IBM CEO: We messed up last year but will do better

IBM CEO Ginni Rometty, in her annual letter to shareholders, set out IBM’s bold vision to be a modern company that can meet the challenges of big data, analytics and cloud computing. But she also acknowledged what we already knew: Big Blue missed the mark in 2013.

Rometty wrote:

“We must acknowledge that while 2013 was an important year of transformation, our performance did not meet our expectations. Our operating pre-tax income was down 8 percent. Our revenue in 2013, at $99.8 billion, was down 5 percent as reported and 2 percent at constant currency.”

On the little matter of hardware, she reiterated that the company will focus more on its Power servers and storage — IBM is selling its x86 server business to Lenovo.

Top billing for Watson and SoftLayer

The first IBM technology/product Rometty mentioned is Watson, the self-learning artificial intelligence technology that is very whizzy, but that IBM has been challenged to sell. In January, it formed an entire business unit, with its own Manhattan headquarters, to push Watson into businesses, something that Stephen Gold, VP of marketing and sales operations for Watson IBM Solutions will talk about at Structure Data next week.

SoftLayer also got a couple mentions. The cloud and hosted services provider IBM bought last year for about $2 billion is front and center in IBM’s cloud right now. Insiders tell me that the SoftLayer folks, up to and including Lance Crosby, SoftLayer co-founder and CEO of IBM’s SoftLayer unit, are being treated with kid gloves. (Crosby will be at Structure 2014  in June to talk out IBM’s cloud strategy.)

Even some IBM critics acknowledge that the addition of SoftLayer’s 13 data centers to the 12 IBM already ran give IBM’s cloud a boost. The company said it will bring total data center count worldwide to 40 across 15 countries. That should give the company heft and global presence to compete with Amazon(s amzn) Web Services, the leader in public cloud, which is pushing into enterprise accounts. IBM will open its Hong Kong data center next week.

Romancing the startups

Crosby and Claudia Fan Munce, who heads IBM’s Venture Capital Group, were in Silicon Valley last week meeting with VCs and entrepreneurs to promote the use of SoftLayer infrastructure by startups — the sorts of companies that have turned to AWS as their default cloud.

It’s heartening to hear that IBM is doubling down on its SoftLayer cloud efforts, but I would caution that when IBM bought Lotus in 1995, Lotus Notes was the newest shiny thing and IBM was nothing if not nurturing. That lasted about 12 to 18 months before IBM was on to the next battle.