In my forecast for the latest financial report from IBM
Palmisano said that IBM is "well-positioned in the growth areas of a changing IT industry, focused on our evolving business model, and poised for long-term success for our clients and shareholders." The technology business is not kind to laggards, and IBM clearly recognizes the importance of staying nimble as the landscape around the company changes. Right now, it's international growth and Web services that power the hopes at Big Blue; tomorrow, it could be support services or databases.
That's why the largest tech companies also hold prominent positions in lists of the biggest R&D spenders. If IBM, or Microsoft
So I don't mind seeing R&D expenditures growing faster than sales. Yes, it cuts into the bottom line, which is what all the pundits are watching, but it's an investment in the future of the company, and indeed, of the tech business as a whole. IBM delivered on that mark, with 2006 R&D expenses 4.5% above 2005 levels -- a much bigger change than the 0.3% annual sales growth. $6.1 billion of research budgets should do nicely. Carry on, gentlemen; you have the right idea.
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