International Business Machines Corporation or IBM Corp is a leading cloud platform and cognitive solutions multinational technology and consulting company. They have recently announced an intriguing spinoff to accelerate its cloud and artificial intelligence (AI) growth strategy, this week.
The time is ripe for the company to accelerate its hybrid cloud growth strategy and drive digital transformations for its clients. In addition, it separates the infrastructure services unit to a newly public company referred to as “NewCo”.
In a blogpost, Arvind Krishna, IBM Chief Executive Officer, says “Today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself. 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.”
However, the separation is expected to be the tax for the company’s shareholders. It is expected to complete by the end of 2021.
Krishna says “IBM is laser-focused on the $1T (approx. €.84T) hybrid-cloud opportunity. Client buying needs for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating. 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.”
Further adding that NewCo will have greater agility to design, run, and modernize the infrastructure. Both companies will be on an improved growth trajectory by capturing new opportunities and partners to create value for both its clients and shareholders.
IBM says NewCo has a relationship with more than 4,600 clients in 115 countries. The company also has the base of more than 75% of the Fortune 100 companies and more than twice the scale of its nearest competitor.
It will entirely focus on managing and modernizing client-owned infrastructures by leveraging its expertise to offer to host network services, infrastructure modernization, and multi-cloud environments.
Also, the company will have greater freedom to forge partnerships in the managed infrastructure services space.
The two independent companies, IBM will accelerate clients’ digital transformation journeys and NewCo will accelerate clients’ infrastructure modernization efforts.