Although we expect IBM to maintain its high margins given the strength of its GBS business, a contraction in GBS profit margin in the future to historical average of rate of 12.5% would result in downside of 5% to the Trefis price estimate.
Marketers are mislead to think that they promotionally come out ahead with incremental sales and profits in spite of lower margins because mix models do not measure the longer-term negative consequences of cannibalized, future full-margin sales.