IBM to focus on cloud computing spins off $19B

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FILE PHOTO: A man stands near an IBM logo at the Mobile World Congress in Barcelona, Spain, February 25, 2019. REUTERS/Sergio Perez/File Photo

Recently, the 109-year-old tech company i.e. IBM announced it was breaking off a USD 19 billion chunk from its business to put the center of attention on cloud computing. They plan to do it by spinning its directed infrastructure service unit into the latest public company, which is temporarily named ‘New Co’. In late 2021, the separation is expected to take effect.

The management of the infrastructure of businesses and other organizations can be served by the newly formed company so that the split will help IBM to concentrate on its Artificial intelligence and cloud platform, said IBM CEO, Arvind Krishna.

Last year IBM’s annual revenue was $77,1 billion. IBM’s top two focus areas for growth is ‘Cloud Computing and Artificial Intelligence. IBM CEO Arvind Krishna at his first quarterly earnings in April said that the company will carry on with removing software and services that do not align with IBM’s top focus areas.

IBM sheds its PC business in 2005, ever since it became focused on supplying software services for government sectors, big businesses, and various other organizations. IBM has worked hard to build up its Cloud Computing business but has brawled to keep up with the top cloud rivals Google, Amazon, and Microsoft.

With the splitting of business by IBM Corp, up to one-fourth of employees in India are expected to be part of the new-entity that builds focus on hybrid cloud and Artificial intelligence. The CEO said, there will be no material impact on Indian operations.

According to IBM, there are more than 4600 clients from 115 countries and an order backlog of $60 billion, even though the new company has not been named yet. The CEO said, buying needs of clients for infrastructure and application services are varying, also the adoption of the hybrid cloud platform is accelerating, so it is the right time to focus on creating two market-leading companies on what they do best.

The innovation-based IBM company has a maniacal focal point on a hybrid cloud platform and AI. Employees working remotely in pharmaceuticals, telecom, retail, and other industry sectors are investing in migrating operations to cloud platforms. The two entities in India will be going to take a year to play out.

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