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Long-Term IBM Potential, Update 7

IBM has tremendous growth potential over the next decade. The following document has two parts. The first lists a number of long-term hardware component and manufacturing contracts, as well as outsourcing contracts (services). The second section describes a number of areas in which IBM technology is leading the way into the 21st century, both in terms of cutting-edge products and patent licenses.

Long-term Contracts
Here are just some of the long-term contracts ($200B+) IBM has signed up just since December '98 (updated since the last posting, with new listings/hyperlinks), in order of decreasing contract value. (The list shows company name, contract amount, type of product or service and 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]
Meiji Life Insurance (Japan) - $533M, outsourcing [10 years]
Mazda - $480M, outsourcing [10 years]
Ford Europe - $300M, outsourcing [5 years]
Musashino Bank (Japan) - $260M, outsourcing [10 years]
Mitsui Marine Insurance (Japan) - $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:

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!

Cutting-Edge Technology
All of this money in guaranteed-income contracts doesn't even include the additional billions to be made in patent licensing for advanced technologies, including:
- Copper chips, advances in optical lithography, switch-on-a-chip, and other advanced manufacturing technologies ( Eventually all computer chips will use copper interconnects. ** Updated **
- Silicon-on-Insulator technology (
- Spray-on flexible transistors ( ** Updated **
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 7 years in a row. This press release talks about some of the 1999 patents received: The press release discussing IBM's 1998 patents can be found at: It's still worth reading, as it contains a lot of interesting material. According to the release, IBM's patent portfolio accounts for over $1B per year in licenses. (For more information about U.S. patents in general, go to the IBM Patent Server at This server lets you access over 26 years of U.S. Patent & Trademark Office (USPTO) patent descriptions as well as the last seventeen years of images.) ** Updated **

IBM is now the largest supercomputer vendor on the planet. IBM used the technology pioneered in the development of Deep Blue, the computer that beat world chess champion Garry Kasparov ( to develop the next generation of IBM supercomputers, surpassing Sun and Cray/SGI with nearly a third of the world's 500 most powerful computer installations ( Now IBM is going even farther with Blue Gene (, a 1 million processor computer that will eventually process more than 1 petaFLOP (quadrillion floating point operations) per second. It will be used in biological research for the Human Genome Project. (Blue Gene will put not one, but 32, microprocessors in each chip. Each motherboard will contain sixty-four such chips Each of Blue Gene's 64 computing towers will hold eight of these motherboards.) ** New addition **

IBM has the biggest/smallest/densest hard drives on the market:
- The first 73GB 3.5" drive (
- The revolutionary 340MB microdrive (the size of a quarter dollar) that can be used in digital cameras, MP3 music players, and other small devices (
- The third world record in the last year for drive storage density (

40% of all new laptop hard drives are made by IBM, and IBM ships more state of the art Giant Magneto-Resistive read/write heads for hard drives than anyone else (

IBM has demonstrated a prototype wearable computer (, 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 for pictures. Here are a couple of updated articles: and

For another interesting future technology, how about the PAN (Personal Area Network) (

With all the focus on hardware and services, many people don't know that IBM is one of the world's largest software vendors as well, with revenues of over $13B in 1999, and more than 50 million Lotus Notes users. Tivoli, another IBM subsidiary, provides much of the world's "middleware" software. ** New addition **

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

Take care. Mark.
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