IBM to Split into Two Companies
IBM announced it will be splitting into two separate companies by the end of 2021. The original IBM will continue to focus on cloud computing and AI, while the unnamed new company will handle IBM’s infrastructure services. The companies will exist as two separate entities but will maintain a strong strategic partnership.
The split comes as IBM wants to narrow its focus on its cloud and AI services because they have significantly higher margins than some of its other lines of business. IBM has been trying to narrow its sprawling business model for years, and the move was presented by management as just another step in the process.
IBM shifting its focus more directly to the cloud could help it succeed against its main competitors in the field. Two of the biggest players are Microsoft and Amazon, both of which obviously have numerous other lines of business. IBM’s decision to split could have implications for these companies and possibly lead them to do the same, particularly with the growing sentiment that the tech giants are getting too big.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.