds the entire deal puzzling. the only thing I can think of is since they still have their embedded hard drive division they maybe have a cheap POS design already cooked up using the tech they already have and hope by buying IBM's contracts they can convert these users over to their new POS designs without having to compete, but even then it just doesn't make a whole lot of sense.

I mean we ARE talking 850 million dollars here, how are they gonna make enough off of sales and support in a market that is about to have its throat slit by commodity boxes? it would be like buying a company that only made desktop HDDs at this stage of the game with everyone going mobile...I honestly can't see where they are gonna find the sales to make this deal turn a profit. In every store I've walked into of late all I've seen is commodity X86 and ARM based touchscreens being used as POS, I don't think I saw a single "big name' POS unit, so where are they gonna get a billion plus dollars in sales to make this deal a winner?

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39719189)

IBM has wisely seen that POS is being threatened by software replacements on tablets.

You are joking, right? You honestly think companies are going to rewrite all their POS code and forgo cheap, durable PC hardware in order to switch to trendy, expensive, delicate tablets that give them no return on investment? IBM is getting out of the business because the profit margin is *tiny* (companies almost never upgrade these systems) and they have much more profitable things they can spend their time on. A hot dog stand using an iPod is exactly that, a hot dog stand. The guy might as well be using a sheet of paper and a pencil.

Re:Who knew (2)

TheCarp (96830) | more than 2 years ago | (#39719385)

and that hot dog stand doesn't even go to a cash register place, he goes and buys a register at Staples.... then takes it into a cash register place when it breaks and they tell him they don't work on those cheap store bought models and, even if they did, the labor charges would almost be the cost of a new one.... minimum.

I worked on a project involving some store upgrades in the late 90s. Just as you said... they seldom upgrade whole systems, they were running IBM servers from the 1980s in 1997, and the plan, involved removing one of them, and leaving the old secondary in service! (to run the wireless registers, not sure what the issue was, either they didn't want to buy the new wireless card, or there was no new one in that line...)

The machine we took out was a hefty full tower 386 with double height internal hard drives, providing a whopping 100 MB of storage. Reason for the upgrade: Layaway transactions were filling the hard drive and crashing the system due to data requirements.... and not having layaway was killing the business.

Of course, these new systems... new Pentiums of the time.... were running the same "Store Operating System" as the old 386s were. The entire point of this upgrade was to add disk capacity.

Though, to say they never upgrade the systems isn't exactly true. There was a pile of disused cables, maybe 6 inches deep, behind the main servers. They would upgrade something, and drop the old cable in place....in every single store.... but those clearly were the result of small changes over time.

Re:Who knew (1)

clive_p (547409) | more than 2 years ago | (#39720801)

I would have thought that the change to chip-and-pin cards in the US would have forced most places to invest in new POS infrastructure. That's certainly what has been going on in Europe over the last few years. Restaurants, especially, have had to invest in lots of new wireless POS terminals so they can take their machine to your card at the table. Maybe IBM doesn't think there's much money in all this new hardware, but somebody obviously does.

Re:Who knew (1)

colinnwn (677715) | more than 2 years ago | (#39723321)

What change to chip and pin cards in the USA? Besides McDonalds, I don't know of any other large company doing a chip card reader deployment to their stores.

Re:Who knew (1)

Taco Cowboy (5327) | more than 2 years ago | (#39719713)

... You honestly think companies are going to rewrite all their POS code ...

Speaking from experience

While there _are_ some legacy cobol code that are still being used in big irons, but a lot of code already been rewritten

Re:Who knew (1)

hairyfish (1653411) | more than 2 years ago | (#39720661)

Because of smartphones and tablets. Or, more specifically, the miniaturization and commercialization of the components. It is the same reason you are seeing things like the Ecobee thermostat. The price of POS equipment is really high, but super-cheap commodity tablets could be used to replace almost all of that. You still need the cash drawer and some other accessories, but IBM has wisely seen that POS is being threatened by software replacements on tablets.

Cash drawer, receipt printer, pinpad, barcode scanner, we also used fingerprint readers for time and attendance and label printers for reprinting labels. Tablets aren't there yet but desktops are. We could buy commodity PC hardware for almost half the price of an IBM or HP POS kit.

As an example, there is a hot dog stand that I go eat at once or twice a week and the guy takes credit cards via his iPhone and a Square CC reader. He has no POS gear. That's today. In ten years, those POS equipment vendors could be very disrupted by newcomers to that industry.

Yeah but hotdog guy doesn't have real time sales reporting and replenishment, nor time and attendance, timesheets and staff management or collaboration or stocktaking, transfer, or any of the other myriad or features required by a competitive retail chain. Sure ma and pa kettle can getaway with a calculator and 3G pinpad, but a retail business that employs more than a couple of people will need a bit more technology than that.

Re:Who knew (1)

RobertLTux (260313) | more than 2 years ago | (#39723167)

actually its not much more "stuff" that would be needed to do that and none of it is exactly POS software

all you really need is a decent backend server (to coordinate everything) and a few Cobra Scanners for each terminal and you are set.

the only bits left that are POS bits would be the cash drawer and maybe the "customer screen"

Re:Who knew (1)

Narrowband (2602733) | more than 2 years ago | (#39718475)

Why? I see their hardware in checkout lanes everywhere. I assumed others have noticed too.

Yes, but you don't see them as much in restaurants, I see more Micros stuff there... or even grocery stores. Empirically, just from personal recollection, they seem to be popular in all the brick and mortar types of chains that seem to be struggling themselves. Hmm.

Re:Who knew (1)

RubberDogBone (851604) | more than 2 years ago | (#39718813)

A Kroger near me featured extensive IBM hardware until recently. They just did a semi-refresh of the store and tossed all the IBM hardware. They have another brand now. It's flashier and newer and quieter.

I miss the distinctive IBM printer noises. That clattering is unmistakable. The sound of commerce.

Re:Who knew (1)

Spykk (823586) | more than 2 years ago | (#39717467)

Some of us are still developing software for it.

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39717541)

*raises hand*

IBM has POS machines everywhere.

Re:Who knew (1)

BosstonesOwn (794949) | more than 2 years ago | (#39718947)

Their servers and DS equipment ?

Re:Who knew (5, Funny)

TWX (665546) | more than 2 years ago | (#39717549)

I doubt most /. readers even knew IBM had a POS division...

I'm sure some Slashdotters, particularly those of overly-zealous Apple or Microsoft bend, thought all IBM divisions were POS divisions...

Re:Who knew (-1)

Anonymous Coward | more than 2 years ago | (#39718147)

IBM is still around? Who knew? There must be all of 3 mainframes left in my town, they sold off their other hardware divisions, the on-shore support people I've talked to over the last 10 years or so have mostly been more ignorant of product features than I was, and the few useful ones always seemed to depart IBM a month after I discovered them.

In short, IBM is more of a ghost than a major player in IT in the circles I move in these days. As far as I can tell, the only thing that keeps them going is selling overpriced vapor to PHBs, and then only companies whose "economies of scale" have forced them to find new ways to burn cash.

Re:Who knew (3, Funny)

bws111 (1216812) | more than 2 years ago | (#39718311)

Yeah, a ghost that just today announced first quarter profits of $3B on revenue of $25B.

Let me guess, the IT circles you move in consists of that really cool server with a glowing case you built in Mom's basement?

Re:Who knew (3, Insightful)

TWX (665546) | more than 2 years ago | (#39718531)

That's what came to my mind on gp's post. We are on our third AS400/i-Series, as we like the payroll for 10,000 employees to just always work, and the finance, purchasing, and inventory system for 200,000 tracked and probably 10,000,000 untracked assets to just work. We have probably quad-9 uptime reliability with the IBM, while our Microsoft boxes constantly have downtime.

Re:Who knew (0)

hairyfish (1653411) | more than 2 years ago | (#39720605)

We have probably quad-9 uptime reliability with the IBM, while our Microsoft boxes constantly have downtime.

Lol
1. Microsoft don't makes 'boxes'
2. You 'probably' have quad 9 uptime? You either did or you didn't. 'Probably' is not acceptable. Neither is 'constantly' an officially metric for uptime.
This is typical nonsense we get from IBM types where I work.

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39722319)

You 'probably' have quad 9 uptime? You either did or you didn't. 'Probably' is not acceptable. Neither is 'constantly' an officially metric for uptime.
This is typical nonsense we get from IBM types where I work.

Were you expecting a whitepaper report on TWX's systems instead of the brief /. post he provided?

Re:Who knew (2, Interesting)

Anonymous Coward | more than 2 years ago | (#39718663)

Indeed.

Costco (HQ Issaquah, WA) uses iSeries-I've seen the screen at the warehouses and they occasionally list iseries jobs. Most casino corporations use the system for their HR and Finance systems. Some use it for their Hotel and Casino systems.

Their real mainframe (System z) is in use in tiny places like the State of California's tax collection department, and last I heard, Citibank used them and upgraded at least their Las Vegas ones about 3 or so years ago.

Look around most LV casinos and restaurants you'll see IBM POS terminals EVERYWHERE. InfoGenesis seems to be synonymous with IBM POS terminals.

Re:Who knew (1)

martiniturbide (1203660) | more than 2 years ago | (#39718887)

Here goes to the IBM i Lovers. http://www.youtube.com/watch?v=StuQy13q128 [youtube.com]

Re:Who knew (1)

IntlHarvester (11985) | more than 2 years ago | (#39720027)

On occasion, someone takes this stuff at face value and installs Lotus Domino on the iSeries running their main assembly line. That's when the chuckles really begin.

Re:Who knew (1)

nurb432 (527695) | more than 2 years ago | (#39718205)

If you shop at stores you do. A lot of us used to work on their stuff too. Where do you think all of those OS/2 installs were at? For a long time that is what ran countless retail stores systems.

And those damned printers suck. Bad. Almost as bad as the ones on those fuji registers that had bubble memory for main storage.

Re:Who knew (1)

Ihmhi (1206036) | more than 2 years ago | (#39719525)

I doubt most /. readers even knew IBM had a POS division...

What about their hard drive division?

Thank you! Tip your waitress, try the veal!

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39720707)

i thought they sold their POS division to hitachi nine years ago.

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39722083)

I'm pretty sure it's not because they didn't know, but rather everyone just assumes all companies have "That Division" which just always seems to be NSFW.

Re:Who knew (1)

almitchell (1237520) | more than 2 years ago | (#39722293)

I work for a retail conglomerate who use IBM's POS systems and have for at least 30 years. It's not bad technology at all.

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39722849)

I wonder if this will be as lucrative as IBM's HOLL ER ITH machine cards used to do you know what to you know who during the thingy that actually happened during the you know what.

Perhaps this dribble will make it past the sla sh dot sensor machine so people could actually read it and know a little more truth thats been buried for decades by a major advertiser on this site...

Re:Who knew (0)

Anonymous Coward | more than 2 years ago | (#39723377)

You're an idiot. Are we going to hold Hugo Boss responsible for making Nazi uniforms?

So much for quality. (3, Insightful)

sethstorm (512897) | more than 2 years ago | (#39717245)

As it has done with Lenovo and the other manufacturers, the quality will decline.

Re:So much for quality. (3, Informative)

Tough Love (215404) | more than 2 years ago | (#39717283)

As it has done with Lenovo and the other manufacturers, the quality will decline.

Lenovo still has a pretty good rep. Anyway, nothing beats the quality of those old IBM card punches.

Re:So much for quality. (1)

PixetaledPikachu (1007305) | more than 2 years ago | (#39717801)

As it has done with Lenovo and the other manufacturers, the quality will decline.

Lenovo still has a pretty good rep. Anyway, nothing beats th,e quality of those old IBM card punches.

Agree, While not as legendary as the X60/X61, the X201 and X220 are miles ahead of their competitors in term of performance and durability

Re:So much for quality. (5, Interesting)

Dynedain (141758) | more than 2 years ago | (#39717947)

As it has done with Lenovo and the other manufacturers, the quality will decline.

Because of disruptive tablet and other mobile technologies in this market, the quality will decline regardless of the manufacturer. IBM has rightfully recognized this and is selling off before that decline can hurt the IBM brand. Look at HP for a comparison of inevitable dropping quality on commoditized (race to the bottom) hardware hurting the parent brand.

Re:So much for quality. (1)

Alioth (221270) | more than 2 years ago | (#39723153)

The writing was on the wall years ago.

I used to work for IBM, on a very large project to supply POS equipment (and develop software) for a very large customer in the United States. This customer had very specific requirements, so much so that the customizations on the software ended up being more lines of code than the base retail point of sale software product (the base product was designed to be customizable).

To keep the costs in line with something the customer would pay, we actually - as IBM - ended up using a lot of commodity, non-IBM hardware rather than the full POS kit we made. The money was to be made on the software and the support, you got to sell the hardware once, but you got to keep selling software as the customer kept adding on new requirements. IBM at the time (1996) was making touch LCD screens for retail, but we ended up using some no-name Taiwanese LCD touch screen, and badge engineering it. We used Epson printers, not IBM POS printers. We used a scale made by Eaton rather than by IBM. Scanners from Symbol. I don't even remember whose cash draw we used, and we continued using the customer's already installed label printer. The only IBM kit we used was the base unit, which by then was already a standard PC but with an SDLC interface for the peripherals.

Re:So much for quality. (0)

Anonymous Coward | more than 2 years ago | (#39717981)

No kiddin my Lenovo came with a design flaw and now I'm typing this on my phone

Re:So much for quality. (5, Insightful)

Sir_Sri (199544) | more than 2 years ago | (#39718003)

isn't that why they're selling? The premium for IBM quality isn't justified or isn't sufficiently profitable anymore, and IBM wants the IBM brand to remain premium. So you sell off any non premium divisions to other people.

From the perspective of IBM no one should ever be fired for buying an IBM. That may mean you have an 80% markup on some things to make sure it's going to work and you can support it if it doesn't. But it damn well better work. If you can't justify that price or can't make it work sell the business and move on to something else.

Re:So much for quality. (-1)

Anonymous Coward | more than 2 years ago | (#39719355)

We make sure it works. If it doesn't work, then we fix it until it works. If it still doesn't work, then we cancel the product and move onto something else :-D

Can't make heads nor tails (1)

Suki I (1546431) | more than 2 years ago | (#39717255)

I can't make heads nor tails of these big purchases any more. Valuing things like this looked easy in college. Maybe I am getting ancient.

Good (1)

busyqth (2566075) | more than 2 years ago | (#39717275)

I think this is a good move. I suspect IBM used to do good business with POS by selling AS/400s, etc. as backend systems. But now? It seems like it doesn't really fit in with their core businesses.

Re:Good (1)

sneakyimp (1161443) | more than 2 years ago | (#39717645)

I agree that it's a good move. The stock market also seems to approve as IBM's stock is up about 240% since the sale of their PC business in 2004. Building hardware is a low-skill business relative to *designing* hardware -- or software. IBM doesn't make a lot of money off an assembly line worker building commodity hardware for low-tech applications. They do make a fortune marking up a highly educated, highly skilled knowledge worker designing novel network or supercomputer topologies built on commodity hardware.

Ex-IBM Employee (1)

Anonymous Coward | more than 2 years ago | (#39717277)

As an ex-ibm employee I should hope they trip, fall, and die... but I own to much stock in the company... so party on.

Re:Ex-IBM Employee (0)

Anonymous Coward | more than 2 years ago | (#39719015)

As a current IBM employee , I'd like to say thanks for the well wishes, that attitude must be why your not a current employee.

Us well paid highly knowledgeable individuals won't miss you my friend!

Of course there's money in hardware (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39717297)

This is why they have a buyer.

But their consultants will look more honest when they go out shilling Toshibas POS systems, and they still have their slice of the pie. They wont be baking it, just slicing and serving.

Re:Of course there's money in hardware (3, Insightful)

TWX (665546) | more than 2 years ago | (#39717539)

The next main-trunk comment below this one explains it very well. IBM may not have their name on the product anymore, but they will undoubtedly still have a heavy hand in it, and the risk gets put off on the new owner.

IBM made mostly good stuff, though I still don't care for their Lexmark printers nowadays. Otherwise, they could do well if they're shilling whatever hardware they need to push, not just their own.

Re:Of course there's money in hardware (1)

swalve (1980968) | more than 2 years ago | (#39718405)

Yeah, the real IBM printer spinoff was Lexmark. InfoPrint units were just rebadged Lexmarks. (And the larger ones were rebadged something else.)

I'm not a fan of Lexmarks either, but having a printer fixer guy for the last many years, I think they are better designed than HP units of the same era. Lexmarks are more cheaply made (I've had brand new ones jam right out of the box because plastic casting "hunks" were left in the paper path), but HP printers are just monstrosities. Over engineered and under specced. Whole lines of machines plagued with bad plastic bearings and control boards that go tits up after 1-2 years. Plastic gears that wear out. Little fiddly springs everywhere. One thing Lexmark did really well was their autocompensator pickup arm. Those things work great, no silly separation pads or separation rollers.

Re:Of course there's money in hardware (1)

RubberDogBone (851604) | more than 2 years ago | (#39718793)

IBM also had a line of servers running InfoPrint as a front end for really big production printers that used rolls of paper, etc. And then there were giant cut-sheet printers too. But most of those were developed by Kodak and sold by Kodak and also with IBM, Canon, and Heidelberg branding. Same printer, three or four names. This was big stuff meant to compete with Xerox production printers.

Re:Of course there's money in hardware (1)

TWX (665546) | more than 2 years ago | (#39722825)

What's really annoying me now is that Dell is rebranding Lexmark printers. We've attempted to stop buying Lexmarks because of problems we had with at least four product lines a few years back, but it's hard to write the bid to say, "No Lexmark Guts". Dell won the bid and we're still having the same sorts of problems.

Re:Of course there's money in hardware (0)

Anonymous Coward | more than 2 years ago | (#39718513)

Pretty much.

I don't see IBM selling off their storage hardware business (tape, disk arrays), nor their mainframe business, nor their POWER systems business (AIX, IBM i [formerly known as the AS/400].) This looks very much like IBM looking at point of sale, and saying "there's no significant future there for us, sell it off while it's still strong and focus on the areas where we stand a chance of growing and/or continuing to make decent money in the medium term".

Good ol' hyperbole.

With Lenovo... (0)

Anonymous Coward | more than 2 years ago | (#39717339)

When IBM sold Lenovo to Taiwan it worked out great since they basically still run Lenovo as "consultants" so even if laptop sales tank they still get paid for their work running the company while the Taiwanese have all the risk. If this one works out the same way then it's all good. Plus since technically Lenovo is owned by Asians if everything is made in a radioactive sweatshop IBM isn't going to get any blowback the way Apple does. IBM's middle name is "Business" and it shows.

Mainland, not Taiwan (1)

alexander_686 (957440) | more than 2 years ago | (#39717673)

Lenovo was bought by a People's Republic of China (i.e. mainland) company, not a Republic of China (i.e. Taiwan) (Of course, it is kind of a moot point because both official claim that there is only 1 china, but...)

Re:Mainland, not Taiwan (0)

Anonymous Coward | more than 2 years ago | (#39718091)

Taiwan claims one China because if it didn't, it'd be a de facto declaration of independence from "China". That could lead to war. Instead, the PRC, ROC, and the USA all officially adhere to a one China policy in order to sustain the political status quo.

Re:Mainland, not Taiwan (1)

unixisc (2429386) | more than 2 years ago | (#39719941)

Taiwan claims one China b'cos they regard the current PRC government as illegal, and their own KMT successor government as more legitimate, being democratically elected and all that. Had the US not taken advantage of the Beijing-Soviet rift and recognized PRC, Taiwan would have been recognized as the official China even today, barring any of the past presidents since Nixon changing policy.

Re:Mainland, not Taiwan (0)

Anonymous Coward | more than 2 years ago | (#39722179)

Except that original GMD rulers of Taiwan were warlords not elected but the US still supported them.

Is it really a good idea (1)

Tough Love (215404) | more than 2 years ago | (#39717347)

Is it really a good idea for a company defined by good (and in this case, high-margin) hardware to sell it off in favor of nebulous consulting stuff?

Oh yes indeed, if the margin on the service side of the business is larger than the hardware business it makes loads of sense. Put it this way: it's cheaper for IBM to buy Lenovo PCs for its engineers and consultants than to build them itself.

you FAIL it... (-1)

Anonymous Coward | more than 2 years ago | (#39717391)

Mainframes (1)

kobach (803388) | more than 2 years ago | (#39717493)

They're still the largest manufacturer of mainframes, who are they going to sell that off to?

There is a lot of money in hardware (5, Insightful)

ilotgov (637717) | more than 2 years ago | (#39717679)

In my opinion there is a lot of money in hardware. Something else is wanting in most of Europe and perhaps North America. The will and enthusiasm to work physically with ones hands. And hardware is at the bottom line a physical thing.
We tend to talk about cheep labor, an expression which degrades labor in general when used so often. And so we end up with a lot of decision makers and wall-streeters who have no regard for physical things in general. Decisions will be made in favor of offices instead factories and money will flow to offices instead of factories.
As we can see in the example of China (owning a large part of the US) there must be money in hardware.
Germany, as an exception to the rule, seems to do quit well producing hardware but in general it is below our dignity to make our hands dirty producing something and this is the reason hardware returns little money in our culture.

Re:There is a lot of money in hardware (0)

foniksonik (573572) | more than 2 years ago | (#39718407)

Noone in the US could live on $290 a month (Foxconn wages for iPad line person).

You are delusional to think that we would be better off making the hardware than using it. How many Chinese workers can afford an iPad or mid-range generic PC at 2 months pay? To continue the comparison it's as if a 40k/year US worker had to pay $6,800.

If we made iPads here that's likely how much they would cost retail. $6,800. Sounds great right?

Re:There is a lot of money in hardware (0)

Anonymous Coward | more than 2 years ago | (#39719401)

Noone in the US could live on $290 a month (Foxconn wages for iPad line person).

You are delusional to think that we would be better off making the hardware than using it. How many Chinese workers can afford an iPad or mid-range generic PC at 2 months pay? To continue the comparison it's as if a 40k/year US worker had to pay $6,800.

If we made iPads here that's likely how much they would cost retail. $6,800. Sounds great right?

Not only would they cost $6,800 but they would be in high demand due to the various Unions mandating unlimited sick pay accumulations, full corporation funded pensions, top notch health care and the right to only do about one and half hours of "actual" work during your 8 hour shift.

Re:There is a lot of money in hardware (0)

Anonymous Coward | more than 2 years ago | (#39720931)

If iPads were produced in a western country, the high wages would cause the price to be higher, yes. But they would also make it more worthwhile to invest in automation. Thus less human labour would be required and the prices wouldn't be nearly as high as you have estimated.

Looking at the big picture, domestic production is even cheaper unless there is a shortage of workers. The worker who is now getting paid for work would otherwise have to be paid for nothing, if only to keep him from starving or freezing to death. Thus only the difference between social security, charity or whatever had previously fed the worker and his wage in the factory is an actual cost to society. The rest is now paid by iPad buyers instead of taxpayers.

Therefore, producing gadgets abroad requires higher taxes and lowers the cost of said gadgets. That is the same effect as the government subsidizing said gadgets would have.

(Shoe Puppet, posting as AC because I'm apparently not smart enough to figure out how to log into Slashdot.)

Re:There is a lot of money in hardware (0)

Anonymous Coward | more than 2 years ago | (#39719207)

Your analysis is non-sensical. There's undoubtedly no shortage of people willing to work with their hands considering there are millions of people just like yourself barking about the laziness of your neighbors. But laborers don't get to decide whether to open a factory; it's investors, entrepreneurs, and managers who decide whether to open a factory, and they sure as hell don't care whether someone else is working with their hands or not.

The reason those people don't open factories is because there's other, more lucrative opportunities. The cost of labor is only a small part of the equation. As discussed in many articles, using American labor Apple products would only cost about 10% more. The reason they don't build in America isn't because of labor, it's because it's stupid.

Makes perfect sense since. (3, Interesting)

Dynedain (141758) | more than 2 years ago | (#39717709)

Makes perfect sense because IBM has not been a consumer company for quite some time now. They are as much a "good high-margin hardware company" as Apple is a set-top-box manufacturer. Sure, they essentially brought the PC to market, but those Model-M keyboards /.ers love and the Thinkpad division they dropped years ago were already then tiny slices of their business.

There's no innovation left in POS. It's a solved problem. IBM makes their money as an extremely large scale systems innovator. That's what they're good at, and that's what they can market well. At this point, the only innovation happening in POS is wireless/mobility use, and there are countless tiny little startups cornering that market via iOS and Android apps.

Build cash registers is a commodity market and essentially a race to the bottom. IBM is smart for selling off this business segment while it still has value, and focusing on the big systems and big data that is their core business.

Would you rather that IBM operated on the MS model? They could buy everything under the sun and have incredible research, but then do a shitty job trying to manage and integrate across their product lines and business services. Or they could go the Xerox route and not put any of their cool research into anything usable.

No, as both a shareholder and a consumer who has respect for the brand, I'm glad they can focus on what works for them, and sell off divisions that are in stagnating industries that no longer benefit from the innovation focus they've had for the last 100 years. I don't see anyone here complaining that they sold off their typewriter division (thus forming Lexmark).

re: race to the bottom (1)

King_TJ (85913) | more than 2 years ago | (#39722951)

Yeah.... A good friend of mine worked for a POS installation and support company for years, and he always said the real money was in the support, just like most situations with computer equipment.

With IBM's high markup for their POS hardware itself, I'm sure it was profitable to sell it ... but the vendors doing the installation and selling the maintenance contracts were doing far better than IBM. IBM only profits once, when the new equipment is sold, and after that, maybe an annual cut from vendors who pay IBM for a service agreement (and ability to download fixes and updates to the OS on the hardware). But the vendors just turn around and ask their customers to pay that, PLUS whatever they tack on, and they profit every time a client needs a change made to their POS system.

The thing about POS is, the BIG players have their systems all figured out and working well for them. (He always said McDonalds was a shining star of an example of how a POS system SHOULD be configured and implemented to maximize profitability.) But 99% of the POS customers out there aren't mega-corps. You've got all the corner bars and hair salons and independent car repair garages where the only person who cares about the POS system is the owner, and he/she is typically not a "computer person". He/she knows a POS system is pretty much a business requirement, but even if you leave all the instruction manuals on-site and give them full access to make changes -- they're simply not going to spend the time to mess around with it. Bars and small restaurants live or die by inventory management. They can go from highly profitable to losing money in a month if some food is wasted or too many drinks are "over poured". Yet, most of the time, they've never delved deeply enough into their POS system to get it programmed so it calculates things like ground beef purchases and resale/spoilage down to the ounce. They could -- but that's where they need vendors to give them that ongoing support.

Time for a name change? (0)

Anonymous Coward | more than 2 years ago | (#39717745)

International Business Machines no longer seems appropriate. Maybe IBHA, International Business Hot Air?

Re:Time for a name change? (0)

Anonymous Coward | more than 2 years ago | (#39722441)

Given their recent history, India Business Machines would be more appropriate, no? ;-)

Services.. (1)

Anonymous Coward | more than 2 years ago | (#39717779)

Posting anonymous for obvious reasons.. but their Software Services are a joke. I've worked for and with IBM for several years. Their GBS (Global Business Services) department is a joke. I've seen multiple failures to deliver on time, and most often they go over budget or get canceled by the client. Somehow they still manage to survive. They also refuse to train these "experts" and charge the client $280/hr for someone to warm a seat.

In addition, their software is pretty bloated and over-architected. While working with them on customer sites, either they were a WebSphere Shop (used to it), or they were coming from another technology. Those coming from the LAMP / .NET realm were frustrated at the amount of resources required to process requests, sessions, transactions and the like. The development enivronment (RAD) eats up 1.5 gigabytes easily, and the web-application/portal server eats up easily another gigabyte.

I don't see how they can simply rely on this type of software and services in the long term. It's truly sad to see them eliminate yet another hardware division. They seem to do better with hardware.

TTEC & IBM POS (0)

Anonymous Coward | more than 2 years ago | (#39718059)

Quality won't drop as suggested - little known fact Toshiba TEC make a big chunk of the POS hardware already for people like IBM, NCR etc.

Re:TTEC & IBM POS (1)

swalve (1980968) | more than 2 years ago | (#39718431)

I believe it was the same for Lenovo- they were the OEMs for IBM.

What I want to know... (3, Informative)

DanielRavenNest (107550) | more than 2 years ago | (#39718105)

Is when Toshiba makes the purchase, will it be credit or debit?

Note that one of IBM's first products in 1911 was a commercial scale. Since supermarket POS systems usually include a scale for weighing produce, this ends a century of IBM selling weighing devices.

just like Pfizer- selling alll the cash cows (2)

toomanyhandles (809578) | more than 2 years ago | (#39718171)

This really reminds me of Pfizer- selling all the cash cows off (household products developed in-house- Listerine, etc etc) that were pure profit. Next step, closing down all research (= new prod development).

Final step, call it toasted and done.

Of course, the Senior Management make a profit at each step- clown shoes flapping all the way to the bank.

Re:just like Pfizer- selling alll the cash cows (2)

bws111 (1216812) | more than 2 years ago | (#39718351)

Just like that, except for the part where IBM sells off all the low-margin, no-profit stuff like POS, printers, disks, PCs, and keeps the high-profit, cash cow stuff like mainframes, servers, software, and services.

Hardware is a dead-end (5, Interesting)

Anonymous Coward | more than 2 years ago | (#39718187)

There is no money in hardware. I found out the hard (stupid) way.

A hardware engineer with a PhD gets paid, entry, 100-110k on average.

A software engineer with MS get paid, entry, 100-100k on average.

A software engineer's work experience accrues without much 'expiration' date - this is more true as you move up higher in abstraction (so I'm not talking about firmware software driver guys, although they should be damn good at C/C++ which helps with getting into other things).

A software engineer can be an entrepreneur: see: Youtube founders out of Ebay, fresh-out-of-college grads. Software initial cost is almost 0.

A hardware engineer cannot be a real entrepreneur. He has to battle a mine patentfield (yeah, same for CS but usually you can get acquired quickly) and huge initial costs. Tools licensing is astronomical. A industrial grade SPICE license + Synthesis + Layout + P&R tools + etc will cost in the hundreds of K, if not hitting a million.

A hardware engineer faces huge elimination by being too close to the transistor level. A switch out of the BJT into MOS probably destroyed many engineers' accrued knowledge in one fell swoop, quickly. Similarly, the impending switch from MOS into double-gates will destroy many IC engineers' accrued knowledge just as quickly.

The same cannot be said for CS, as most of it can be abstracted quickly, and boils down to algorithmic practices which do not get outdated.

Laundry Iphone apps, Stupid dinky games, and apps to help you count how much you fart get millions in funding, while hardware startups flounder to get by (hence preventing others from even thinking of entering the HW game).

Yet, a HW guy (EE Major) has arguably the same skills, foundation, and fundamental knowledge as SW guys (CS majors). Its really just that EE guys don't like doing CS, but they could do it easily. I went to a top-tier uni with EECS as a combined major (and this is common at the top uni's). I can tell you the top EE guys aced their CS classes easily and beat out the top CS guys or were on par.

Why are we paid less? Yeah yeah low margins, blah blah. Well, f* this. I'm taking a stand and telling the ENTIRE next generation of EECS majors to do CS only. There is not much left in EE for the hard workers to do well in, other than work forever for CorpX earning less than CS majors, while doing the same workload with the same skillset. F** this.

Re:Hardware is a dead-end (3, Interesting)

Lotana (842533) | more than 2 years ago | (#39720225)

EE Majors are not idiots. They are well aware of the predicaments you listed. Even if you tell them all this they will still go into EE just as CS students don't all change into Law or Finance.

It is because they are passionate about what they do and don't like CS. Would you really want to spend vast majority of your life doing something that you just can't stand? Will you be able to go this extra mile (That all supervisors will judge you by) in a position that you abhore? When (Not if) you will get screwed over and need to look for another job, will you be able to get motivated to do it all over again?

In my opinion, career must be more than just money. You must enjoy what you are doing in order to persevere through all the downsides of the job.

Re:Hardware is a dead-end (2)

Khazunga (176423) | more than 2 years ago | (#39721569)

Yet, a HW guy (EE Major) has arguably the same skills, foundation, and fundamental knowledge as SW guys (CS majors). Its really just that EE guys don't like doing CS, but they could do it easily. I went to a top-tier uni with EECS as a combined major (and this is common at the top uni's). I can tell you the top EE guys aced their CS classes easily and beat out the top CS guys or were on par.

Wrong. Much as Dilbert's PHB, you assume that stuff you don't know is easy, based on the initial learning curve. Granted, throwing in a couple thousand line coding project is easy. That's the algorithmic training, and that is the easy part. Many kids learn that on their own well before their teen years. The difficult part is the system design; the cobbling of many software pieces to work together coherently; the design of clean abstraction layers (non-leaky abstractions are perhaps one of the most difficult engineering tasks); the design of stability pillars for maintainability (test frontiers, on APIs or on abstraction layers, documentation).

To put it into familiar terms, it's as easy for you to code as it is for me to program an FPGA, stuff it into a breadboard, plug in sensors and actuators and produce a prototype. However, CS guys know that they will never ever design a decent electronic circuit for mass production, even if they can tinker with EE stuff. EE guys will, like you do, boast to be able to decently design a decent software stack for mass usage. They can't (mass generalization). Not without relevant training. Information systems can get pretty darned complex, and just because they don't burn on failure or don't crash into rubble doesn't make software design any less difficult, just less appreciated.

Re:Hardware is a dead-end (1)

Ralph Spoilsport (673134) | more than 2 years ago | (#39722973)

A hardware engineer with a PhD gets paid, entry, 100-110k on average.
A software engineer with MS get paid, entry, 100-100k on average.

So what? You make even more money doing easier work as some kind of reptilian on wall street, figuring out new ways to loot the American Treasury Department.

RS

Commodity hardware (1)

nurb432 (527695) | more than 2 years ago | (#39718247)

Has gone down the tubes, unless you can sell LOTS you wont make a dime.

The Chinese will eat you alive.

I don't expect Dell to be doing it much longer either.

Re:Commodity hardware (1)

oxdas (2447598) | more than 2 years ago | (#39719561)

Dell has never really been in hardware. They are a resale/brand company.

Re:Commodity hardware (1)

Jeng (926980) | more than 2 years ago | (#39722623)

They were for some time, but not for at least a decade.

Brick and mortar technology (1)

Narrowband (2602733) | more than 2 years ago | (#39718313)

I wonder if they may be betting that the market for point of sale systems will diminish as stores like Borders and Circuit City go bankrupt in favor of online retailers like Amazon? Possibly better to sell now before that happens.

Re:Brick and mortar technology (1)

swalve (1980968) | more than 2 years ago | (#39718451)

Probably. There are a lot of POS software vendors that will tell you that you can just run their website in fullscreen on a PC with a touchscreen and call it a POS.

Seriously? (0)

Anonymous Coward | more than 2 years ago | (#39718381)

Why does the poster refer to consulting as "nebulous"? IBM has been making more money off of consulting and software than hardware for a long time, and their strategy is clearly to push their services division. Nothing here is a surprise.

Secondly, the question "isn't there any money in hardware anymore?" is asked. Nodoby said, or even suggested that. In fact, if there was no money in it, you can bet Toshiba wouldn't be interested in buying the business. The fact is, hardware generally has low margins, but is reliable and stable. Software and services tend to be higher margin, and higher risk in general.

It only took 40 years for IBM to figure that out? (1)

p51d007 (656414) | more than 2 years ago | (#39718497)

Wasn't it some stuffed shirt at IBM who told Bill Gates he could have the (dos) software...because the real money was in the hardware?

Re:It only took 40 years for IBM to figure that ou (1)

Anonymous Coward | more than 2 years ago | (#39718633)

IBM is a long term player. Microsoft had a good decade in the 90s but they've been flat for 5-10 years now. IBM had some lean times in the PC era but that's behind them. I'd bet in 2050 IBM will still be making loads of cash meanwhile Microsoft will be a minor player or defunct.

But does it run Linux? (1)

Tough Love (215404) | more than 2 years ago | (#39718719)

As far as I can tell, the majority of IBM's point-of-sale systems these days run Linux [wikipedia.org] with the older FlexOS based [wikipedia.org] systems now a small fraction of the installed base. Can anyone confirm?

Re:But does it run Linux? (0)

Anonymous Coward | more than 2 years ago | (#39719335)

The majority of the installed base runs on the IBM proprietary 4690 OS with some using Windows Embedde platforms. They even wrote their own java VM for for 4690.

Re:But does it run Linux? (1)

Tough Love (215404) | more than 2 years ago | (#39719873)

The majority of the installed base runs on the IBM proprietary 4690 OS...

IBM 4690 OS still had a market share of 12% in the POS register/client market in June 2005, when IBM was starting to phase it out in favour to IBM Retail Environment for SUSE (IRES) [wikipedia.org]

12% in 2005 does not sound like a majority to me.

Re:But does it run Linux? (0)

Anonymous Coward | more than 2 years ago | (#39721959)

Don't believe everything on Wikipedia. The SUSE Linux offering failed miserably (i.e. one customer). I know several people who work in the IBM POS group. 4690 is king.

Is there really no money in hardware anymore? (1)

mevets (322601) | more than 2 years ago | (#39719237)

Of course there is no money in hardware anymore; haven't you been watching the valuations of hardware companies sink like a stone over the years? Hardware companies have no value; this is confirmed by the stock market indices. Try and name a highly valued company that makes hardware. Online pet food is where the money is....

ps: The quoted Subject: line demonstrates remarkable progress in sentence construction. Keep up the good work.

Apple (1)

geoffrobinson (109879) | more than 2 years ago | (#39719477)

Apple seems to make a lot of money making hardware. Isn't that their goal? Use software to sell their hardware.

Re:Apple (1)

Tough Love (215404) | more than 2 years ago | (#39719845)

Apple doesn't sell hardware, Apple sells Unicorn piss.

All you need to know is... (1)

Anonymous Coward | more than 2 years ago | (#39719483)

the new CIO, Virginia Rometty was the executive that brought IBM into the services era.

I would have to say the biggest driver of IBM hardware sales is the service arm. While they will accept anything as part of a DataCenter move, the refresh cycle is geared towards replacing with IBM hardware. The lower cost and maintenance schedule usually seals the deal. So really the only hardware that makes sense is midrange to Mainframe. Commodity is right out.

From the Q1 financial report this afternoon:
http://www.ibm.com/investor/1q12/press.phtml?lnk=w3 [ibm.com]

Systems and Technology revenue down 7 percent, 6 percent adjusting for currency; -hardware

  vrs

Software revenue up 5 percent, 7 percent adjusting for currency;
Services revenue up 1 percent:
Services pre-tax income up 11 percent;

Total systems revenues decreased 6 percent (down 6 percent, adjusting for currency). Revenues from Power Systems were flat compared with the 2011 period. Revenues from System x were also flat. Revenues from System z mainframe server products decreased 25 percent compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased 5 percent. Revenues from System Storage decreased 4 percent, and revenues from Retail Store Solutions decreased 13 percent year over year. Revenues from Microelectronics OEM decreased 13 percent.

Posting AC as I am a sometimes contractor there.

It's the margins. (0)

Anonymous Coward | more than 2 years ago | (#39722279)

I haven't bothered to look through the 2011 annual report yet, but 2010 the plurality of revenue was from software and the majority or profit was from software (The bulk of that being branded software).
Increase your overall margins by ditching the parts of the business with low margins.

And you might say "Well, it'll hurt services revenue and profits." Except IBM Credit Corporation was 2nd place for revenue and profit.

I'll miss it. I had a neighbor that worked for IBM back when their business was scales and time clocks for hourly workers. Early in my career I helped pack systems that went to retail trade shows. But I kind of knew the writing was on the wall when I worked for a grocery store and the order based coupon printers appeared as any brand other than IBM. The credit card terminals became any brand other than IBM. The only reason scales briefly went back to IBM was because they were among the first on the market with combined scanner/scale.

It's IBM, not hardware (1)

nerdbert (71656) | more than 2 years ago | (#39722665)

I worked in IBM's hardware division for over a decade before I (voluntarily) left, so I know what it's like there.

The problem isn't hardware, there's plenty of money there, just ask Intel, Broadcomm, or TI.

IBM's problem is IBM. Look at the SEC 10K filings for IBM and you'll see that IBM has the highest SG&A expenses (sales, general, and administrative) of any tech company, and has had that for 40 years. That means that IBM's legendary internal bureaucracy and management wastes far more cash than anybody else.

When you look at the SG&A you can see why IBM's present strategy is almost forced on it. Since their internal structure burns cash at a terrific rate they need to find lower risk, lower expense projects. That pretty much means software where you don't need to invest as much money in infrastructure (semiconductor fabs run $3B+) and where a dumb decision (an upper level IBM management specialty -- the PPC615 would be a classic study in mismanagement if they'd ever admit details about the development, but I saw it firsthand) doesn't cost as much. And when you can replace expensive US workers with off-shored workers you lower expenses still more.

Acronyms (1)

captain_dope_pants (842414) | more than 2 years ago | (#39722719)

IBM: Hi Toshiba, Would you like to buy our POS business ?
Tosh: Wow, yeah !
** money changes hands
Tosh: This business is a total POS !
IBM: Haha

It's called Capitalism (1)

Ralph Spoilsport (673134) | more than 2 years ago | (#39722917)

"Is it really a good idea for a company defined by good (and in this case, high-margin) hardware to sell it off in favor of nebulous consulting stuff? "

Ummmm, IBM will do what it can to increase profits and shareholder value. If that means getting out of ICT and into a string of hotels and vocational schools, then so be it. Oh, right. ITT already did that...

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