Company Profile

International Business Machines Corporation (IBM)

United States

Information Technology – Computers & Peripherals

http://www.ibm.com/us/en/

IBM provides computer solutions through the use of advanced information technology. IBM manufacturers and markets computer hardware and software as well as offers infrastructure, hosting and consulting services.

Impacts and Opportunities for Computer and Peripherals Companies

Product Efficiency

Restricted budgets, rising energy costs, and limits on electric power availability are hindering the ability of information technology (IT) departments to meet the growing demand for IT services. Many IT manufacturers are responding to this challenge by producing more energy efficient computer hardware and software that assist in improving the energy efficiency of IT operations.

IBM’s product energy goal is to continually improve the computing power delivered for each kilowatt-hour of electricity used with each new generation or model of a product. Performance is tracked by product line—servers and storage systems. As of May 2014, IBM has certified 11 server machine types to ENERGY STAR requirements.

Data Center Efficiency

For every 100 watts of power consumed in a typical data center, fewer than 3 watts are associated with actual computing. Increasing server utilization offers the greatest potential to improve data centers productivity1.

Server utilization can be achieved through the use of server virtualization technology. According to IBM, virtualizing workloads allows a single system to support multiple applications or images, making greater use of the full capabilities of IT equipment and executing more workloads in less space with less energy. Through virtualization, in 2013 IBM was able to reduce its energy use by more than 99,000 megawatt-hours and its cost by more than $11 million.

End of Life

According to StEP (Solving the E-Waste Problem) Initiative (a partnership of United Nations organizations, industry groups, and non-governmental organizations), in 2012 48.9 million tons of e-waste was produced. This figure is expected to increase by 33% by 2017.2 Electronic waste contains many valuable and precious materials. Using the personal computer as an example—a normal Cathode Ray Tube computer monitor contains the toxic substance cadmium, which can bio-accumulate in the environment and is extremely toxic to humans. In addition, it contains PVC (polyvinyl chloride), which when burned, can release carcinogenic dioxins into the atmosphere.

In 2013, IBM’s end-of-life operations processed 32,200 metric tons of e-waste, representing 67% of the estimated 47,800 metric tons of new IBM IT equipment put on the market in 2013. Of the e-waste processed, only 0.3% was sent to landfills or incineration facilities for treatment.

Areas for Improvement

Power Usage Effectiveness (PUE)

PUE is the ratio of the total power required at a data center divided by the power required to operate IT equipment. Despite IBM’s strong efforts aimed at increasing server utilization, IBM’s PUE measures 1.4 to 1.6; this is significantly higher than Google’s industry-leading average of 1.12.

Reduction Goals for Key Performance Indicators (KPIs)

Although IBM has minimized its direct environmental impact across many of its KPIs, Portfolio 21 would like to see the company set long-term reduction goals across all of its KPI metrics (e.g., energy, waste, water, and carbon dioxide emissions).

  1. Mark Aggar, The IT Energy Efficiency Imperative. Microsoft Corporation (June 2011). Retrieved from http://www.microsoft.com/environment/IT_Energy/IT_Energy.aspx []
  2. United Nations University. StEP Launches Interactive World E-Waste Map. (December 2013). Retrieved from http://unu.edu/media-relations/releases/step-launches-interactive-world-e-waste-map.html#info []

To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 8/31/14 and may not reflect current opinions or subsequent events.

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