IBM Sees Shift Back in Customer Spending Priorities Amid Shortfall
IBM CEO Arvind Krishna acknowledged that the company's second quarter software shortfall was limited to capital expenditure-sensitive areas of its portfolio.
During the Q2 earnings call, Krishna attributed the shortfall to 'execution' issues and pointed out that IBM has already started to see a shift back from customer spending towards AI-focused hardware components outside of the vendor's traditional offerings.
The company witnessed a 'shift in client spending priorities' during the end of June, with customers moving toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases.
Krisha emphasized that IBM has already started to close some of the deals that slipped due to this shift, with about one-third of them closing in the first three weeks after the initial shortfall.