Comment by stevenjgarner

> IBM has not exactly had a stellar record at identifying the future.

IBM invented/developed/introduced magnetic stripe cards, UPC Barcodes, the modern ATM, Hard drives, floppies, DRAM, SQL, the 360 Family of Mainframes, the PC, Apollo guidance computers, Deep Blue. IBM created a far share of the future we're living in.

I'm no fan of much of what IBM is doing at the moment but it could be argued that its consultancy/service orientation gives it a good view of how business is and is planning to use AI.

> In 1977, Apple, a young fledgling company on the West Coast, invents the Apple II, the first personal computer as we know it today. IBM dismisses the personal computer as too small to do serious computing and unimportant to their business.

IBM released the 5100 in September 1975 [0] which was essentially a personal computer in feature set. The biggest problem with it was the price tag - the entry model cost US$8975, compared to US$1298 for the entry Apple II released in June 1977 (close to two years later). The IBM PC was released in August 1981 for US$1565 for the most basic system (which almost no one bought, so in practice they cost more). And the original IBM PC had model number 5150, officially positioning it as a successor to the 5100.

IBM’s big problem wasn’t that they were disinterested in the category - it was they initially insisted on using expensive IBM-proprietary parts (often shared technology with their mainframe/midrange/minicomputer systems and peripherals), which resulted in a price that made the machine unaffordable for everyone except large businesses, governments, universities (and even those customers often balked at the price tag). The secret of the IBM PC’s success is they told the design team to use commercial off-the-shelf chips from vendors such as Intel and Motorola instead of IBM’s own silicon.

[0] https://en.wikipedia.org/wiki/IBM_5100

This is the exact kind of thinking that got us into this mess in the first place, and I'm not blaming you for it, it seems to be something all of us do to an extent. We don't look to Meta, who only a few years ago thought that the Metaverse would be the "next big thing" as an example of failure to identify the future, we look to IBM who made that mistake almost 30 years ago. Underestimating a technology seems to stick much harder than overestimating one.

If you want to be seen as relevant in this industry, or as a kind of "thought leader", the easy trick seems to be to hype up everything. If you do that and you're wrong, people will quickly forget. If you don't and you're wrong, that will stain your reputation for decades.

Got anything vis-a-vis the message as opposed to the messenger?

I'm not sure these examples are even the gotchas you're positing them as. Xerox is a dinosaur that was last relevant at the turn of the century, and IBM is a $300bn company. And if it wasn't obvious, the Apple II never made a dent in the corporate market, while IBM and later Windows PCs did.

In any case, these examples are almost half a century old and don't relate to capex ROI, which was the topic of dicussion.

I read the actual article.

He is pointing out that the current costs to create the data centres means you will never be able to make a profit to cover those costs. $800 Billion just to cover the interest.

OpenAI is already haemorrhaging money and the space data centres has already been debunked. There is even a recent paper that points out that LLMs will never become AGI.

The article also finishes out with some other experts giving the same results.

[edit] Fixed $80 to $800

IBM is an interesting beast when it comes to business decisions. While I can't give exact details, their business intelligence and ability to predict monetary things is uncannily spot-on at times.

So, when their CEO says that this investment will not pay off, I tend to believe them, because they most probably have the knowledge, insight and data to back that claim, and they have ran the numbers.

Oh, also, please let's not forget that they dabbled in "big AI" before everyone else. Anyone remembers Deep Blue and Watson, the original chatbot backed by big data?

We can cherry-pick blunders made by any big company to make a point. Maybe it would be more honest to also list companies IBM passed on that turned out to be rubbish? And all the technologies that IBM did invest in that made them a ton of money and became industry standards?[0]

Today, Xerox has less total revenue than IBM has profit. DEC went out of business 27 years ago. Apple is an in astoundingly great place right now, but Jobs got kicked out of his own company, and then returned when it was about to fail, having to take investment from Microsoft(!) in order to stay afloat.

Meanwhile, IBM is still here, making money hand over fist. We might not have a ton of respect for them, being mostly a consulting services company these days, but they're doing just fine.

[0] As another commenter points out: https://news.ycombinator.com/item?id=46131245

Were Xerox, Dec, or Apple burning investor money by the billions of dollars?

DEC went down the drain, Xerox is 1/1000 of IBM's market cap. IBM made its own, superior by its relative openness, personal computer that ended up running the world, mostly maintaining direct binary compatibility for 40+ years, even without IBM really paying attention.

What does that have to do with the current CEO's assessment of the situation?

50 year grudges are not relevant there is no one still at ibm that worked there in 1977, IMHO.

"The amount being spent on AI data centres not paying off" is a different statement to "AI is not worth investing in". They're effectively saying the portions people are investing are disproportionately large to what the returns will end up being.

It's a difficult thing to predict, but I think there's almost certainly some wasteful competition here. And some competitors are probably going to lose hard. If models end up being easy to switch between and the better model is significantly better than its competitors, than anything invested in weaker models will effectively be for nothing.

But there's also a lot to gain from investing in the right model, even so it's possible those who invested in the winner may have to wait a long time to see a return on their investment and could still possibly over allocate their capital at the expense of other investment opportunities.

> IBM has not exactly had a stellar record at identifying the future.

This would be very damning if IBM had only considered three businesses over the course of seventy years and made the wrong call each time.

This is like only counting three times that somebody got food poisoning and then confidently asserting that diarrhea is part of their character.

Right, you just missed the part where DEC went out of business in the 90s. And IBM is still around, with a different business model.

Steve Jobs, the guy that got booted out of his own company and that required a lifeline from his arch nemesis to survive?

This is all true, but it was only true in hindsight and as such does not carry much value.

It's possible that you are right and AI is 'the future' but with the present day AI offering I'm skeptical as well. It isn't at a level where you don't have to be constantly on guard against bs and in that sense it's very different from computing so far, where reproducibility and accuracy of the results were important, not the language that they are cast in.

AI has killed the NLP field and it probably will kill quite a few others, but for the moment I don't see it as the replacement of general computing that the proponents say that it is. Some qualitative change is still required before I'm willing to check off that box.

In other news: Kodak declares digital cameras a fad, and Microsoft saw the potential of the mp3 format and created a killer device called the M-Pod.

But how many companies did IBM pass on that did crash and burn ? And how many did it not pass on and did decently ? They're still around after more than 3 generations worth of tech industry. They're doing something right.

TLDR Cherrypicking

You, or your existence, probably triggers multiple transactions per day through a POWER mainframe without you even knowing it. Their mainframes handle the critical infrastructure that can't go down.It's so reliable we don't even think about it. I shudder to think about Microsoft or Apple handling that.

How about check out how many companies exist today vs existed in 1958? If you look at it that way then just surviving is an achievement in itself and then you might interpret their actions as extremely astute business acumen.

IBM is still alive and kicking well, and definitively more relevant than Xerox or DEC. You are completely misconstruing Jobs’ point to justify the current AI datacenter tulip fever.

This isn't even a great argument at a literal level. Nowadays nobody cares about Xerox and their business is selling printers, DEC was bought by Compaq which was bought by HP. Apple is important today because of phones, and itself was struggling selling personal computers and needed a (antitrust-motivated) bailout from Microsoft to survive during the transition.

Yet here they are at the front of Quantum Computing research

Didn't also pass on SAP at some point? I think I read that somewhere.

So, is the napkin math wrong, or you are just going by the company history?

Cool story, but it’s more than just the opinion of this CEO. It’s logic.

Hardware is not like building railroads, the hardware is already out of date once deployed and the clock has started ticking on writing off the expense or turning a profit on it.

There are fundamental discoveries needed to make the current tech financially viable and an entire next generation of discoveries needed to deliver on the over inflated promises already made.

You could try addressing the actual topic of discussion vs this inflammatory and lazy "dunk" format that frankly, doesn't reflect favorably on you.

For some strange reason a lot of people were attracted by a comment that speaks about everything else BUT the actual topic and its the top comment now. Sigh.

If you think that carefully chosen anecdotes out of many many more are relevant, there needs to be at least an attempt of reasoning. There is nothing here. It's really just barebones mentioning of stuff intentionally selected to support the preconceived point.

I think we can, and should, do better in HN discussions, no? This is "vibe commenting".

The idea that a company DNA somehow lives over 100 years and maintains the same track record is far fetched.

that the OpenAI tech bro are investing in AI using a grown up ROI is similarly far fetched, they are burning money to pull ahead of the reset and assume the world will be in the palm of the winner and there is only 1 winner. Will the investment pay off if there are 3 neck and neck companies ?

this is cherry picking.

I’m sorry, but this is stupid, you understand that you have several logical errors in your post? I was sure Clinton is going to win 2016. Does that mean that when I say 800 is bigger than 8 is not to be trusted?

Do people actually think that running a business is some magical realism where you can manifest yourself to become a billionaire if you just believe hard enough?

Hot Hand Fallacy.

Even a broken watch is right twice per day

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