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Tech Giant IBM To Be Split In Two

Sun Oct 11 2020

Is this the end of an era? Or the start of something new, as IBM splits its infrastructure services off as an entirely new company?

By the end of 2021, tech giant and one of the founders of our sector, IBM, will; be split up into two completely separate companies.

Their infrastructure services operations, which currently bring in $19 billion annually by providing services and support to data centres, networking and other IT hardware initiatives will be spun off with a new name, whilst IMB ‘proper’ will, moving forward, focus on the lucrative market of cloud-based services.

IBM, as part of the split, have stated their current cloud-based operations, after their recent $34 billion acquisition of Red Hat, could represent ‘a $1 trillion market opportunity’  by facilitating the development and deployment of even more AI capabilities and apps for it’s customers.

 

For decades IBM has been a mainstay of the IT sector but in recent times it’s been shedding itself of it’s hardware past, selling it’s printer arm to  Lexmark and it’s PC arm to Lenovo, as it focuses more and more on cloud services.

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We divested networking back in the ‘90s, we divested PCs back in the 2000s, we divested semiconductors about five years ago because all of them didn't necessarily play into the integrated value proposition. With a streamlined business model, ‘NewCo' will create value by helping enterprises optimise their performance through AI and automation. 'NewCo's' services will enable enterprises to build agility and efficiency into their infrastructure and data centres."

Arvind Krishna – IBM, CEO

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The new company is expected to employ around 90,000 people worldwide, serving around 4,600 clients and IBM estimates will be twice the size of its nearest competitor.

That will leave IBM ‘original’, focussing on the cloud, with 260,000 employees.

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As two independent companies, IBM and NewCo will capitalise on their respective strengths. IBM will accelerate clients' digital transformation journeys, and NewCo will accelerate clients' infrastructure modernisation efforts. This focus will result in greater value, increased innovation, and faster execution for our clients.

Ginni Rometty – IBM, Executive Chairman

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Sun Oct 11 2020

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