I believe you are about to see IBM split into two pieces. Strategic initiatives, and everything else. Both pieces will be marketed separately and eventually they will be sold off. Strategic initiatives will include all of the strategic initiatives that we have come to understand (cloud, cogative, etc etc) in addition to GBS consulting, and IP for the legacy investment both HW and SW, and finally the lab investment and patent royalties It will also include the IBM name. The everything else will include GTS (outsourcing, ISV hosting/admin, and essentially everything not associated with strategic initiatives. It might be easier to think about it as anything that can be offshored to a less expensive country (think India, Eastern Europe). The everything else will be a spin off with the possibility of IBM issuing new stock and current share holders having a resulting investment in that new stock (much like CSC and HPE services). The strategic part of IBM will retain the IBM name, and either be absorbed by someone, or carry on under the IBM umbrella, but being owned by someone else. The revenue split of the two half’s will Be approx 50 - 52 billion strategic, and 25 - 28 billion everything else.
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HCL Tech is far from being the only IBM IP partner. Yet, it certainly has taken over brands of IBM that still are very well-known: this includes the application life cycle brand Rational, the Informix database products, and the collaboration Tivoli and Notes software products, as well as software products related to mainframes, and marketing automation applications we could not fully identify . We estimate, based on financial reports, that HCL Tech has invested, in the past two years, close to $1bn. This is therefore a major investment.
Do you have the list of software sold to HCL ?
Wow.. and I was totally unaware of the HCL sales for some of the software brands
Taking a peek at the latest post nets out what has happened to SWG already. HCL and IBM have structured an IP deal. (Lotus, Rational, Tivoli) are all now part of HCL and they paid us and continue to pay us an IP fee. (Eg IBM has figured out how to mine the HW and SW legacy investment. IP it off). IBM has done the same with the Power chip investment. They sold off manufacturing, BUT they IP’ed off the design to the Open Power Group. (Multiple “gray” market manufacturers pay us an IP fee to manufacture Open Power designs including Google). Mainframe will most likely always remain within IBM due to the end user investment in legacy SW applications (approx 1 trillion dollars over 40 years). This again fits within IBM’s strategy of only directly marketing to the fortune 250. (think mainframe customers for the most part). Power HW will migrate to “big” memory Enterprise box needs (think SAP, Oracle, epic, cerner ISV’s staying on IBM HW, BUT moving to their cloud based offerings). Smaller Power users will migrate to NICHE MSP offerings (think scale out legacy market places) (eg AIX and OS/400). This scale out offering will most likely be farmed out to the Open Power manufacturers. Enterprise Power manufacturing may remain within IBM as an off shoot of Z or just get spun to the “gray market manufacturers”. So open power manufacturers will have HPC Open offerings, and Niche scale out legacy offerings, and possibly “enterprise Niche manufacturing”. Z HW and OS’s will remain with IBM. AIX, and OS/400 will get IP’ed off. LINUX will become IBM’s strategic OS moving forward as that’s the “cloud” vision that IBM has embraced.
I believe in IBM will sell out more and more non-core business. Only Watson, Cloud, Mainframe,semiconductor will survive. The reason is lots of traditional business are losing money.
RTC, DemandTec, Lotus (Notes, Sametime, Verse...)。
HP has been split into 2 companies and looks much better. I have no doubt that IBM will keep on slimming in 2018. Let's keep our eyes open！
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I’ll take your bet. How much do you want to lose????
Honestly this is just a free exchange of ideas that are in the public domain I expressed my thoughts due to the inflow of corporate cash that the tax bill will certainly bring. (that’s not a political statement, but just the facts that there is a lot of cash overseas that will most likely come home) That cash has to go somewhere
Just a couple of thoughts. 1. I believe IBM will make it’s 2017 number. The biggest reason is System Z full quarter revenue. The second biggest reason is cost reduction mostly out of the legacy groups and off shoring. The 3rd reason is it’s Ginni’s swan song and she wants to go out on a high note. (Eg she will be able to say I turned the ship and made 1 out of 23 quarters). REMEMBER it’s all about setting wall streets expectations, and IBM has been an expert at doing that, and the 4th q is where all of that comes together. Z revenues will extend for at least 2 more quarters going forward. With that said, corporate America under the new tax plan will be able to bring off shore earnings back on shore for approx 15 cents on the dollar. That nets to everyone will be in a shopping mode and IBM has set or will soon set the expectation that they are for sale. (Eg they have trimmed legacy costs, and grown strategic initiatives thus being able to say they have transformed the company). SO who gets what
Apple or a Google or someone with deep pockets will want the strategic portion of IBM. (this will be a merger, or a buy out most likely keeping the IBM name)
Tata, HCL, or Wipro will want the GTS non-strategic piece (can you say joint venture with new stock issue)
Oracle/SAP will take the IP portion or Enterprise Power / analytics / cognitive (Eg IBM licenses it’s strategic legacy HW and SW)
SuperMicro, HPE, or Cisco will take the Scaleout portion of Power and DASD (. Again IBM licenses it’s IP investment into Legacy, and farms out its manufacturing)
Why do I predict this??? It’s plays to everyone who has deep pockets and is flush with off shore money. PLUS it plays to where IBM wants to transform to. NET NET. IBM management is out of ideas of what it wants to be when it grows up, so it’s going back to the Opel playbook. Break up to extract shareholder value with the new pieces continuing to return revenue to shareholders
I bet you ARE QRK7HX1-1gqg
And what makes you believe this? A breakup has long been guessed at. What's new here?
I predict a low pressure zone will come over with precipitation expected.
I believe the weather company goes with “strategic”. Reason being part of cloud
It's possible that IBM will switch gears to accelerate this kind of thing to happen faster than they planned, because it's going to be tough to justify a mass layoff (as I believe is planned for January based on consultation notices already sent out in Europe). Ginni knows that with other corps handing out bonuses and raises due to the new tax bill, she's going to make the administration pretty angry if she does a big layoff, because it will make them look bad too. And we know it's important to her to be cozy with the administration. So maybe we'll see the restructuring of IBM (and that would be the big tipping point to the end). It might also help defray a landslide in the stock price if IBM misses it's 4Q and 2017 targets, which I think is likely.
What do you think will happen with the Weather Company?