In-Depth

On the Web

• By Jack Vaughan, Michael W. Bucken
• June 15, 2001

>In software, where perception can be key, Gerstner's IBM has proved adept. An industry shift such as that presented by the Internet could prove to be daunting to no less an industry hand than Bill Gates; plenty of people expected industry newcomer Gerstner to fail here. But IBM met the challenge and fashioned a new image at the same time. There were marketing missteps, too. IBM did not shine at the Olympic Games in Atlanta. Still, Lotus' Domino campaign, Deep Blue vs. Kasparov (one of the defining "Internet events"), the company's introduction of a WebSphere product line, its innovative alphaWorks site -- these and other moves help depict a company transformed.

AlphaWorks deserves special attention. The World Wide Web site has evolved over the last two years from a platform to show off new technologies to a testing ground for technologies developed by engineers from throughout the corporation.

"Our challenge is to change the way IBM does new product development," said John Wolpert, emerging technology development manager in the alphaWorks unit based in San Jose, Calif. "We are always looking at emerging technologies. We're trying to find the next big technology." The unit includes engineers and researchers who joined from a variety of IBM units as well as from nearby Sun Microsystems Inc. The group "has a passionate interest in technology. We understand the technology," said Wolpert. "If we don't have the right people in IBM, we send briefs to high-level, distinguished engineers."

Proposals for the site are submitted from IBM developers and researchers to the alphaWorks unit, which decides what technologies are posted. Once a technology is on the site, it is available to all IBM groups for comment, suggestions and opinions. The technology can be changed several times based on that input. "We can bring early adopters directly into the earliest phase of development," added Wolpert. The technology on the site is also available to IBM product groups to use in new and existing products. "Our job is to drive people to the site," Wolpert said.

Since the technology testing operation was started early this year, technologies first made available through alphaWorks have been incorporated into the IBM WebSphere and Bean Machine offerings. And at the XML '98 conference held last month in Chicago, IBM unveiled nine new XML tools that will be distributed without charge through the alphaWorks site. Early on, the technology focus of the unit is Java (or pervasive computing, as some in IBM now call it), XML and multimedia technologies.

The alphaWorks site was created two years ago at the direction of John Patrick, IBM vice president of Internet technology. "The idea was to get a new site on the Web to show off new IBM technologies. We built a cool Web site that brought us a new community of users. Now we're trying to gain mindshare within IBM," Wolpert said.

Today, the alphaWorks unit is a corporate business unit in the Software Solutions Group, and is charged with becoming an integral part of the IBM software development process. The group is housed in IBM's Java development facilities and is run as a new business. "We have to turn everything around quickly," Wolpert said Mills said the alphaWorks unit must still work to establish itself within IBM. "I'm not sure where it will go. It's been a fun thing, a learning thing. It's getting good data and good feedback, and there have already been some successes -- Java and the Bean Machine," he said. Mills somewhat dismisses the notion that IBM should ever be considered less "cool" than other software companies. "We have lots of people with ponytails," he quipped. Has there been some smoke and mirrors in IBM's "Internet revival"? Perhaps. Web server strategy, like language and object component strategies, has been a moving target. OS/2 was quickly rolled out as an Internet operating system (remember 'Warp'?) in the early Gerstner days, and almost as quickly rolled back. The network computer is still the impetus for an IBM press conference or two -- but it is really more just a replacement strategy for aging terminals and dusty, one-note PCs.

Overall, the company has come to be known as more flexible, surprisingly so for such a large entity. If it has been unafraid to embrace standards, it has also been willing to jettison standards that ebb. Witness the move to quickly demote Netscape's Web server. Witness not a wasted moment in endorsing the popular Apache server.

Big Blue momentum

To continue its momentum, IBM will need to continue to play the role of a giant that is nimble of foot. The Java alliance with Sun will be tested over time. While the recent rebranding of middleware offerings may make sense on paper, it will have to be effectively sold in the field.

Long-time IBM watcher Sam Albert gives good marks to the new IBM. Albert, president of Sam Albert Associates, Scarsdale, N.Y., says of Gerstner: "This guy has been an amazing turnaround artist. He has made IBM customer-centric and customer-driven."

Continued Albert: "He decided not to break up the company [as he was urged to do]. He's very carefully focused on keeping the breadth. With him, it's not about 'reads, feeds and speeds' [read: 'technology']. It's about solutions for business problems." Gerstner has deftly managed software, hardware and services sales integration, noted Albert.

And the man who claims coinage of the term "co-opitition'' gives Gerstner the highest grades as a practitioner of that art form. "He cooperates with Microsoft, yet he can compete with them. He competes with Sun, yet he can cooperate with them," he said. IBM, Albert cautions, must continue to execute.

Reaching similar conclusions on Gerstner's performance -- while taking a slightly different tact -- is Max Watson, chairman, president and CEO of BMC Software, Houston. Like Albert, and so many other figures in the industry, Watson worked at IBM. "IBM's getting better at what it does. He got costs under control," Watson said of Gerstner. "He's done an incredible job in five years." Watson continued: "The next five years will be more difficult. I like my job better than his job.

"I was at IBM for 14 years," said Watson. "In my opinion, the great problem is that they became internally focused. People worried about their own job." The resulting in-house competition can become counterproductive. Cliques form what Watson refers to as "the IBM Mafia." Gerstner still faces these organizational obstacles.

Amid the daily barrage of news from IBM are missives that show the prowess of the firm. IBM continues to acquire. In October, the firm bought Internet workbench software from Wallop Software, incorporating that promising package into its growing WebSphere Studio line (and in turn licensing it to another Web company in which it has invested, NetObjects). In November, the company proposed UMI (an XML-like format for repository meta data) with Oracle and Unisys. Also in November, IBM announced that the U.S. Census Bureau would use IBM's SSA-based 7133 Serial Disk Systems in the operation of the Bureau's American Fact Finder Internet-based database. Such a wedding of large-scale processing and the Internet seems characteristic of "the New IBM." Its recent growth spurts will be challenged, however. Financial analysts warily note that Gerstner and other insiders have recently unloaded some stock. But clearly, the company that had a hand in the 1896 census (via its forerunner, Hollerith's Tabulating Machine Co.), is headed into another century in good order.

This special report includes reporting by Jennifer Lancione, George Lawton and Jason Meserve.