I want to explain to you why we have taken these steps. They constitute an end-to-end transformation of our business, driven by major new marketplace opportunities that promise to expand our industry significantly. We are confident in IBM’s ability to seize these opportunities, and the purpose of this document is to explain the reasons why.

We think those reasons are relevant to shareholders, clients, employees, business partners, suppliers — or members of the broad range of our other important constituencies, from governments, to universities, to communities. If you are part of any of those groups, we think you’d want to understand what IBM is all about, and what its prospects are.

In fact, that is why we are calling this document a prospectus. According to one dictionary, prospectus means “a distant view.” The word is related to the Latin verb meaning “to look forward.” So a prospectus — above and beyond its specific use in a legal or financial context — is simply a presentation of pertinent information about a company or planned venture so that individuals can make informed decisions.

Fully understanding the strategies and prospects of companies in our industry today is, frankly, very difficult. We’re in one of those transition phases when the old rules no longer apply and the new ones haven’t fully emerged. People have been burned by overly ambitious promises and expectations in the past — but they know the answer isn’t to sit on the sidelines.

Interestingly, some information technology companies did just that during the recent downturn. They hunkered down and awaited the eventual cyclical rebound. Others decided the future lay in consolidation, and chose to bulk up. And then some companies just concluded that their core business wasn’t very interesting, and chased after new markets.

None of that describes what we’ve done at IBM. We saw the changes in technology, economic behavior and client preferences as evidence not of cyclical swings, but of a major secular shift in both technology and business — and we were determined to seize the opportunity it presented.

Now, after several years of changes that have touched virtually every aspect of IBM’s operations and strategy, the major pieces are in place. Our company is aligned around a single, focused business model — innovation — and this document explains why it gives us confidence in IBM’s outlook for the years ahead.

Providing this kind of understanding is particularly important in business today. Indeed, it is a form of transparency and accountability — a deeper form than the usual questions about legal compliance or ethics. This is about a company’s strategy, operations, culture and values. Whether or not you want to be associated with the IBM company, we think you should do so for the right reasons.

Throughout our history, clarity about who we are has been the key to our best relationships and to our own prosperity. It helped IBM become a successful, progressive leadership enterprise. And everything we do today — the fundamentals of which are described in this document — is aimed at being that company in the decades ahead. After reading our prospectus, I hope you will share our confidence in IBM’s future.

Samuel J. Palmisano
Chairman, President and Chief Executive Officer