SWOT Analysis of IBM: 2021 Strengths & Threats

Name International Business Machines Corporation (IBM)
Industry Cloud computing, Artificial intelligence, Computer hardware,
Computer software
Founded 1911 as Computing-Tabulating-Recording Company (CTR) 
Headquarters Armonk, New York
CEO Arvind Krishna
Revenues US$73.62 billion (2020) 
Profit US$5.59 billion (2020) 
Competitors Hewlett Packard, Xerox, Accenture, Oracle, SAS, SAP, Salesforce, Intel.

Company Overview

Charles Ranlett Flint created International Business Machines Corporation (IBM) in 1911 as the Computing-Tabulating-Recording Company (CTR), which was renamed “International Business Machines” in 1924. IBM is incorporated in New York with operations in over 170 countries. Revenues for the six months ending June 30, 2021, totaled $36.5 billion, up 2% year over year (down 1% after accounting for divested operations and currency) compared to $35.7 billion in the first half of 2020. The company’s net income was $2.3 billion, down 10% from the previous year. The diluted earnings per share were $2.52, down 11% from $2.83 per diluted share in 2020. Let’s now dive into the swot analysis of the company

IBM Strengths 2021:

  • Brand Equity.

    IBM’s brand worth climbed by 9% in 2021 compared to the previous year, reaching 91.34 billion USD. (Statista, 2021). 

  • Strategic acquisitions.

    IBM’s pivot toward multi-cloud software and associated business opportunities is still a work in progress, with many acquisitions aimed at solidifying its position in the cloud-based solutions market.

  • High economies of scale.

    Despite the inflated costs of developing new technological products, high economies of scale help businesses keep their competitiveness. IBM’s hybrid cloud strategy is built on a platform-centric basis of Linux, containers, and Kubernetes. Platforms have enticing economics: on average, every $1 invested in a platform generates $3 to $5 in software income, $6 to $8 in services, and $1 to $2 in enterprise infrastructure (IBM, 2021). The technology stack’s multiplier effect adds value to IBM and its growing network of partners.

  • Diversity in the workforce.

    IBM has been working on workplace diversity, inclusion, and equality for over a century. IBM is a pioneer in diversity and inclusion because of its history and ongoing commitment to advancing equity in a global society. Because of its diversity, the company has been able to attract outstanding personnel, which has been critical to its development and repositioning in the face of fierce competition.

  • Extensive intellectual property portfolio.

    More than 3,000 patents of cloud and hybrid cloud technology have been awarded to IBM (IBM Newsroom, 2021). IBM researchers devised a method for intelligently distributing data processing components between the cloud, the edge, and intermediate computing devices. As inventors developed new AI technologies to help organizations grow their usage of AI, IBM earned over 2,300 AI patents. IBM inventors also earned more than 1,400 security-related patents as businesses fight to protect sensitive data, particularly in highly regulated industries.

IBM Weaknesses 2021:

  • Products are easily replicated.

    IBMs focus on cloud and AI solutions exposes the business to more competition as the number of service providers in the same market has increased. Through machine learning, the solutions are becoming easier to replicate.
  • Structured solutions.

    IBM focuses on offering large and medium-sized businesses with tailored solutions. This is a highly profitable business concept, but it only accounts for a small part of the market. The rest of the market is often content with off-the-shelf software and services. Because of the unavailability of these products, IBM is less appealing to the rest of the market, where competitors such as Oracle and SalesForce thrive.

IBM Opportunities 2021

  • Innovation.

    IBM has been focused on developing its technology to better positioned in the market. In 2020, IBM spent 6.33 billion U.S. dollars on research, development, and engineering. IBM, one of the most productive research firms in the world, holds the record for the most patents granted in the United States in 2020. 

  • Strategic alliances.

    The cloud for telecommunications initiative by IBM has seen over thirty-five partners joining to collaborate with IBM. The company has also partnered with Samsung and Redhat to develop the next generation 5g and mobile edge device solutions for private networks (IBM, 2021).

  • Changing work environment.

    Most businesses accelerated their technical developments as they looked to prepare their workers to work remotely during the epidemic. IBMs hybrid cloud and AI solutions presents many opportunities and positions the business in the long-term remote work environment.

  • Divesting.

    IBMs plan to spin off the GTS segment’s managed infrastructure services unit into a new public company, which was announced on October 8, 2020, will create two industry-leading companies, each with strategic focus and flexibility to capitalize on their respective missions and drive client and shareholder value (IBM, 2021).

IBM Threats 2021:

  • Increasing competition. 

    The cloud computing sector is a new and lucrative market with a lot of room for expansion. The potential gains entice a slew of entrants and entrepreneurs, who threaten to eat into IBM’s market dominance.
  • Exchange rate risk.

    IBM has operations in over 170 countries. Each country presents unending foreign currency risks which may result in loss of value for the company. Operation in more volatile markets often result in foreign currency fluctuations.
  • Cybersecurity.

    One of the key foundations of cybersecurity is machine learning (ML). Most solutions that ensure data and information security include this field of artificial intelligence (AI). Cybercriminals also employ AI and machine learning to create more sophisticated and effective threats and attacks. IBM’s platforms and clients have not been spared from cyber-attacks.

IBM SWOT Analysis Conclusion:

International Corporate Machines Corporation (IBM) SWOT’s analysis shows internal and external strategic variables that promote long-term business survival. Despite IBM’s strengths and strong industry position, there are significant challenges arising from the company’s limitations, as well as opportunities and dangers in the external environment. IBM should minimize the impact of its threats direct resources towards exploiting its opportunities. 


HPC Wire (2021) IBM Introduces its First Power10-based Server, the Power E1080; Targets Hybrid Cloud.

IBM Newsroom (2021) IBM Tops U.S. Patent List for 28th Consecutive Year with Innovations in Artificial Intelligence, Hybrid Cloud, Quantum Computing and Cyber-Security

IBM (2021) 2020 Annual Report. 

MorningStar (2021)  IBM Financials

Statista, (2021) IBM’s global brand value from 2006 to 2021

Recent Posts