[comp.sys.ibm.pc] IBM hardware vs. software R & D costs

perkins@bnrmtv.UUCP (09/01/87)

In article <16481@toto.uucp>, dbercel@toto.uucp (Danielle Bercel, MIS Systems Programming) writes:
> Indeed, I recall reading an IBM report that said for every penny ($0.01)
> they spend on hardware R & D they had to spend 100M ($100,000,000.00) in
> software R & D.
> 
> danielle

This ratio is NOT possible.  IBM spends millions of dollars on
hardware R & D.  The necessary software R & D to accompany this,
using the 10 BILLION-to-1 ratio you recall, far exceeds the
gross world product.

Let's try it from another approach.  Say IBM's software R & D
is on the same order as their total profits, or $10 billion a
year.  With your ratio, their annual hardware R & D budget is
a mere $1.  That's pretty impressive when you consider that they
introduce dozens of new hardware products each year.

Next time, I suggest you add some smiley faces when you "recall"
figures from IBM reports.
-- 
{hplabs,amdahl,ames}!bnrmtv!perkins         --Henry Perkins

It is better never to have been born.  But who among us has such luck?
One in a million, perhaps.

jpn@teddy.UUCP (09/02/87)

>Let's try it from another approach.  Say IBM's software R & D
>is on the same order as their total profits, or $10 billion a
>year.  With your ratio, their annual hardware R & D budget is
>a mere $1.  That's pretty impressive when you consider that they
>introduce dozens of new hardware products each year.

Perhaps that ratio refers to PROFIT.  Suppose IBM spends $10 billion
on each hardware and software development.  They make a profit of $10
billion on hardware (sold $20billion) and $1 on software (sold $10
billion + 1$).  This is not that farfetched:  IBM doesn't seem to make
much money on software.  Perhaps that is because IBM has yet to come
out with a decent software product!