Growing Software Sales Underpin IBM’s Narrow Moat

IBM, one of the world's largest IT services companies, remains the dominant provider of mainframes and has built out consulting and software businesses focused on digital transformation projects and hybrid cloud infrastructure. IBM has had to reinvent itself over the past several decades as its original mainframe business faced a changing industry landscape. While the company has not always been known for being on the cutting edge of innovation, we think it has positioned itself well to serve the needs of enterprises in search of IT infrastructure upgrades, consulting services, and hardware. We see synergies among its different businesses. IBM's software offerings are being used in hybrid cloud focused projects, in addition to the consulting work to implement and service these projects. These projects can also run on hardware that IBM assists.