IBM Business Perspective

Certain comments made in the presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor Relations. These charts and the associated remarks and comments are integrally related, and are intended to be presented and understood together. In an effort to provide additional and useful information regarding the company’s results as determined by generally accepted accounting principles (GAAP), certain materials presented include non-GAAP information. The rationale for management’s use of this non-GAAP information, the reconciliation of that information to GAAP, and other related information is included in supplementary materials entitled “Non- GAAP Supplementary Materials” that are posted on the Company’s investor relations web site at http://www.ibm.com/investor/events/analyst0509/ The Non-GAAP Supplementary Materials are also included as Attachment II to the Company’s Form 8-K dated May 13, 2009. 2

Agenda Strategy and Transformation 2010 Roadmap Driving Long Term Performance 3

The traditional IT industry is undergoing fundamental shifts High Business Value Individual/ Traditional Enterprise Consumer IT Industry Focused Focused Lowest Cost IT Producer 4

IBM strategy addresses shifts in IT industry I. Changes in world markets: We are at the forefront of global integration II. Changes in client needs: We are focused on integration and innovation III. Changes in IT: We are shifting to higher value segments 5

We remixed our businesses in order to move to the emerging higher-value spaces 6

We became a globally integrated enterprise in order to capture the best growth opportunities and improve IBM’s profitability 7

The mix to higher value segments, global integration and productivity have driven margin expansion GROSS MARGIN TREND PRE-TAX INCOME MARGIN TREND 50% 19% 48% 46% 17% 16.1% 44.1% 44% 14.6% 14.7% 15% 41.9% 42.2% 13.4% 42% 40.1% 13% 12.0% 40% 11.8% 38.4% 11.1% 10.6% 38% 37.1% 11% 36.6% 36.5% 36.9% 36% 9% 34% 7% 32% 7.2% 30% 5% 00 01 02 03 04 05 06 07 08 00 01 02 03 04 05 06 07 08 8

As a result, IBM is a higher-performing enterprise today than it was a decade ago 9

We have been able to invest in future sources of growth and provide record return to investors... ...while continuing to invest in R&D 10

Agenda Strategy and Transformation 2010 Roadmap Driving Long Term Performance 11

Long Term EPS Roadmap: May 2007 10% 14% 16% CGR CGR CGR ~$11 ~$10 ~$0.90 10% - 12% CGR EPS Model ~$9 ~$1.10 ~$1.20 ~$1.00 $6.05 ~$0.75 5% +1 to 2 pts Revenue Revenue Growth Growth 2006 EPS Historical Margin Share Estimated Growth Future 2010 EPS Retirement 2010 EPS Revenue Expansion Repurchases 2010 EPS Initiatives Acquisitions w/o Related Objective Growth of 3% (Base) Retirement Costs Yr/Yr Related Costs Yr/Yr 12 Note: EPS has been restated to reflect the adoption of EITF 03-6-1

Long Term EPS Roadmap: Progress through 2008 ~ 0.35 ~ 0.90 ~ 0.65 ~ 0.45 ~ 0.50 Total ~ 2.85 Exceeded revenue Revenue growth and Will vary based on EPS of $8.89 growth of 3% in 2007 Net margin Share repurchases margin expansion interest rates and and achieved 2.3% expansion in model of ~ $30 B through 2008 above model market performance in 2008 @ CC ~$11 ~$10 ~$0.90 ~$9 ~$1.10 ~$1.20 ~$1.00 $6.05 ~$0.75 5% +1 to 2 pts Revenue Revenue Growth Growth 2006 EPS Historical Margin Share Estimated Growth Future 2010 EPS Retirement 2010 EPS Revenue Expansion Repurchases 2010 EPS Initiatives Acquisitions w/o Related Objective Growth of 3% (Base) Retirement Costs Yr/Yr Related Costs Yr/Yr 13 Progress through 2008 Note: EPS has been restated to reflect the adoption of EITF 03-6-1

We are well ahead of pace to achieve the 2010 roadmap objective 2010 $10-$11 Transformed business mix Significant annuity content Competitive cost structure 2008 $8.89 Strong cash generation 2007 $7.15 Financial flexibility 2006 $6.05 EPS Note: EPS has been restated to reflect the adoption of EITF 03-6-1 14

Agenda Strategy and Transformation 2010 Roadmap Driving Long Term Performance • Growth Markets • Acquisitions • Technology Leadership • Margin Expansion • New Growth Initiatives 15

Growth Markets: Leading future growth requires differentiated strategies and approaches based on market stages and client needs Major Markets Growth Markets Key Market Statistics Key Market Statistics GDP (2009) $3.2T GDP (2009) $1.5T GDP Growth (2008 - 2012) 1% GDP Growth (2008 - 2012) 3% Served IT Market (2009)* $799B Served IT Market (2009)* $139B Served IT Market Growth (2008 - 2012) 2% Served IT Market Growth (2008 - 2012) 6% IBM Focus IBM Focus Manage for productivity Invest for growth FY08 Results FY08 Results # of Countries ~ 30 # of Countries ~ 140 % of IBM Revenue 82% % of IBM Revenue 18% Yr/Yr Revenue Growth 5% Yr/Yr Revenue Growth 10% Yr/Yr Growth @ CC 2% Yr/Yr Growth @ CC 10% *Served IT Market Opportunity is IBM Global Market View, 2H09 at constant currency 16

Acquisitions: Our acquisition portfolio continues to deliver attractive revenue and profit growth ESTIMATED ACQUISITION REVENUE GROWTH ESTIMATED ACQUISITION PRE-TAX INCOME MARGIN 40% 30% 35% 24% 21% 20% 30% 20% 22% 19% 25% 11% 13% 10% 20% 14% -2% 3% 13% 13% 0% 10% -10% -13% 0% -20% Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Actual Projected Without amortization of acquired intangibles 17 Note: Includes 2002-2005 acquisitions less than $500M, and all 2006 & 2007 acquisitions

Technology Leadership: R&D spending enables technology leadership R&D SPENDING Last 5 fiscal years ($B) 40 IBM spends more on R&D than most 36 of our Tech peers 35 – Enhancing our leadership in 30 enterprise servers & software 30 – Leveraging IP assets to remain the #1 provider of IT services 25 20 20 18 Making the right organic investments – Virtualization 15 – Cloud Computing 10 – SOA 10 – Service Product Lines & Quality 5 – Business Analytics – Smarter Planet 0 MSFT IBM Cisco HP Oracle 18 Note: As of May 7, 2009

Margin Expansion: We have further opportunity to expand margin 25% of companies in S&P 500 have PRE-TAX INCOME MARGIN PTI margins in excess of 20% 50% 40% 30% 20% IBM 10% 0% -10% 30% of companies in Tech Universe have PTI margins in excess of 20% -20% -30% -40% S&P 500 Tech Universe * -50% 19 *Note: As of April 21, 2009. Includes 333 worldwide technology companies with market cap > $1B

New Growth Initiatives: We are investing to capture future growth Business Analytics & Smarter Planet Cloud Computing Optimization Business Optimization The Enterprise Cloud Business Intelligence Resource planning Business Automation What’s required? The world is getting smarter New consumption & delivery model Insight on our clients and industry IBM is leading the charge to think Benefits: and act in new ways – Foundational software platforms Economically, Socially, and Self-service Technically Rapid Provisioning Mathematical and analytical skills of Automation IBM Research Standardization Smarter Traffic Systems Smarter Oil Economies-of-scale Balanced price performance and scale Smarter Energy Grids Smarter Healthcare Market validating client experience 20 Smarter Cities

IBM’s strategy and execution drives improved financial performance 25% $11 Objective Transformation $10 to $11 in 2010 $10 Shifting portfolio to higher value 20% PTI Margin % $9 spaces with greater opportunity for EPS margin expansion $8 Driving productivity and efficiency in 15% our cost structure PTI Margin % $7 EPS Investing in skills and capabilities to $6 drive future growth 10% $5 Returning capital to shareholders $4 Significant operating leverage in 5% businesses with improved long-term growth prospects $3 Well ahead of pace for 2010 0% $2 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09e roadmap Revenue Divested Revenue: PC, HDD, Printers, Displays, EDI, Interconnectivity Products 21 Note: EPS has been restated to reflect the adoption of EITF 03-6-1

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IBM Business Perspective

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