Vendors Survival: Will IBM Survive until 2030? is no longer a question to be asked

IBM's headquarter in Armonk, New York
Source: Wikipedia

I wrote the first post on IBM's Survival on 2017. Issues appearing in the post were not resolved yet by IBM.

To quote my post "The problem is that IBM does not lead any significant new technologies market."

The market that IBM should be one of the Leaders is the Public Cloud market. Unfortunately for IBM, it failed to lead this market.

On 2018 I wrote another post: First Take: IBM's Red Hat Acquisition: Is it too late?

IBM's position was even worse than in 2017.

"Is it too late?" refers to the Cloud market.

Like HP, few years ago, IBM plans to split its business into two companies at the end of 2021.

IBM (currently 59 billion revenues until June 30 2020) will focus on Hybrid Clouds.

"New CO" (currently 19 billion revenues) will focus on infrastructure services.

the new IBM

The new IBM will focus on Public Hybrid Clouds. Mainly integrating clouds of Amazon's AWS and Microsoft's Azure but it will also compete against them with its Public Cloud Platform.

Red Hat is a part of the new IBM.

Arvind Krishna, IBM's new CEO since April 2020 describes the splitting and new focus as "significant shift" in the company's model.

The Cloud market is a high margin market.

Rapid growth is one of the goals of the new more focused IBM.

IBM management expect better business results.

the "New CO"

"New Co" focus is on Information Technology services and infrastructure. It is an extended IGS (IBM Global Services) Its main competitor is Accenture.

Its goal is efficiency not rapid growth.

It should be noted that few years ago IBM was the Leader of that market. The main competitor in that market was EDS. However, it was acquired by HP trying to replace IBM as the market leader and failed to achieve that goal.

Which Products and Business Lines will gradually disappear?

This question is a significant question. IBM's new CEO told analysts that "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,”

By abandoning these business lines IBM is cannibalizing its revenues. It seems that Long Term focus and growth is more important than Short Term revenues.

The future of IBM's Mainframe

It is a significant question: will it be part of the "New CO" or will it be included in the disappearing Product Lines?

I will dwell upon this issue on the next post.

First Take

Arvind Krishna was the key architect behibd Red Hat acquisition. He succeeded Ginny Rometty as IBM's CEO since April 2020.

It is possible to find similarities between the strategic business change he is executing and strategic changes in Microsoft and HP.

HP

HP was splitted into two companies because it failed to achieve its business goals. HP, which kept its logo and its name, and focused in its core business (PCs and Printers) and the HP Enterprise including the remaining Business lines. The idea was to be better focused in each sub companies-goals.

IBM is position is gradually deteriorating. The structure of the sub companies is similar to HP: a company that is focused in its main Business Goals and keeps its name and the logo.

Microsoft

Both companies had a successful CEO. The legendary Bill Gates at Microsoft and Samueal Palmisano at IBM. Both were replaced by Conservative Managers. Steve Ballmer at Microsoft and Ginni Rometty at IBM.

Both companies were less successful when the CEOS stepped down and Conservative Managers replaced them.

A significant Business Strategy was required in Microsoft. Ballmer was not capable of leading the required change therefore he stepped down and Satya Nadella replaced him as a CEO.

Nadella made a significant change by the Cloud First Strategy i.e. focusing on Cloud Platform, products and services.

Arvind Krishna who replaced Jinnny Rometty is trying also to focus on the Cloud.

There are differences between Microsoft and IBM.

The Cloud Strategy is different and IBM is trying to get rid of low margin products and services.

The crucial difference is that it was not too late for Microsoft to focus on the Cloud.

The question I asked in previous posts about IBM is still relevant: Is it too late?

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