The company's initiatives in emerging technology areas continue to do well. Business analytics revenue grew by 14 percent. Revenue from Smarter Planet systems, software and services grew by more than 25 percent, and cloud computing revenue doubled in the first quarter. IBM does not disclose dollar amounts for emerging technology revenue.

IBM had expected the dip in hardware spending, given a heavy surge of hardware sales in the first quarter a year earlier, said Mark Loughridge, IBM chief financial officer, in a conference call discussing the results.

Loughridge pointed to a recent , called PureSystems, that the company expects to start boosting hardware sales as soon as the second half of this year.

Analysts did not seem to be overly concerned about the dip in hardware sales. It did fall short of Gartner's expectations, which were recently revised downward, Gartner analyst Chris Ambrose said. IBM's bigger challenge is maintaining growth in its services division, given the continued weakness in the global economy, Ambrose said.