IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Why IBM is splitting its business in two

While the focus on cloud may sound like a revolution, the old regime remains

Stop me if you’ve heard this one before: A giant of the tech industry with a history stretching back many decades and a footprint in most large organisations – and many smaller ones – finds itself struggling against the tide of digital transformation and the shift to cloud.

Despite its best efforts to reform its business over a number of years, IBM has taken the decision to split its company in two in the hope that, as separate entities, they can pursue more successful growth strategies than they could under one umbrella – but they will maintain close ties.

To be fair to IBM, the split it announced yesterday, which will see its managed infrastructure services unit spun off into a separate entity, is less fundamental than that of HP in 2015, which saw the creation of Hewlett Packard Enterprise and… HP. Nevertheless, it is meaningful.

It’s clear from the announcement that the centenarian company does very much want to capitalise on its strengths in AI and cloud, with Red Hat taking centre stage as an example of its excellence in the latter and talk of being “laser-focused on the $1 trillion hybrid cloud opportunity”.

Reading between the lines, however, it’s also clear that IBM has no intention of letting go of its core infrastructure heritage, either. While the paragraph on its Systems business is coated in a sweet layer of hybrid cloud, if you were to bite down you would find there’s a traditional hardware business still sitting at the core.

And why not? One of IBMs strengths is its enterprise hardware products and, when it comes to things like mainframe, it has very few competitors. While it may not be quite as sexy to talk about as more modern technologies, it’s still fundamental to many large organisations in lucrative areas like financial services.

What it won’t be doing any more, however, is managing that hardware. This new company will be fundamentally IBM’s managed infrastructure services business, packing up its belongings and striking out on its own. It makes sense for this business unit to become independent, too – multi-cloud and hybrid cloud are all about flexibility and choice and, while it’s promised the company will maintain “a strong strategic partnership with IBM”, it will be able to work more freely across all cloud vendors.

The split is expected to be complete by the end of next year, which gives the branding teams and consultants 12 months to come up with an inspiring name for the new venture. Infrastructure Business Management Corporation, perhaps?

Featured Resources

Join the 90% of enterprises accelerating to the cloud

Business transformation through digital modernisation

Free Download

Delivering on demand: Momentum builds toward flexible IT

A modern digital workplace strategy

Free download

Modernise the workforce experience

Actionable insights and an optimised experience for both IT and end users

Free Download

The digital workplace roadmap

A leader's guide to strategy and success

Free Download

Recommended

IT Pro News In Review: UK 4 day week, ransomware payment rise, IBM cut ties with Russia
Business operations

IT Pro News In Review: UK 4 day week, ransomware payment rise, IBM cut ties with Russia

10 Jun 2022
IBM bolsters cyber security offerings with Randori acquisition
mergers and acquisitions

IBM bolsters cyber security offerings with Randori acquisition

7 Jun 2022
IBM's new z16 mainframe brings two industry-firsts and quantum-proof data encryption
Hardware

IBM's new z16 mainframe brings two industry-firsts and quantum-proof data encryption

5 Apr 2022
Software-defined storage for dummies
Whitepaper

Software-defined storage for dummies

1 Apr 2022

Most Popular

Actively exploited server backdoor remains undetected in most organisations' networks
cyber attacks

Actively exploited server backdoor remains undetected in most organisations' networks

1 Jul 2022
Former Uber security chief to face fraud charges over hack coverup
data breaches

Former Uber security chief to face fraud charges over hack coverup

29 Jun 2022
Why India wants to become a chipmaking powerhouse
components

Why India wants to become a chipmaking powerhouse

28 Jun 2022