#JETTISON SYNONYM SOFTWARE#

HP bought Electronic Data Systems and Dell bought Perot Systems, which interestingly were both founded by one of IBM’s top mainframe salesmen from the punch card era, none other than Ross Perot.

The original Hewlett Packard tried to build a copy of the IBM behemoth of the 1990s, and Dell followed suit, with both trying to build up and buy services businesses.

#JETTISON SYNONYM SOFTWARE#

That has been the case with both Hewlett Packard, which split into HP Inc and Hewlett Packard Enterprise and sold off its software and IT services businesses, but the free-standing and much smaller HPE has also bought the SGI and Cray supercomputing businesses to push higher up the IT food chain. Every company has a narrative arc, just as every person does. This is inherently less fun, but no less important.

We talk about companies embiggening a lot here at The Next Platform – think of what Intel has done with acquisitions in recent months and what Nvidia has been doing in the past year – and sometimes we have to talk about them ensmallening. Frankly, we have been more than a little worried that Big Blue might be contemplating spinning off its systems hardware businesses, and we are pretty sure that this has been contemplated over the years, given all of the things that IBM has sold off: the manufacturing of low-end and high-end printers, disk drives, networking equipment, PCs, X86 servers, and chips being the notable ones in recent decades. Perhaps nothing could illustrate the changing nature of IT infrastructure in the enterprise better than this deal does, and it also shows that Krishna is very serious about repositioning IBM for growth and is dedicated to its Red Hat enterprise software and IBM Cloud businesses as the means to provide growth while at the same time staying in the systems business proper and retaining the annuity revenue streams that come from its System z mainframes and Power Systems iron. And while IBM has not said this, NewCo will also be something else: IBM’s largest customer, which has some interesting ramifications for both companies. The spinout, which IBM chief executive officer Arvind Krishna, who took over the helm of the company in April, will create an as-yet-unnamed and publicly traded company that is tentatively being called NewCo, focused on strategic outsourcing and system hosting for some 4,600 companies in 115 countries around the world. Today, the Gerstner era of International Business Machines is over, and the Krishna era is truly beginning, as Big Blue is spinning out the system outsourcing and hosting business that gave it an annuity-like revenue stream – and something of an even keel – in some rough IT infrastructure waters for two over decades.