The Bloor Perspective: IBM's big blues, Citrix's ASP success, and boo.com's deepening crisis

Financially, IBM hasn't been looking too good recently. The first quarter of 2000 showed revenues falling year-on-year by five per cent to $19.3bn and net income holding steady at $1.52bn. This week, in a presentation to financial analysts, IBM CEO Lou Gerstner admitted the next quarter will be similarly affected.

Much of the blame was placed upon the restructuring IBM has been undertaking - designed to increase sales in the long term but with a short term negative impact.

But this is only half of the problem. IBM's hard drive business has struggled with design problems and late delivery times. Its PC business is still struggling and hardware sales just aren't what they should be.

So what is IBM doing to redress the balance? Apart from fixing the problems that it had with its hard drives, the emphasis so far has been on the enhancement of its personal computer business - in particular with the launch of new laptops and a fresh desktop line called NetVista.

NetVista comes in two flavours, the X40 and the S40. The S40 is a Windows 2000 system that, initially, comes in a business version only. The NetVista PC systems are expected to be available within a month and these will be followed closely by a range of S80 mid-range servers that are expected to compete strongly against Sun's mid-range offerings.

It's probably only the financial analysts who could have a real problem with the fact that IBM only made a profit of $1.5bn in the last three months. To some extent it's frightening that Lou Gerstner felt the need to explain this away when other businesses would fall over themselves to fail in the same way. However, it is clear that IBM has highlighted three areas where it can make improvements - its business structure, its hard drive business and its PC sales - and is working to achieve what it can.

* Citrix gains from the ASP boom *

Since it was introduced in 1995, Citrix Systems claims that its Independent Computing Architecture (ICA) has been adopted by 24 million end users. This is seen to be a major validation of the server-based approach to applications solutions.

Exactly how the 24 million users were counted is not absolutely clear, but Citrix is able to point to six million concurrent user licenses that it has sold to over 130 companies and this points to a widespread acceptance of the thin-client model.

While it's clear that 24 million users is not a great deal in terms of the overall application-using population, it is significant. What's more interesting is the relatively small number of licensed companies that have produced these users. Citrix has developed more than 30 strong partnerships with application service providers through its iBusiness ASP programme. It's probably safe to assume that these and many other ASPs are included within the 130. So who takes the kudos?

While the concepts behind MetaFrame have always been strong, it has never been easy to sell into businesses that have grown up with the fat-client philosophy. Even when the issues of TCO and the return to server-centric computing were raised, Citrix was seen to have the technology but the uptake of the concept was slower than many expected. It is with the ASP market that Citrix has really gained critical mass - benefiting from a small number of service organisations seeking to provide server-based applications to large numbers of users. Citrix has been able to identify itself strongly with the need of the ASP to provide centralised application management with good-quality, low-bandwidth user access. Citrix and application service provision are now inextricably linked with the result that Citrix has gained critical mass and can move forward with some security. However, it is the ASPs that should take the bow.

* boo.com - from riches to rags? *

In the early days of the dot-com goldrush, it was commonly believed that the retail sector would be one of the greatest gold-bearing areas. But troubles do persist in the market. Among the giants, Amazon is not yet in profit, CDNow is running out of money. And recently boo.com seemed on the brink of collapse.

boo.com is not yet two years old but already it provides an object lesson in what can go wrong with a dot-com. Having acquired financing of $120m, it set about blowing the lot on expensive computer consultancy, armies of staff and expensive marketing campaigns. But even this failed to provide the launch pad it needed - coming to market six months late amid a cloud of contention. And sales haven't really picked up momentum since.

Whether it has any chance of establishing itself as the sports clothes retailer of choice is difficult to say. It still lacks deals with big hitters like Adidas and Nike and it isn't going to burst into profit any time soon. What boo.com and many other e-tailers have done is to execute grandiose schemes when a simple prototype site to experiment with the business model and refine it would have made much greater sense.

boo.com has been innovative in one way, by not discounting the goods it sells. It presumed that type of goods it sold and the shopping experience, which is admittedly superior to the average "catalogue" e-tail site, meant that customers would forgo discounts and on this point it may be proved correct. However, from the signs at the moment it may never get the chance to prove the point.

* Further analysis is available at http://www.it-director.com