As reported in a fantastic cover story in Businessweek, IBM's (NYSE:IBM) transition into the cloud computing era has been a bumpy one. For instance, IBM recently lost a major contract with the CIA, with Amazon.com (NASDAQ:AMZN) ultimately winning the deal. But it wasn't because Amazon cut prices so low that nobody could match them -- IBM was actually one-third cheaper than Amazon. It got beat because its products were severely lacking.
 
In the following video, Motley Fool tech analyst Eric Bleeker and Max Macaluso discuss IBM's difficult transition from being a hardware giant, not only into cloud computing but also in the ways the the tech world operates financially, which is basically not worried about making returns on invested capital or making returns to shareholders in the near term. How will IBM adapt against competitors who basically get free capital without having to worry about making money?
 
 

Eric Bleeker, CFA, has no position in any stocks mentioned. Max Macaluso, Ph.D., owns shares of Apple. The Motley Fool recommends Amazon.com and Apple and owns shares of Amazon.com, Apple, and IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.