In 2010, IBM’s consulting and technology services generated gross margins of 32%. The company’s software business, which accounts for 20% of revenue, had margins of 88% in the 3rd quarter of 2011. IBM also owns more patents than any other US based technology company. It invested $6 billion in R&D in 2010, the equivalent of 6% of its revenue, compared to $3 billion, or 2.4%, at its rival Hewlett-Packard.

The areas that IBM is focusing on now – cloud computing, analytics and emerging markets are part of its carefully planned strategies for global growth.

Earlier this year, IBM announced a $38 million investment to build a new Asia-Pacific Cloud Computing Data Center in Singapore to exploit the potential of cloud computing through its comprehensive solutions and services. The new facility in Singapore will extend IBM’s globally integrated cloud delivery network that includes centers in Canada, the United States and Germany. The company also has 13 global cloud labs, of which seven are based in Asia-Pacific countries namely China, Singapore, Korea, Japan, Hong Kong, Vietnam and India.

Another cloud computing data center will be built in Langfang, a city near Beijing, under the collaborative efforts between IBM and the China-based Range Technology. The 620,000 square meter facility, which is to be owned by Range Technology, is scheduled to be completed in 2016. The data center, the largest in Asia by floor area, aims to serve mainly government departments from Beijing and across the country, but will also be open to major banks and private enterprises throughout China. According to IBM spokesperson Harriet Ip, the center is also designed to support the development of a new information technology hub being built in the area.

IBM’s data-center business in China has tripled in the last four years. In 2010, China overtook Japan as IBM’s second largest data center market, with the U.S. as the company’s number one market. Moreover, the Asia-Pacific market for cloud computing is set to grow 40% per annum through 2014 to $4.9 billion, according to IDC Asia Pacific. IBM is well positioned to take advantage of this growth by establishing regional data centers that will provide the necessary infrastructure for growth of key cloud computing areas.

IBM is headquartered in Armonk, New York. As of September 2011, IBM is the second-largest publicly traded technology company in the world by market capitalization. In 2011, Fortune ranked IBM the 18th largest firm in the U.S., as well as the 7th most profitable. Globally, the company was ranked the 31st largest firm by Forbes for 2011, and 18th most innovative company by Fast Company. IBM employs more than 427,000 employees in over 200 countries, with occupations including scientists, engineers, consultants, and sales professionals.

For 2010, IBM’s brand was valued at $64.7 billion. IBM’s closing value of $214 billion on September 29, 2011 surpassed Microsoft which was valued at $213.2 billion. It was the first time since 1996 that IBM exceeded its software rival based on closing price. However, IBM’s value is still less than two-thirds of Apple’s value of $362.1 billion.

Though faced with strong competitors such as Oracle Corp. (NASDAQ:ORCL), Hewlett Packard Co. (NYSE:HPQ), Microsoft Corp (NASDAQ:MSFT) and EMC Corp (NYSE:EMC), IBM is still viewed by many industry analysts to be a heavyweight in the cloud computing market. Its strong cash balance will no doubt help it acquire more companies with high intellectual property assets, which will drive further growth in the upcoming quarters. New CEO Virginia “Ginni” Rometty says that despite IBM’s deep pockets and $100 billion in 2010 sales, she plans to keep pressing her management team to take more risks and embrace change. “Whatever business you’re in, it’s going to commoditize over time, so you have to keep moving it to a higher value and change”.

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Unusual Location For Subway Sandwiches In China

The Subway sandwich group, operated by privately held Doctor’s Associates Inc., has officially overtaken McDonald’s Corp (NYSE: MCD) as the world’s largest restaurant chain in terms of number of restaurant outlets, according to the year-end store count filed by Subway to the Securities and Exchange Commission at the end of February 2011.

Subway has reported that it has a total of 33,749 restaurants worldwide at the end of year 2010, compared to the 32,737 restaurant units of McDonald’s.  That number has already increased to 34,246 units according to Subway’s own corporate count as of March 10, 2011.

Both companies have aggressively expanded into international markets using successful franchise business models during recent years.  Subway was founded by Fred DeLuca and Peter Buck in 1965 when they opened the first store in Bridgeport, Connecticut.  It now has restaurants in 95 countries.  McDonald’s Restaurant as a franchise concept was established by Ray Kroc in 1955 and sold 100 million burgers in just 3 years’ time.  It now has restaurants in 117 countries around the world.  From a revenue perspective, McDonald’s is still leader of the pack with a global revenue of US$24 billion compared to Subway’s US$15.2 billion for the year 2010.

As of March 2011, Subway has 1000 restaurant outlets operating across Asia, including 17 in Hong Kong, 199 in India, 236 in Japan, 63 in Malaysia, 14 in Philippines, 92 in Singapore, 38 in South Korea, 118 in Taiwan, 36 in Thailand, 1 in Vietnam and 199 in China.  According to Don Fertman, Subway’s Chief Development Officer, the company is looking towards China for its future expansion plans.  It is expected that the number of outlets in China will surpass 500 by the year 2015.

Other major restaurant chains are also looking for expansion into Asia, and to China in particular, as part of their overall strategic plans.  Starbucks (NASDAQ: SBUX), already the largest coffeehouse chain in the world with 16,858 outlets in over 50 countries, plans to triple its café outlets in China.  Kentucky Fried Chicken (KFC) with 16,200 restaurant outlets in 105 countries, also the largest and fastest growing restaurant chain in mainland China today with over 3,200 restaurants in more than 700 cities, and Pizza Hut, the largest pizza chain in the world with 13,100 restaurants, and Taco Bell with over 6000 franchise locations, are all operated by Yum! Brands Inc. (NYSE:YUM), which plans to increase its dominance in the global fast food market by opening significantly more stores across Asia in the near future.

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In 1977, Coke pulled out of the Indian market because it refused to comply with then government regulations which would essentially force it to form a partnership with a local company and to share its secret Coke formula. In 1988, PepsiCo formed a joint venture with 2 Indian companies and in 1990 introduced its signature cola under the Lehar Pepsi brand. Coke re-entered the Indian market in 1993 when government regulations had changed to allow foreign companies to operate without local partners. Coke’s complete absence from India during a time when India began to embrace Western products was a strategic mistake. Pepsi’s crucial timing and its presence in the Indian market without its main competition had basically made Pepsi into a household word… a word synonymous with the carbonated cola drink category. Sales of PepsiCo’s wide range of products in India, including Frito Lay chips, Tropicana juices, Gatorade drinks and Quaker Oats, totaled $1.5 billion in 2009.

India born Indra Nooyi, PepsiCo Inc. (NYSE: PEP) Chairman and CEO, has stated that she will invest aggressively in emerging markets and will continue to pursue strategic costs-cutting opportunities. Her recent completion of the purchase of PepsiCo’s 2 largest bottlers assured investors of her intentions. PepsiCo’s stock is up 12% since September 2009 and its revenues are projected to be $60 billion for 2010.

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