Platformonomics TGIF is a weekly roll-up of links, comments on those links, and perhaps a little too much tugging on my favorite threads.
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It is definitely scary clown season.
News
ClownWatch™: IBM Reports Negative CAPEX
IBM shatters the zero lower bound to retain their crown as the clowniest CAPEX clown of all time. We all implicitly assume that IBM, on their long CAPEX descent towards zero, can’t actually spend less than zero. But IBM annihilates this assumption by reporting negative $55 million CAPEX spend for Q3. That number of course was part of the usual financial engineering games, but kudos to the champ for showing us they have infinite room to hold off any challengers to their clown crown.
Tough quarter on the IBM narrative front:
- “IBM is returning to growth” – 1% growth doesn’t even keep up with inflation, much less the industry. Probably why they leaned so hard into the 2% constant currency growth number 😂
- “IBM consulting momentum” – this was the story behind IBM’s modest stock run-up of the last quarter. Consulting was flat and “a pause in discretionary spending is impacting our consulting business”.
- “IBM, something, something, AI” – the CEO brazenly tells us “We continue to see great momentum in AI…” while having to acknowledge that the “pause in discretionary spending” is spelled AI. And, of course, their rounding error CAPEX.
Actual clouds report next week.
Previous:
Follow the CAPEX: The Clown Car Race Checkered Flag, Introducing Platformonomics ClownWatch™, IBM is Not a Technology Company: Employees Agree, IBM is Not a Technology Company: Layoffs Are Their Specialty, IBM is Not a Technology Company: But Ecstatic to be Treated Like One, IBM is Not a Technology Company: McDonald’s Edition, This Week in Securities Fraud, IBM and the Art of Misleading Investors, Last IBM Strategic Imperative Bites the Dust, IBM’s “Cloud” Business (or Lack Thereof), Tweetstorm Digest: Reactions to Barron’s “IBM’s Reboot” Story, IBM’s Lost Decade, Follow the CAPEX: The Clown Car Race Checkered Flag, Introducing Platformonomics ClownWatch™
Dealing With Data Center Delays
Even Business Insider has discovered that it takes years to permit, build, connect, power and populate hyperscale cloud data centers.
About the only party that hasn’t figured this out is Oracle. (Amazon is amongst the best at building data centers).
We’ve figured out where Oracle’s “hail mary” data centers/747 hangars are sited and are working to determine just how many years away they are from possible completion. Stay tuned.
Benioff’s Blizzard of Bluster
Salesforce CEO Marc Benioff is in full attack mode against Microsoft. He’s dipped into his greatest hits bin and recycled Salesforce’s original “No Software” slogan as “No Copilots”.
The question is why is he being so vocal? Is he playing offense or defense? Does Benioff really think he’s going to displace Microsoft in the enterprise? Or is his aging (and still Oracle-based) CRM system of record leaking data and getting filled with AI slop as sales people use ChatGPT to satisfy the man’s demands (CRM has always been a tool of oppression for the man, at least the sales management man)?
Salesforce brings not even a knife but a family of mascots to the AI technology fight. Their trailing twelve month CAPEX is $613 million and declining, and even less than clowniest of clowns IBM as a percentage of revenue. Salesforce just isn’t much of a technology company.
Yet Benioff is saying stuff that make you question his grasp of AI (and even reality):
Salesforce will do more enterprise AI transactions this week, about 2 trillion, than any other vendor in the world. We are the second-largest software company in the world today but I do not believe in some of this narratives and rhetorics that’s going on and I think it’s a disservice, and I’ve been wanting to say this, and you also know two out of the five top performing models in the world, we wrote most accurate, most capable, we created prompt engineering, we’ve done a lot of the work in deep learning, we’ve done a lot of the research.
Prompt engineering, I’ll admit, is a good fit for Salesforce’s engineering chops.
I would say first of all, ten years ago I thought this was about to happen, and I went to have this existential crisis in my own leadership where I was like, “Well, the AI wave is here and I need to crank it out at Salesforce”, and I built something called Einstein. Which is our core, and we did machine intelligence, machine learning, deep learning, and now generative, and the thing that I learned when I did Einstein was that this AI needs to kind of be baked in. That this is too technical for customers, you’ve got to just make everything better.
Benioff’s even taken the baton from IBM to make extravagant promises about single-handedly fixing healthcare.
We’ll see!!!
Previous:
Media Self-Harm: Declining Time Magazine, Media Self-Harm: Time Magazine Edition,
Salesforce + Indian Mystic + AI = ???, “There’s an art to this kind of horseshit, and Benioff is its Michelangelo”, The Hard Thing About “Hard Pivots”, Thought Leadership (in Mascots), Salesforce Rallies Its Deep Bench of AI Experts (and Cartoon Characters), Bluster, Bombast and Bullshit: Just Another Day at Salesforce, Salesforce’s Shamelessness is Staggering, Salesforce Gonna Salesforce, The Spectacle that is Dreamforce
A Three Orders of Magnitude Error (At Least)
$30 million? Presumably they meant $30 billion? Per quarter…
Good luck!!!
Play Bigger: Picking Your Anti-Customer
Positioning, that succinct and strategic articulation of your identity to the market, is an Archimedean lever. It is too often neglected today as people fixate on the digital funnel.
Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets is that very rare thing: a useful business book that makes the case for why and how great companies use positioning to create and dominate categories (and, even better, you only have to read the first six chapters).
A Friend of Platformonomics (hereforth to be known as FOPs) reminds me that one positioning technique is to define (and share loudly) who your customer isn’t, which the authors of Play Bigger do brilliantly:
I very much want to hear the SAP story. The footnote says “We once did work for SAP. As a company, it has old-man balls.”
