BEIJING, Jan. 31 (Xinhua) — “Blue Giant” IBM announced today that CEO Ginni Rometty will officially retire on April 6th, with adhior Arvind Krishna as the new CEO. In addition, Jim Whitehurst, a former Red Hat CEO, will become president.
IBM revenue, market value decline
The news came that IBM’s shares had risen about 5 per cent in after-hours trading, which no doubt represented the capital markets’ attitude towards Mr Rowland’s retirement.
Since he became president and CEO of IBM on January 1, 2012, the company’s share price has fallen by about 25 percent as it has underperformed in transforming itself into a cloud computing service provider. During this period, IBM’s revenue also fell from $104.5 billion in 2012 to $77.1 billion in 2019 (and, of course, IBM’s sale of some of its business will also affect revenue). At the end of 2012, IBM’s market capitalisation was more than $200 billion, and it is now only $121.1 billion, down about 40 percent.
However, IBM’s falling stick can’t hit Rowerland all. After selling his PC business to Lenovo in 2005, Samuel Palmisano led IBM’s transition to high-end services, which were just emerging from data analytics and cloud computing.
In the six years that followed, IBM’s revenue grew little, but by buying back shares, IBM’s earnings per share were sesame- One of IBM’s main ways to control costs is to move more jobs overseas, particularly in India.
Watson, a data analysis tool based on artificial intelligence
Since taking office, Mr. Luo has ambitious plans to expand into cloud computing and artificial intelligence. While abandoning a business that doesn’t make a profit, she is betting on Watson, a data analysis tool based on artificial intelligence.
But fate made a joke for Rowland and IBM. IBM’s push into cloud computing has been met with a new competitor, Amazon. In stark contrast to IBM’s faltering approach to cloud computing, Amazon’s cloud computing division, AWS, had net revenue of more than $35 billion in 2019.
Watson didn’t get any better, and was approved by customers as never delivering on his promises.
Speaking about the transition from traditional business to next-generation technology, Moshe Katri, an analyst at Wedbush Securities, said, “IBM has had a very challenging time in charge, and poor financial performance is the best example of that.” “
Rowland didn’t sit still.
At the beginning of his tenure, the troubled Luo Ruilan did not choose to escape, sitting down.
In order to reduce costs and increase profitability, she chose to sell unprofitable businesses. One of the most high-profile moves was the sale of the not-so-fashionable X86 server business to Lenovo. At the time, it was widely believed that IBM was aware that there would be a large number of customers turning to cloud computing services, that the demand for standardized servers would shrink, and that cloud service providers would abandon standardized servers in favor of custom servers. IBM also cut costs to some extent by laying off 7,500 full-time and 1,500 contract employees in the deal.
Before the sale of the X86 server business, IBM announced a $1 billion investment in the new Watson Business Group and a $1.2 billion expansion of its cloud computing business, building 40 data centers in 15 countries on five continents.
IBM buys Red Hat for $34 billion
Realizing that it lags behind Amazon, Microsoft and Google in cloud computing, in 2018, Rowland made the boldest decision to buy Red Hat, an open-source software maker, for $34 billion, in the hope that the deal would help keep IBM from falling behind in the cloud computing boom. But it was a big surprise that IBM’s revenue fell five straight after the deal, and it didn’t turn around the decline until the fourth quarter of 2019, though revenue grew just 0.1 percent.
In 2014, IBM announced a partnership with Apple to design applications for corporate customers, and that year, IBM also announced a partnership with SAP, a German enterprise software giant, in cloud computing, and Twitter in data analytics. In 2015, IBM and Box reached a cloud service cooperation agreement.
IBM bought about 30 companies for $8.5 billion between 2012 and 2015. As of 2016, Rowland sold about $7 billion worth of IBM businesses, including chip making.
“Remembered” for two reasons
James Cortada, a senior researcher at the University of Minnesota, said Rowland would be linked to two big things: shrinking revenue and opening the door to IBM’s third transformation.
In history, IBM has undergone two major transformations. The first transformation took place in the 1950s, when IBM’s main business shifted from watchmaking equipment to computers, and the second in the 1990s, when IBM’s main business shifted from mainframes to software and services. Hybrid cloud is IBM’s third big transformation, but for many, IBM is moving too slowly.
BEFORE ADOPTING A HYBRID CLOUD STRATEGY, IBM TOOK A DETOUR IN CLOUD SERVICES. IBM has used a closed-door strategy to tap into the cloud service market, primarily using its own services. Krishna has changed IBM’s cloud service strategy to hybrid cloud, working with rivals rather than competing.
Luo Ruilan has opened IBM’s third transformation of the curtain, but in the internal and external causes under the clampdown, but did not successfully complete the retirement, the heart will certainly leave some regret.
Two transformations in IBM’s history
Former IBM CEO Thomas Watson Jr.
Thomas Watson Jr. led IBM’s first transformation after taking over from his father in 1956. Under his leadership, IBM became the world’s largest computer manufacturer.
The System/360 system took several years to develop and cost $5 billion (in dollar terms in the 1960s), surpassing even the U.S. government’s previous Manhattan project for developing a nuclear bomb. IBM’s position in the computer space was illustrated by its 70% share of the mainframe market in 1969, which led to antitrust litigation.
By the 1990s, the rapid growth of the PC had hit IBM like never before, with revenuefrom the mainframe business shrinking from $13 billion in 1990 to $7 billion in 1993. Ibm has been slow to roll out a relatively inexpensive distributed computing system that has lagged behind its rivals in technology because of the high profit margins in its mainframe business, and the board has placed a bet on Louis Gerstner, the “outsider”. IBM’s losses reached $5 billion in 1992, and in 1993, in Mr. Goethe’s first year in office, the losses widened to $8.1 billion.
Former IBM CEO Michael Kwok
Guo Shina resisted the pressure inside and outside the company, change the company’s business units “separate war” strategy, but the whole company screwed into a rope, software and services as a breakthrough, driving hardware sales, to achieve the company’s main industry from hardware manufacturing to software and service transformation.
In 1995, IBM bought Lotus for $3.5 billion, using Notes software as a weapon to launch a storm on the software market. In 1994, IBM made a profit of $3 billion, and has grown year after year.
Mr. Guo’s transformation led to IBM has also been recognized by the capital markets. From 1993 to 2002, when Mr. Goewasner retired, IBM’s market value soared from $29 billion to $168 billion.
Who is Krishna?
Krishna is currently head of IBM’s cloud computing and cognitive software division and is the lead architect of the Red Hat deal. He suggested to Mr. Rowland and the board that the acquisition of Red Hat, citing hybrid clouds as the company’s best chance for future growth.
IBM’s new CEO, Arvind Krishna
Krishna has led the development of many new technologies, such as cloud computing, artificial intelligence and quantum computing. IBM said in a statement that “he is a true leader and has taken on increasing responsibilities throughout the company” to help restore growth in the company’s cloud computing and software businesses.
It was Krishna who corrected IBM’s approach to closing the market for cloud computing. “His openness and ability to work with all the vendors is very good for IBM,” said Anurag Rana, an industry research analyst at Bloomberg. “
Charles King, a market research firm, said it was logical for IBM to choose Krishna as its new CEO, given the importance of cloud computing for IBM’s future.
Rob Enderle, an analyst at Enderle Group, a market research firm, said IBM’s appointment of Krishna as its new CEO was a match for Microsoft’s appointment of Satya Nadella as CEO. They all lead business units that are considered important to the future of the company.
Insiders say Krishna will complete his unfinished career and lead IBM’s successful transformation, just as Nadella did at Microsoft.
Lenovo’s acquisition of IBM X86 server business is a “pit”?
Lenovo acquires IBM PC and X86 server business
In December 2004, Lenovo staged a “snake-swallowing” announcement to buy IBM’s PC business for $1.25 billion, with an actual purchase price of $1.75 billion. For IBM, the low-margin PC business has become a chicken, with a loss of nearly $1 billion in 2001-2004, and the sale is a better option; Lenovo faced fierce competition in the domestic market at the time, making little progress in the international market, and IBM’s technology, brand and sales channels were attractive.
After acquiring IBM PC business, Lenovo entered the global PC market in the top three ranks, and then for many years to win the championship.
Perhaps having a taste of the sweet spot for IBM, Lenovo announced in 2014 that it would buy ibm’s X86 server business for $2.3 billion. Although the PC market is booming, but under the impact of smartphones, THE PC has long been a sunset industry, profit margins are poor, and corporate server products profit is much higher. This may be one reason Lenovo acquired IBM’s X86 server business.
Through the acquisition of IBM PC business, Lenovo has accumulated extensive experience in business integration and international market development, with the acquisition of IBM X86 server business underground. However, Lenovo’s $2.9bn deal to buy Motorola’s mobile business has proved to be a failure.
IDC’s share of the global X86 server market is only 6.82 percent, lagging behind Dell, HP and Wave, and IDC’s data show that Lenovo also has an 11.9 percent market share in China’s X86 server market in the third quarter of 2019. Huawei and Xinhua San. This is clearly not a goal that Lenovo set for itself when it acquired ibm’s X86 server business.
Data over the past 10 years show that Lenovo’s overcalculation has also been strong, many times in the top 500 list. In recent years, with the rise of Tianhe, Shenwei, Sugon three super-computing platforms, Lenovo in terms of performance has been outdated, but in terms of quantity there is still a certain advantage.
Although a cloud computing division has also been set up, Lenovo is largely classified as “other” in Alibaba Cloud’s largeChinese cloud computing market, with little sense of existence.