Merrill Lynch & Co has been taking a closer look at the revenues IBM Corp generates from software, and reckons sales of applications now amount to around $1bn, while systems software sales amount to $12bn. Of that figure, host software accounts for $9bn – 30% from operating systems, 70% from other software, including DB2 database sales – while $3bn of revenue comes from distributed software such as Lotus Development Corp and Tivoli Systems Inc products. Steve Milunovich of Merrill Lynch estimates IBM’s software operating margin comes out at 23% and contributes around a third of Big Blue’s overall operating profit. DB2, he figures, is now a $1.7bn business.
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