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Author: Chapman208 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 9251  
Subject: IBM long-term potential, Update 5 Date: 12/17/1999 2:43 PM
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Long-Term IBM Potential, Update 5

I think that IBM has tremendous growth potential over the next decade. For example, here are just some of the long-term contracts IBM has signed up since December '98 (updated since the last posting, with new listings/hyperlinks), in order of decreasing contract value:

(Company name - contract commitment, type of product or service [contract duration])
Dell - $16B in component sales; $6B in outsourcing [multi-year]
Acer - $8B, components [7 years]
EMC - $3B, components [5 years]
Cisco - $2B, components [7 years]
Galeries Lafayette - $1.2B, outsourcing [15 years]
Nissan - $1.0B, outsourcing [9.5 years]
Nintendo - $1.0B, components (for Jupiter) [multi-year]
Portugal Telecom - $1.0B, outsourcing [10 years]
Bank One - $558M, outsourcing [7 year]
Allied Signal - $550M, outsourcing, hardware, software [7 years]
Mazda - $480M, outsourcing [10 years]
Ford Europe - $300M, outsourcing [5 years] ** New addition **
Musashino Bank (Japan) - $260M, outsourcing [10 years] ** New addition **
Mitsui Marine Insurance - $235M, outsourcing [10 years]
Telephonica Italia - $200M, outsourcing [multi-year]
CGU (UK) - $200M, outsourcing [7 years]
Sega - (I don't recall how much), components and manufacturing (for Dreamcast) [multi-year]
Apple - (undisclosed), components (copper-based PowerPC G4 chip) [multi-year]
Cazenove (UK) - (undisclosed), outsourcing [10 years]

(I believe that EDS and AT&T both signed large outsourcing deals, but I don't recall the details. And I think there was another foreign telephone company. There are probably others I have forgotten as well.)

Here is a great Business Week article about IBM's e-commerce potential: http://www.businessweek.com/1999/99_50/b3659001.htm. ** New addition **

According to an article discussing recent outsourcing deals, there is presently a backlog of $58B in IBM long-term outsourcing contracts just waiting to be completed. So it looks like IBM Global Services will be sitting pretty for the next decade. The long-term component deals kick in another $35B-$40B. That's $90 to $100B already locked in, without even including computer and software sales!

And this doesn't count billions to be made in patent licensing for advanced technologies, including:
- Copper chip, optical lithography, and other advanced manufacturing technologies (http://www.research.ibm.com/topics/serious/chip/)
- Silicon-on-Insulator technology (http://www.chips.ibm.com/bluelogic/showcase/soi/)
- Flexible transistors
and other high-performance/power-reducing/ergonomic technologies that no one else has, but will need in order to compete in the next century. IBM has led the world in US patents received for the last 6 years in a row. This press release talks about some of them: http://www.ibm.com/press/prnews.nsf/Searchvw/6e897902e509f243852566f600505932. ** New addition **

Or how about hard drives? IBM has the biggest/smallest/densest hard drives on the market:
- The first 73GB(!) 3.5" drive (http://biz.yahoo.com/bw/991015/ca_ibm_1.html)
- The revolutionary 340MB microdrive (the size of a quarter dollar) that can be used in digital cameras, MP3 music players, and other small devices (http://www.storage.ibm.com/press/hdd/micro/990617.htm)
- The third world record in the last year for drive storage density (http://www.storage.ibm.com/press/hdd/991004.htm)

Did you know that 40% of all new laptop hard drives are made by IBM, or that IBM ships more state of the art Giant Magneto-Resistive read/write heads for hard drives than anyone (http://www.storage.ibm.com/press/mrheads/981217.htm)?

Or that IBM has demonstrated a prototype wearable computer (http://www.ie.ibm.com/ie121198.html), about the size of a portable CD player, with a headset (about the size of a pair of glasses with one lens) for video output, with voice recognition. See http://www.jp.ibm.com/esbu/E/wpc/features.html for pictures. Here is an updated article: http://yahoo.cnet.com/news/0-1006-200-1474374.html?tt.yfin.

For another interesting future technology, how about the Personal Area Network (PAN): http://www.research.ibm.com/resources/magazine/1997/issue_1/pan197.html. ** New addition **

I hope you find this useful. I'll try to update this list periodically.

Take care. Mark.
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