IBM Spinning Off Infrastructure Managed Services Group To Focus On Cloud Is A Good Move

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IBM has been making a flurry of improvements to position the company to better take advantage of the cloud opportunity.  In the past year, IBM acquired Red Hat, deeply integrated many of its products, and installed new CEO Arvind Krishna and President Jim Whitehurst. The company isn’t done. Yesterday, IBM announced that it will spin out its Managed Infrastructure Services unit of its Global Technology Services division into a new public company that it is calling “NewCo” for now. Net-net, I believe this move will better position the “new IBM” for a cloud future defined by hybrid and multi-cloud, AI, and quantum computing.

The news

IBM announced it would execute a tax-free spin-off of the Managed Infrastructure Services business of its Global Technology Services segment called “NewCo”. NewCo will focus on IT infra modernization, service delivery excellence, operation efficiency, and cash flow generation. Factually, this makes NewCo the #1 market share managed infra company at $19B annual revenue with a $60B backlog that employs 90,000 working on 46,000 customers in 115 countries.

What I’ll call the “new IBM” is designed to attack the hybrid cloud better and will focus on technology and platform innovation, digital transformations, and higher growth opportunities.  This includes the current businesses: Cloud & Cognitive Software, Global Business Services, Systems, and Global Financing segments, and the IBM Public