IBM Splits to Focus on Open Hybrid Cloud and AI
IBM plans to split its operations into two separate business units as part of an evolving effort to become the world's top hybrid cloud and artificial intelligence (AI) provider, the company announced last week. Big Blue is spinning off its legacy technology services business into a separate company called NewCo, which will free the company to focus on what it sees as the future of IBM.
"Today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself," said IBM CEO Arvind Krishna in a blog post. "This shift is driven by the changing needs of our clients, who find that choosing an open hybrid cloud approach is 2.5 times more valuable than relying on public cloud alone… Going all in on our open hybrid cloud platform and AI solutions will create value for our clients, our company, and our shareholders [and] best positions IBM for improved growth."
The move comes nearly two years after IBM's acquisition of Red Hat. At the time, Krishna, then IBM's head of hybrid cloud, said the acquisition will make his company the world's leading hybrid cloud provider. IBM's goal, he said, "is to win in hybrid cloud, and win on the basis of open technologies, and in the end to provide a technology that makes life easier [for companies] with less complexity and a future proof investment."
That move may have helped IBM propel itself into the company of perennial cloud computing leaders Amazon Web Services (AWS), Microsoft Azure and Google Cloud in a recent Gartner Magic Quadrant report on cloud-based AI vendors.
The reorganization could be characterized as an extension of that initial goal announced in 2018.
"We have decided that the managed infrastructure services business of our [Global Technology Services] segment will become an independent company, which we're initially referring to as 'NewCo,'" Krishna said. "We expect the new company to be created sometime toward the end of 2021. IBM will sharpen its focus on its open hybrid cloud platform and AI capabilities. And the new company will focus on delivering managed infrastructure services."
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David Ramel is an editor and writer for Converge360.