Analysts at Credit Suisse First Boston expect IBM software business could exceed their 1999 growth forecast of 4%. Steve Mills, IBM’s general manager of software solutions, told the bank that increased server sales will drag more software with it and that popularity of its middleware applications continues to swell. Apparently 200 customers have deployed ERP applications on mainframes in the last six months. VP server development Bill Kelly said the innovations in copper technology and performance boost it brings will help to pep hardware sales throughout 1999. At its annual user conference in Florida in October (CI No 3,518), Gartner Group analyst Thomas Bittman noted that IBM derives more profit from its software arm than any other. The margins in services are only 20%, which isn’t particularly high. But those derived from software sales are around 70%, he said, so IBM can be a successful services vendor, but if it wants to make a continued profit, the company needs to grow and maintain the software business.
