®

Recruitment and Retentionof Engineers at IBM

Feb 17, 2007

Randolph MoorerEast Region Sales DirectorIBM Software Group

2

Technical Resource Demands

Systems

Software

Research

Consulting

Manufacturing

3

IBM Software Group

Gold Coast Sydney Canberra

Singapore

Perth

Yamato

IndiaBangalore

PuneHyderabadGurgaon

ChinaBeijing, Shanghai

Taiwan

Cairo

Dublin

HaifaPortlandSeattle

Menlo ParkBurlingameCupertino

San FranciscoSVL / San Jose

Agoura HillIrvine

OaklandSanta CruzLas Vegas

CanadaToronto, Ottawa ,Montreal, Victoria

Rome

Paris

StainesHursley

Boeblingen

Krakow

RochesterBoulderDenverLenexaTucsonPhoenixAustin

Pittsburgh BethesdaRaleigh

Lexington, KYCharlotte

Boca Raton

PortsmouthLexington, MA

WestboroWestford

CambridgePoughkeepsie

44,000 Employees Worldwide 57 Major* R&D Locations

• 22,000 DevelopersMajor* R&D Locations

* 163 Additional Smaller R&D Locations

4

We Are a Technology Company

2006 Development Spending Software Products Software Patents

Development IBM Fellows Distinguished Engineers Senior Technical Staff Members

Field Technical Software Certified IT Architects Certified IT Specialists

Lab ServicesLab Person Years on Customer Engagements

$2.6B13,206 (600 Product Families)

12,500+

22,0001177

257

4,000350

1,644

3,3004,000

5

InformationManagement

SoftwareDevelopment

Servers Storage

Linux Unix Windows OS/400 z/OS

Rational

SystemsManagement

& SecurityTivoliDB2

Transactions,Messaging &Integration

WebSphere

HumanInteraction &Collaboration

Lotus

Evolution Towards Middleware

Processes

SystemsEnvironment

Applications

MiddlewareEnvironment

6

Linux Unix Windows OS/400 z/OS

Servers Storage

Processes

SystemsEnvironment

Rational

Applications

Manage BuildRun

RationalMiddlewareEnvironment Lotus WebSphere DB2 Tivoli

Middleware Platform – Componentization / Integration

7

IBM is the #1 commercial supporterOpen Operating

System Choice Includes Linux

IBM contributed significant technology to J2EE and helped form the Apache Software Foundation

Open Application Server

J2EE and Apache

IBM led or co-led the creation of SOAP. WSDL, UDDI, WS-Security, BPEL4WS …

Open Application Integration

Web Services

IBM donated $40M of initial technologyOpen Development

Integration Platform Eclipse

The Open Platform Approach

8

Middleware Opportunity

IBM Ranked #1 or #2 in All Middleware Segments

Development Toolsand Languages

$10B3% CGR

Systems Management$26B

6% CGR

Messaging, Collaborationand e-Learning

$6B7% CGR

Information Management$29B

6% CGR

Transaction Managementand Integration

$12B4% CGR

2006 Opportunity: $84BCGR 2006 - 2009: 5%

Source: GMV 1H06 / IBM analysis based on Industry Reports / Market Research, 1/06

9

High Growth Product Segments ’06 – ’09CGR

IBM Position

Portals and Personalization

Mobile Middleware

Content Management

Information Integration

Storage Management

Relational Database and Tools

AD Lifecycle Management ToolsSecurity / Identity Management

12%12%10%10%10%

8%8%6%5%5%

2006 MiddlewareOpportunity = $ 84 B’06 – ’09 CGR = 5%

41% 59%

Advanced Collaboration

Integration Server

Source: IBM analysis based on Industry Reports / Market Research, 12/05

Investing in High Growth Product Segments

#1#1#1#1#3#1#2#2#1#1

10

Acquisitions Complement Our Organic Growth Strategy

High profile entry

Leverage IBM strengths

Complementary technology buys

Gain time to market

Leverage IBM channels

Significant revenue streams

Leverage install base

Achieve cost and expense synergies

Market leaders in growth segments

Strong ecosystems Large customer

install bases Command premium

valuations

+ + +ComplementaryPoint Products

Bold Market Entry

Market Leadership

Opportunistic Consolidations

11

Acquisitions Complement Our Organic Growth Strategy

High profile entry

Leverage IBM strengths

Complementary technology buys

Gain time to market

Leverage IBM channels

Significant revenue streams

Leverage install base

Achieve cost and expense synergies

Market leaders in growth segments

Strong ecosystems Large customer

install bases Command premium

valuations

+ + +ComplementaryPoint Products

Bold Market Entry

Market Leadership

Opportunistic Consolidations

Tivoli Rational

Informix Candle

Ascential CrossWorlds Trigo .....

Lotus

12

InformationManagement

SoftwareDevelopment

Servers Storage

Linux Unix Windows OS/400z/OS

Rational

SystemsManagement

& SecurityTivoliDB2

Transactions,Messaging &Integration

WebSphere

HumanInteraction &Collaboration

Lotus

Growth Through Acquisitions

Processes

SystemsEnvironment

Applications

MiddlewareEnvironment

Tivoli CollationUnison MicromuseDBMXDascomAccessible SoftwareSANergyAccess360MetamergeTrelliSoftThink DynamicsCandleCyaneaIsogonCIMS Lab

OTIOpenOrdersCrossWorldsHolosofxGluecodeDataPower

IW Manager iPhraseInformix SRDTarian DWLTrigo UnicornVenetica AscentialGreen PastureCrossAccess Alphablox Language Analysis Sol

LotusDataBeamUbiqueOneStonePathwareAptrixTrilogPureEdgeBowstreetPureEdge

z/OS

WallopRationalInformation LabsSystemCorpBuildForge

13

IBM Software Leadership

87,000+ WebSphere customers 1.1+ million registered WebSphere developers

Over 450,000 Information Management customers 13,000 Business Partners; 40,000 ISV applications

120 million Messaging users – 61,000 sites 8 million Instant Messaging corporate users 2.5 million Workplace users

22,000 Tivoli Systems Management customers 60 million user licenses of Tivoli Access Manager

600,000+ users of Rational Software More than 18 million Eclipse downloads