Initially making a name for itself with enterprise hardware, IBM is taking that legacy a step further as it delves into the world of cloud services. The company today announced its decision to spin off its managed infrastructure services division into a separate public company with $ 19 billion in annual revenues to focus on the new capabilities of hybrid cloud applications and artificial intelligence.
According to the CEO of IBM Arvind Krishna, the process of creating a new company with the code name NewCo (new company) will be completed by the end of 2021. It will have 90 thousand employees, 4600 large corporate clients in 115 countries, an order book of $ 60 billion, “and more than twice as much as the nearest competitor»Presence in the field of infrastructure services.
The new company’s competitors include BMC and Microsoft. The business that remains with IBM after the spin-off of the new company now brings it about $ 59 billion in annual revenue.
Infrastructure services include a range of managed services based on established infrastructure and associated digital transformation. These include testing and assembly as well as product development and laboratory services.
The move marks a significant shift for the company and highlights a big change in how the enterprise IT infrastructure has evolved and looks set to continue to change in the future.
IBM is betting that legacy infrastructure and its services, while continuing to generate net profit, will not grow as it did in the past, and as the company continues to modernize or “digitalize”, it will increasingly turn to external infrastructure and the use of cloud services both for running your business and for creating services that interact with consumers.
The announcement came a year after IBM acquired open-source software company Red Hat for $ 34 billion, hoping to move much of its business to the cloud.
“I am very excited about the journey ahead and the tremendous value we will create as the two companies focus on what they do best., – said Arvind Krishna in his statement. – This will benefit our customers, employees and shareholders and put IBM and NewCo on a path of improved growth.“.
“IBM Focuses On $ 1 Trillion Hybrid Cloud PossibilitySaid Krishna. – Customers’ needs for purchasing applications and infrastructure services vary as adoption of our hybrid cloud platform accelerates. 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 be more flexible to design, manage and modernize the infrastructure of the world’s most important organizations. Both companies will move on an improved growth trajectory with greater ability to collaborate and seize new opportunities, creating value for customers and shareholders“.