IBM Accelerates Hybrid Cloud

IBM has been drooling over the idea of the hybrid cloud for several years at least. Hybrid clouds result when an organization operates more than one cloud, often an on-premises cloud or more and one or more clouds from third-party providers. IBM wants to provide its IBM Cloud to the customer as its on-premises cloud and provide a variety of specialized clouds to the same customers, effectively expanding its hybrid cloud revenues.

So last week, (Oct. 8) IBM revealed complex plans to accelerate its hybrid cloud growth strategy to drive digital transformations for its clients. BTW, if you expect to sell complex technology and systems, you better tie it directly to business transformation, which has emerged as the hot C-suite buzzword. 

And, IBM continued, it will separate the Managed Infrastructure Services unit of its Global Technology Services division into a new public company, imaginatively called NewCo for now. This creates two companies, each with strategic focus and flexibility to drive client and shareholder value. This will be achieved as a tax-free spin-off to IBM shareholders, and completed by the end of 2021.

Of course, others have similar ideas. Oracle offers its cloud infrastructure with a free promotion. Microsoft offers its Azure Cloud platform. Even HPE is there with its Pointnext cloud services. So you have choices.

Arvind Krishna, IBM Chief Executive Officer adds: “IBM is laser-focused on the $1 trillion hybrid cloud opportunity.” Client buying needs, he continued, “for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating.”

IBM will focus on its open hybrid cloud platform and AI capabilities. NewCo will have greater agility to design, run and modernize the infrastructure. Does it tempt you to jump in right now to buy some IBM shares (about $125 a share)?

The company is understandably enthusiastic. As two independent companies, IBM and NewCo might capitalize on their respective strengths. IBM will accelerate clients’ digital transformation journeys, and NewCo will accelerate clients’ infrastructure modernization efforts.

IBM will focus on its open hybrid cloud platform, which, it claims, represents a $1 trillion market opportunity. To build its hybrid cloud foundation, IBM acquired Red Hat, for $34 billion, to unlock the cross platform value of the cloud. This platform also promises to facilitate the deployment of powerful AI capabilities to enable the power of data, application modernization services, and systems. This moves from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions and producing more than 50% of its portfolio in recurring revenues.

IBM’s open hybrid cloud platform architecture, based on Red Hat OpenShift, works with the entire range of clients’ existing IT infrastructures, regardless of vendor, driving up to 2.5 times more value for clients than a public cloud-only solution, it claims. 

This is a fresh repackaging of what ibm has been moving toward for some years and at considerable expense. Would you as a customer buy it? DancingDinosaur isn’t being asked but it would wait to see specific pricing, packaging, terms, and conditions. And absolutely shop around. You have choices.

After parsing much of the IBM boilerplate around this announcement, it is somewhat disappointing that IBM said nothing about where the Z fits in. The Z has been the company’s only profitable product performer in recent quarters. It certainly isn’t going to be a services player. 

DancingDinosaur has covered the Z under its various names for 20 years. Guess Z fans will just have to see where it ends up, which very well could be nowhere. Is it likely that IBM would abandon a profitable product line that attracts so much of the Fortune 100? Or will they dump it the way they dumped chip fabrication, by paying somebody to take it? Guess we’ll just have to wait and see. 

DancingDinosaur is Alan Radding, a veteran information technology analyst, writer, and ghost-writer. Follow DancingDinosaur on Twitter, @mainframeblog. See more of his work at and here.

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