E-Commerce Times Talkback
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In a deal that might ultimately shift the balance of power among computer vendors, IBM
will pay $3.5 billion in cash and stock for PricewaterhouseCoopers Consulting. Pascal
Matzke, a senior analyst at Giga Information Group, told the E-Commerce Times that
the acquisition is "actually a good match" that will give IBM a strong position in
high-end projects against the likes of EDS and Accenture. The deal could have long-term
ramifications, particularly for IBM competitors Hewlett-Packard and Sun.
IBM is buying the strategic consulting skills it could not grow internally. I worked for IBM for 20 years, and every time they would launch a project to develop the kind of intellectual property needed for strategic consulting, the funding was pulled right around the time the proof-of-concept phase was completed. Most of IBM's Global Services revenues are from very-low-margin outsourcing, installation, and programming services. IBM wants the kind of stratgic consulting - like Accenture and EDS have (EDS also bought theirs, but have done a good job integrating it). IBM is generally poor at integrating acquisitions, so this PwC deal should be a boon to its consulting competitors.