IBM Detaches infrastructure from the mainstream company to focus on Hybrid cloud, Red hat…
The business streets woke with the latest news on IBM`s strategy to diverge into two different arms, it is now evident that one will cater to the legacy IT services and the other will focus on the infrastructure services.
What does this mean?
IBM is a single entity right now, consisting of a variety of services, the major two arms are separated with the name of GBS(IBM Global Business Services) and GTS (IBM Global Technology Services). but still, they are part of the same company IBM. moving forward IBM GTS will no longer be part of IBM, rather it will be a separate public company on its own.
GTS will only focus on the IT infrastructure that will be named and spun off soon.
Why is IBM taking this step?
The IBM boss Mr. Arvin has the vision to make IBM a cloud focusing company in his tenure, he said in his blog post that “IBM is laser-focused on the $1 trillion hybrid-cloud opportunities”.Also, he was the key decision-maker in IBM and Red Hat deal. This clearly shows that he can sense a great future in cloud-based business. he further stated that in the same blog post that “Now is the right time to create two market-leading companies focused on what they do best. IBM will focus on its open hybrid cloud platform and AI capabilities. NewCo will have greater agility to design, run and modernize the infrastructure of the world’s most important organizations,”.
This also hints us where the paradigm shift is happening, most of the C level bosses are focusing on the cloud strategy and the traditional focus on legacy infra services is declining, the current marketing in cloud services is dominated by Microsoft and Amazon Web Services.
Impacts after the news:
With this new reinvention news, IBM shares soared by 6%. The new company will have 90,000 employees and will receive a permanent name soon. It will have its own market listing as well. This new business is estimated to be around $19B. Mr. Arvind said NewCo will have $19bn in annual revenue and will serve 75% of Fortune 100 companies when it makes its share market debut. The overall cost of this split will cost IBM around $5B.
IBM also said that it will not impact any of its current clients in any way. even after the company will be tamed apart but the teams will not work in silos and will still be one IBM for clients.
