International Business Machines, or IBM as you might know them, has announced that it will be splitting its business in two as it shifts focus to hybrid, cloud and AI solutions.

The announcement was made by current IBM chief executive officer, Arvind Krishna.

“Today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself. This shift is driven by the changing needs of our clients, who find that choosing an open hybrid cloud approach is 2.5 times more valuable than relying on public cloud alone,” said Krishna.

The goal of this split is so that IBM can meet its client’s expectations and that requires focus.

The second half of IBM will re-emerge as a new company – tentatively called NewCo – which will handle IBM’s managed infrastructure services business.

“We expect the new company to be created sometime toward the end of 2021. IBM will sharpen its focus on its open hybrid cloud platform and AI capabilities. And the new company will focus on delivering managed infrastructure services,” said Krishna.

This announcement comes off of the back of IBM’s Red Hat acquisition in 2019. According to IBM, this acquisition has helped it build out a robust and secure hybrid cloud platform.

“Today, services account for more than 60 percent of our revenue. When NewCo becomes an independent company, our software and solutions portfolio will account for the majority of our revenue. This represents a significant shift in our business model. The success we’ve had with Red Hat gives us confidence that this is the right move,” says the CEO.

According to Reuters, NewCo will have 90 000 employees and its leadership structure will be decided in the coming months.

Whatever the future holds for IBM this is a monumental shift for a company that has stayed relatively the same for the last 109 years.

[Source – IBM]