An Overview of the IBM Business Model

An Overview of the IBM Business Model

IBM provides infrastructure, Internet hosting, and other services in addition to creating and selling computer hardware and software.


Located in Armonk, New York, International Business Machines Corporation (IBM) is a global American technology company. Initially known as the Computing-Tabulating-Recording Company (CTR), International Business Machines was renamed in 1924.

With the addition of cutting-edge technologies like IBM Watson and IBM Blockchain, IBM primarily generates revenue through five business segments: cognitive solutions, global business services, technology services, cloud platforms, systems, and global financing.

Along with creating and marketing computer hardware and software, IBM offers infrastructure, Internet hosting, and consulting services in various computer-related fields, including nanotechnology and mainframe computers.

The company competes against hundreds of organizations, from tiny businesses to huge international corporations, and has customers in more than 175 countries.


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Details About IBM

Type   Public
IndustryInformation technology
Founded          June 16, 1911; 111 Years Ago
Founder          Charles Ranlett Flint
HeadquartersArmonk, New York, U.S.
Area served     177 countries

The Computing-Tabulating-Recording Company (CTR), which later became known as “International Business Machines,” was established in 1911 in Endicott, New York. IBM is a New York-based corporation with operations in more than 170 nations.

Technologies that would eventually make up the foundation of International Business Machines first appeared in the 1880s (IBM). They produced equipment for sale and rental, including tabulators, punched cards, industrial time recorders, meat and cheese slicers, and commercial scales.

To acknowledge employee potential and accomplishments, IBM offers several leadership development and recognition initiatives. In addition, IBM provides discipline-specific leadership development programs for high-potential early-career workers. With revenue of $73.6 billion for the fiscal year 2020, IBM recorded a profitability of $5.6 billion.

The Strategies IBM Aims At Making Money

Four business divisions comprise the company’s operations: software, consulting, infrastructure, and financing.

  • Software: By utilizing IBM’s software solutions and its hybrid cloud platform, the IBM Software division aids clients in managing their data requirements, automating processes, and securing their systems. Except for those in the Infrastructure section, all of IBM’s software products are included in this division. In FY 2021, software earned $24.1 billion in sales, a 5.3% increase over the previous year. More than 42% of the total income from all four categories came from it. Gross profit for the five divisions climbed by 5.9% to $19.0 billion, or 59% of total sales from all segments.
  • Consulting: The IBM Consulting business unit assists its clients in transforming their businesses and implementing new technologies. This section works with IBM clients to develop products and solutions that help them in their organization’s digital transformation, in addition to designing and constructing hybrid cloud infrastructures to improve workflows and business processes. In the fiscal year 2020 timeframe, the consultancy business produced $17.8 billion in sales, an increase of 9.8%. The consultancy segment produced almost 31% of the overall income. In FY 2021, this segment contributed almost 16% of the total gross profit earned by the other four segments, a growth of 4.9%.
  • Infrastructure: IBM provides hybrid cloud solutions for the infrastructure sector. The business offers its clients infrastructure platforms that enable them to satisfy the brand-new requirements brought on by hybrid multi-cloud and AI workloads in businesses. It also provides high-performance servers, storage options, and cloud infrastructure-as-a-service in addition to hardware (IaaS). Additionally, the section engages in the refurbishing and reselling of old equipment. In FY 2021, revenue from infrastructure fell 2.4% to $14.2 billion, or approximately 25% of total revenue from all four categories. The gross profit was down 6.1% from the previous year at $7.8 billion. Approximately 24% of the overall gross profit was attributable to this area.
  • Financing: Customers can purchase IT equipment, software, and services through IBM’s Financing division. The business sector often offers to finance goods and services essential to the client’s day-to-day operations and IBM’s hybrid cloud platform and artificial intelligence strategy. Revenue in the Financing division was $774 million, a 20.6% decrease from FY 2020. From this category, more than 1% of total income was generated. The segment’s gross profit dropped 39.7% to $245 million throughout the year, making up less than 1% of the overall gross profit for all four segments.

The Latest IBM Developments

On March 3, 2022, IBM stated Russia’s invasion of Ukraine. The statement claims that the issue has caused the corporation to discontinue selling technologies in Russia. The Microsoft Azure cloud platform-focused cloud services company Neudesic was purchased by IBM earlier this year, according to an announcement made at the time. The business said that the purchase would assist its ongoing hybrid cloud and artificial intelligence objectives and help it grow its hybrid multi-cloud services offerings. The financial specifics of the purchase are not disclosed.

The Corporate Culture Of IBM

IBM is frequently referred to as a sales-focused business. Many top managers and executives have historically been chosen from the ranks of sales assistants. Top and middle management also assisted salespeople in closing a deal with significant clients. The business developed a more technological edge over time. Of IBM’s 320,000 workers, roughly 178,000 worked in technical positions in 2003, including 38,000 in software. The term “Big Blue” (also known as “The Blue Giant”) refers to the blue suit that IBM personnel wore to work in the past with a white shirt and black tie.

Today, the open-source movement is a crucial supporter of IBM’s corporate culture. Through the IBM Linux Technology Center, where roughly 300 IBM workers work on the Linux kernel, the business also spends billions of dollars on GNU/Linux-based products and services.


When discussing the great and diverse IT firms that are active around the globe today, IBM is unquestionably one of the top names. The company offers a wide range of business services, which has led to an expansion of the company’s service-related business areas. In addition, the IBM Company has a long history of serving its customers, making it trustworthy and dependable.

Since the company’s founding, it has gained widespread acceptance in other nations, and there are currently around 175 distinct branches operating there. As one of the world’s oldest IT businesses, For individuals looking to enter this industry on their own, IBM undoubtedly has a business strategy that may serve as inspiration.

How does IBM make money?

●        IBM offers consulting services, sells software, and offers hybrid cloud infrastructure solutions. IBM’s largest source of income and profit comes from its software division.

What now drives IBM’s business?  

●        Technology firm IBM) offers hybrid cloud and artificial intelligence (AI) solutions.

How does IBM achieve success?

●        For more than a century, IBM dominated the early worldwide market with technological and service excellence, calculation and tabulation equipment, and success in major defense contracts, one of the most recognizable brands among computer behemoths.

How many business divisions does IBM have?

●        A total of 800 separate businesses make up the IBM business model.

Who currently owns IBM?

●        Global Business Machines Corporation

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