IBM will spin off legacy business to focus on cloud and AI services. IBM is splitting into two public companies, with a spin-off handling the firm's legacy IT infrastructure work, allowing IBM to focus on new high-margin businesses, particularly cloud services and AI. The new IBM will be mostly focused on its hybrid cloud platform, which the firm says represents a $1 trillion market opportunity. Right now, the cloud market is dominated by Amazon and Microsoft, but continues to see strong growth, particularly as the global pandemic encourages remote work.
IBM will move from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions, said IBM in a press release. Krishna led IBM’s $34 billion acquisition of Red Hat, an enterprise software maker that is now a part of IBM’s hybrid cloud division. The new company, which has the placeholder name NewCo in official documents will have roughly 90,000 employees and $19 billion in revenue.