Monday, 03 February 2020 11:19

Veteran tech journo predicts the last days of IBM are nigh

Veteran tech journo predicts the last days of IBM are nigh Image by skeeze from Pixabay

Tech giant IBM will sell one of its remaining divisions and disappear into the company it acquired last year — open source firm Red Hat — the veteran technology scribe Robert X. Cringely says in his annual tech predictions.

Cringely, one of the first Apple employees and the author of Accidental Empires, the only history of the computer industry, makes about 10 predictions at the beginning of each year. At the same time, he also goes over his previous year's guesses to see what he got right.

Last week, IBM's shares got a big boost after chief executive Ginni Rometty stepped down and Arvind Krishna, former head of IBM's Cognitive Computing unit, was announced as the next CEO.

Cringely said Rometty was a failure, but mainly because she was unlucky. "She bought 57 companies in her time running IBM. How many of them can you name? How many of those acquisitions can you say were successful? Red Hat, maybe?" he asked.

Of IBM's three divisions — Global Technology Services, Global Business Services and Red Hat — Cringely said GTS would probably be sold by the Western summer.

"Either it will go to private equity (depends on the total debt load) or it will be sold to HPE or maybe to Oracle. Either way, it’s not a likely success story, but Rometty has no real choice. IBM is, at this point, smoke, mirrors, and buybacks. The GTS windfall will land in Ginni’s final quarter, juicing her payout, which might be the major point of the deal," he said.

However, he did not give GTS much chance of lasting long. "Whoever buys GTS will be a big winner for a few years. The losers will be all the IBMers who go with that deal," Cringely said.

"There will be massive layoffs of redundant staff, salespeople, and support teams. Profits will soar as the IBM staff is fired. The new owners will create a cash cow to pay down the purchase price while expanding their IT footprint. But supporting data centers and large integrations of hardware are so last century…"

Cringely predicted that the Cloud unit would also be hawked to someone by summer in 2021. Jim Whitehurst, the current head of Red Hat, would become the head of what was left of IBM.

"Whitehurst will turn IBM into Red Hat, which will take HQ to North Carolina and mean most of the remaining GBS staff will be gone in a year," he said.

"That’s because software is everything for Red Hat, which means certifications proving staff can actually do what they are being paid to do.

"But IBMers don’t believe in certifications; they are IBMers. In the end, nothing can be done for these people, so the answer will be to release anyone without the proper certifications, helping Red Hat realign the company in 2021."

What would remain under the IBM name would be GBS - but that also would not last long, Cringely predicted, adding that he would give his reasoning for this forecast in another prediction soon.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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