IBM, Cisco, Intel, Microsoft, Dell, HP, and other large legacy hardware and software companies have something in common these days. A declining revenue stream. Big time.
Its not just one or two companies, its most of the big ones. And the results will ultimately effect employees as each quarter passes and they are forced to reckon with Wall Street earnings and reports. The stock market takes no prisoners.
Online newcomers with ‘disruptive’ business models and software are flourishing. Box, Dropbox, Workday, Amazon, Salesforce, Facebook, LinkedIn, all have reported record quarters. Even Apple despite its recently declining stock price is still growing. Just about anything that has to do with mobile phones and tablets has the ‘Midas touch’. Google Inc. said last Thursday that its revenue grew 31% in the first quarter, while profit rose 16%.
IBM last Thursday reported its revenue dropped.
Software giant Microsoft Corp., once known for rapid sales of PC software, reported that the business that includes its Windows operating system turned in essentially zero growth
Intel Corp., which has struggled to get its chips into mobile devices reported a first-quarter profit drop of 25% on revenue that declined 2.5%.
Oracle Corp., reported a 1% drop in its revenue in its most-recent quarter.
The disparities are the result of technology shifts—the rise of mobile devices and slowing growth in personal computers, conventional software replaced with online versions and cloud outsourcing by corporations. Companies want to rent software and computer systems. The deals are smaller and take less time to implement. Companies want to get out of the construction business—building and rolling out expensive software and hardware systems.
Web-based technology makes it easier for consumers and corporate employees to try new things and makes it harder for older technology suppliers to keep rolling out huge hardware and software deals month in and month out. Hardware, chips and hard drives get faster, smaller and cheaper now every 3-6 months making large purchases by corporations old before the equipment barely gets installed.
Workday Inc which was founded in 2005 and went public in October, reported that revenue for its fourth quarter ended in February rose 89%
Box Inc., founded in 2005 that lets customers store their data online and tap into it from mobile phones and PCs., revenue grew more than 150% in 2012 and it expects another doubling again this year.
“Their biggest challenge is they live in a world of legacy business models,” said Ed Anderson, an analyst with technology research firm Gartner Inc.