The NSA Revelations Destroying IBM Hardware Sales In China

[FarCenter]

The first shot was fired on Monday. Teradata, which sells analytics tools for Big Data, warned that quarterly revenues plunged 21% in Asia and 19% in the Middle East and Africa. Wednesday evening, it was IBM’s turn to confess that its hardware sales in China had simply collapsed.

...

But there was nothing to spin in Asia-Pacific, where revenues plunged 15%. Revenues in IBM’s “growth markets” dropped 9%. They include the BRIC countries – Brazil, Russia, India, and China – where revenues sagged 15%. In China, which accounts for 5% of IBM’s total revenues, sales dropped 22%, with hardware sales, nearly half of IBM’s business there, falling off a cliff: down 40%.
...

The explanation is more obvious. In mid-August, an anonymous source told the Shanghai Securities News, a branch of the state-owned Xinhua News Agency, which reports directly to the Propaganda and Public Information Departments of the Communist Party, that IBM, along with Oracle and EMC, have become targets of the Ministry of Public Security and the cabinet-level Development Research Centre due to the Snowden revelations.

“At present, thanks to their technological superiority, many of our core information technology systems are basically dominated by foreign hardware and software firms, but the Prism scandal implies security problems,” the source said, according to Reuters. So the government would launch an investigation into these security problems, the source said.

Absolute stonewalling ensued. IBM told Reuters that it was unable to comment. Oracle and EMC weren’t available for comment. The Ministry of Public Security refused to comment. The Development Research Centre knew nothing of any such investigation. The Ministry of Industry and Information Technology “could not confirm anything because of the matter’s sensitivity.”

http://www.businessinsider.com/nsa-revelations-kill-ibm-hardware-sales-in-china-2013-10

[Shampoyeto]

1. This is one more consequence of the NSA breaking the law and violating the Constitution

People aren't stupid. IBM and other companies have to comply with the NSA's illegal and unconstitutional snooping programs (legal scholars say it, not just me). People get paranoid for good reason as a consequence.

And no, Snowden wasn't the one who spied on everyone.

[Blue_Tires]

8. I still remain unconvinced that corporate America was "coerced" by the NSA

I'm betting when it all comes out we'll see that most, if not all of corporate America were willing, enthusiastic participants in the whole thing...

[FarCenter]

10. The DoD is a major customer of IBM

It only takes a few words between the right people to ensure enthusiastic cooperation.

Your company has not arrived unless your CEO has had a discussion with someone from the national security establishment.

[Blue_Tires]

11. True, and corporate America wants to

massively mine everyone's personal data as badly as the NSA does, if not worse (albeit for different reasons)...

[jakeXT]

2. I thought they had Lenovo

Lenovo acquired IBM's personal computer business in 2005.[8] Lenovo's acquisition of IBM's personal computer division accelerated access to foreign markets while improving both its branding and technology.[9] Lenovo paid US$1.25 billion for IBM's computer business and assumed an additional US$500 million of IBM's debt. This acquisition made Lenovo the third-largest computer maker worldwide by volume.[10]

In regards to the purchase of IBM's personal computer division, Liu Chuanzhi said, "We benefited in three ways from the IBM acquisition. We got the ThinkPad brand, IBM's more advanced PC manufacturing technology and the company's international resources, such as its global sales channels and operation teams. These three elements have shored up our sales revenue in the past several years."[10]

http://en.wikipedia.org/wiki/Lenovo

[stevenleser]

3. The article seems to be talking about mainframes and business servers etc., not personal computers

You are right, I am typing this on a Lenovo and it is not branded IBM anywhere, but IBM still sells its mainframes, etc to businesses.

[FarCenter]

4. IBM has been in negotiations to sell its xSystem and rack mounted server business to Lenovo

These business are based on the Intel server processor chips, similar to those used in PCs. They run Windows or Linux mostly.

IBMs other server businesses are the zSystems mainframes and the pSystem AIX servers.

China has continuing development of their own server processor chips and their own version of Linux.

China's Godson processors to power servers in 2014
http://www.eetimes.com/document.asp?doc_id=1263071

Within a couple years I'd expect these to be mandated for all Chinese critical infrastructure due to security concerns.

[jsr]

5. The paranoia is justified

[Fumesucker]

6. Wow, that's going to be hard on the Indians

http://www.democraticunderground.com/101675381

[FarCenter]

7. The IBMers in India are mainly on the software and services side.

It will be harder on the workers in countries like the US and Europe where IBM does a lot of server manufacturing.

[bemildred]

9. Gee, who could have predicted this? nt