IBM splits

IBM today announced that the company will split into two, moving the Managed Infrastructure Services portion of IBM Global Technology Services into a new cloud-focused corporation tentatively called "NewCo" by the end of 2021. NewCo would also have a greater focus on AI, presumably through a distributed computing model rather than traditional hardware sales. The Technology Support Services piece of GTS that addresses data centre, hardware and software support would remain part of "old" IBM, along with Red Hat and presumably the R&D folks responsible for working on Power ISA like the great people at OzLabs.

It is interesting that this move was predicted as early as February, and a split in itself only means that a combined business strategy no longer makes sense for these units. But chairwoman Ginni Rometty missed the boat on cloud early, and despite the hype in IBM's investor release over the new company, "NewCo" is really the "old" services-oriented IBM with a fresh coat of paint that was a frequent source of layoffs and cost-cutting manoeuvres over the years. There are probably reasons for this, not least of which their hidebound services-first mentality that wouldn't sell yours truly a brand new POWER7 in 2010 even when I had a $15,000 personal budget for the hardware because I didn't (and don't: the used POWER6 I bought instead is self-maintained) need their services piece. As a result I wasn't apparently worth the sale to them, which tells you something right there: today's growth is not in the large institutional customers that used to be IBM's bread and butter but rather in the little folks looking for smaller solutions in bigger numbers, and Rometty's IBM failed to capitalize on this opportunity. In my mind, today's split is a late recognition of her tactical error.

Presumably the new company would preferentially use "OldCo" hardware and recommend "OldCo" solutions for their service-driven hybrid buildouts. But "OldCo" makes most of its money from mainframes, and even with robust virtualization options mainframes as a sector aren't growing. Although IBM is taking pains to talk about "one IBM" in their press release, that halcyon ideal exists only as long as either company isn't being dragged down by the other, and going separate directions suggests such a state of affairs won't last long.

What does this mean to us in OpenPOWER land? Well, we were only ever a small part of the equation, and even with a split this won't increase our influence on "OldCo" much. Though IBM still makes good money from Power ISA and there's still a compelling roadmap, us small individual users will need to continue making our voices heard through the OpenPOWER Foundation and others, and even if IBM chooses not to emphasize individual user applications (and in fairness they won't, because we're not where the money is), they still should realize the public relations and engineering benefits of maintaining an open platform and not get in the way of downstream vendors like Raptor attempting to capitalize on the "low-end" (relatively speaking) market. If spinning off MIS gets IBM a better focus on hardware and being a good steward of their engineering resources, then I'm all for it.