Meet IBM’s New CEO

Have to admire Ginny Rometty. She survived 19 consecutive losing quarters (one quarter shy of 5 years), which DancingDinosaur and the rest of the world covered with monotonous regularity, and she was not bounced out until this January. Memo to readers: Keep that in mind if you start feeling performance heat from top management. Can’t imagine another company that would tolerate it but what do I know.

Arvind Krishna becomes the Chief Executive Officer and a member of the I BM Board of Directors effective April 6, 2020. Krishna is currently IBM Senior Vice President for Cloud and Cognitive Software, and was a principal architect of the company’s acquisition of Red Hat. The cloud/Red Hat strategy has only just started to show signs of payback.

As IBM writes: Under Rometty’s leadership, IBM acquired 65 companies, built out key capabilities in hybrid cloud, security, industry and data, and AI both organically and inorganically, and successfully completed one of the largest technology acquisitions in history (Red Hat).  She reinvented more than 50% of IBM’s portfolio, built a $21 billion hybrid cloud business and established IBM’s leadership in AI, quantum computing, and blockchain, while divesting nearly $9 billion in annual revenue to focus the portfolio on IBM’s high value, integrated offerings. Part of that was the approximately $34 billion Red Hat acquisition, IBM’s, and possibly the IT industry’s, biggest to date. Rometty isn’t going away all that soon; she continues in some executive Board position.

It is way too early to get IBM 1Q2020 results, which will be the last quarter of Rometty’s reign. The fourth quarter of 2019, at least was positive, especially after all those quarters of revenue loss. The company reported  $21.8 billion in revenue, up 0.1 percent. Red Hat revenue was up 24 percent. Cloud and cognitive systems were up 9 percent while systems, which includes the z, was up 16 percent. 

Total cloud revenue, the new CEO Arvind Krishna’s baby, was up 21 percent. Even with z revenue up more than cloud and cognitive systems, it is probably unlikely IBM will easily find a buyer for the z soon. If IBM dumps it, they will probably have to pay somebody to take it despite the z’s faithful, profitable blue chip customer base. 

Although the losing streak has come to an end Krishna still faces some serious challenges.  For example, although DancingDinosaur has been enthusiastically cheerleading quantum computing as the future there is no proven business model there. Except for some limited adoption by a few early adopters, there is no widespread groundswell of demand for quantum computing and the technology has not yet proven itself useful. Also there is no ready pool of skilled quantum talent. If you wanted to try quantum computing would you even know what to try or where to find skilled people?

Even in the area of cloud computing where IBM finally is starting to show some progress the company has yet to penetrate the top tier of players. These players–Amazon, Google, Microsoft/Azur–are not likely to concede market share.

So here is DancingDinosaur’s advice to Krishna: Be prepared to scrap for every point of cloud share and be prepared to spin a compelling case around quantum computing. Finally, don’t give up the z until the accountants and lawyers force you, which they will undoubtedly insist on.To the contrary, slash the z prices and make it an irresistible bargain. 

DancingDinosaur is Alan Radding, a veteran information technology analyst, writer, and ghost-writer. Follow DancingDinosaur on Twitter, @mainframeblog, and see more of his work at http://technologywriter.com/ 

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One Response to “Meet IBM’s New CEO”

  1. Steve Bartlett Says:

    Alan, Red Hat = $34B; if it was $30M you and I could have bought it with a little leverage.

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