IBM wins big in emerging markets

For all the doom and gloom in technology spending in the United States and Western Europe, IBM's results suggest that there's a world of opportunity in emerging markets. IBM reported stellar earnings - three days ahead of schedule - but it's where the growth is coming from that is most interesting. Writes the Wall Street Journal:

IBM Chief Executive Officer Samuel J. Palmisano, said in a prepared statement that the improvement was "led by strong operational performance in Asia, Europe and emerging countries." IBM said it will report revenue for the quarter of $28.9 billion, up 10% from the year earlier level and about $1 billion above analysts' estimates. About six points of the gain came from currency translation, reflecting the decline in value of the dollar against the Euro and other currencies.

IBM projected this growth in a memo last year, but it's great to see it proving out Mr. Palmisano. The future of enterprise IT in Europe and the US may well be vendor consolidation as vendors like IBM and Oracle seek to minimize costs associated with selling into saturated markets.

For net new growth, however, the smart money is paddling overseas. The question, however, will be whether open source can beat the Proprietary Bloc in these new, relatively untapped markets. I'm not sure that it can, but I believe it will compete much more effectively in such markets where the incumbents aren't incumbent.