IBM "will judge the future of hardware on its ability to drive profits. What people forget is that differentiated hardware can be very profitable.  It's when it goes to commodity, it becomes a problem. Today, IBM can drive profit from its hardware products. If that continues, I think it stays."

Big Blue decided to step away from the commodity PC business divesting it to Lenovo some time ago.  So, it’s not afraid to walk away from low margin businesses. On the other hand, IBM does see the value in OEMing hardware as part of the solution mix. It has succeeded in maintaining an OEM relationship with Cisco (NasdaqGS:CSCO) despite Cisco’s recent offensive into the blade-server market. Cisco’s actions caused a rift with long time ally, HP (NYSE:HPQ), but not so with IBM and Cisco.  In addition, IBM has recently announced expanded ties with Brocade and continued relations with Juniper to round out its solutions.  So, Big Blue isn’t backing away from hardware, rather it has lots of options and is just being picky about which hardware fits the bill. Channel partners should also be picky and choose hardware that not only fits the solution but bolsters profits.