Apparently, the managing and owning of IBM data centers will end up going over to Kyndryl. Not sure if this is news or anything, but, I just thought this information was interesting to hear. I don't know if that means all IBM data centers, or not.
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Just a guess... US based kyndryl employees are going to be in the offshore replacement cross hairs and training their replacements once the split is complete.
With a declining revenue base, what other options are there?
You may be completely correct that the spin-off will be a long term disaster, BUT short term it’s what IBM does best. FINANCIAL ENGINEERING.
Kyndryl = slow but steady returns due to 3-5 year long term contracts that are hard to automate. This is wall streets widow and orphans fund model. Management just has to attract new accounts at their shrink rate level, and the books work. Given their scale (2x their nearest competitor) this should be rather easy.
Hybrid IBM = faster growth thru greater risk taking and innovation. They will carry far less debt than traditional IBM, but also have far less infrastructure investment. To succeed new IBM will have to innovate, and that’s why they changed horses to Redhat. Old IBM could innovate, but couldn’t execute that innovation and bring it to the marketplace. Redhat has a track record of doing exactly what IBM was looking for. Innovate, and bring it to market. If the new management continues to execute that strategy across the Enterprise playing field, they will command a far greater market multiple, and that’s what the IBM board is after. Dump the slow and steady, and exploit the fast and nimble
This spinoff is going to be a disaster for both companies... let's talk again in 2 years from now, when IBM will buy back Kyndryl at a huge premium... This company does that so well!
"Dividing a big tu-d into two smaller..."
Point is... kyndryl will not be supporting IBM... so the idea that, "BM will sue Kindryl for failing to live up to its promises" seems misplaced.
Dividing a big tu-d into two smaller turds does not make the results stink any less.
The hardware and applications that kyndryl will use will stay with kyndryl.
Applications that RemainCo will use will end up in the IBM Cloud centers, Dallas, etc.
Good chance kyndryl will not be servicing the IBM account.
I heard this was GTS data centers and they failed to move to Softlayer (not any better since majority of IBMs outages come from softlayer for their cloud).
If they were inheirting softlayer as well then that would be the real finger right there!
This really shouldn’t be a surprise. IBM wants out of the HW business, and data centers are nothing more than money pits servicing commodity products (intel) along with proprietary products (Power and mainframe). IBM’s strategy for Kyndryl is get them to license the Redhat/OS SW stack, and pay Kyndryl to service the HW stack. Remember HW will always be a money pit due to modernization. Better to outsource it, and rent what you need
IBM unloads yet another money-losing business. So just like the last time, I will predict that 5 years later, IBM will sue Kindryl for failing to live up to its promises. Assuming IBM and/or Kindry is still around.
And the debt that goes with them