IBM further consolidates hardware biz as it retools around cloud, Watson

IBM SmartCloud SoftLayerThe industry’s old guard is undergoing an historic transformation as it repositions for the mega-trends that are changing how IT services are consumed and delivered in the enterprise.

Hewlett-Packard and Dell are both pursuing aggressive restructuring plans in an effort to diversify beyond a rapidly shrinking PC market, while more entrenched vendors such as EMC are also starting to scale back on legacy businesses now that the commoditization of the data center is moving into full swing. Even Big Blue, the stalwart of the ecosystem, is sensing the winds of change.

Under the leadership of veteran corporate strategist Virginia Rometty, the vendor is “shipping off the commodity [and] going after profits and not revenue,” observed Wikibon co-founder and chief analyst Dave Vellante during this week’s IBM Pulse conference. The company recently sold its low-end server line to Lenovo for $2.3 billion, nearly twice as much as the Chinese consumer electronics giant paid for its PC business in 2005 – and that’s just the beginning.

IBM intends to axe up to 25 percent of the workers in its Systems and Technology group, CNET reported on Friday, citing an anonymous source familiar with the matter. The layoffs are part of a multi-billion dollar “workforce rebalancing plan” that kicked off earlier this week, hitting employees in New York, Burlington, Minnesota, and Rochester, Vermont, according to the Alliance@IBM union group.

Meanwhile, IBM is increasing investments in high-growth areas such as cloud computing, analytics and security in a bid to capitalize on fast-growing demand among enterprises. “This next chapter of innovation is around really delivering value, and that’s around cloud equals growth for not only the companies selling the hardware and software but also the customers,” says SiliconANGLE founder John Furrier.

image source: IBM

About Maria Deutscher

Maria Deutscher is a staff writer for SiliconAngle covering the enterprise cloud space. If you have a story idea or news tip, please send it to @SiliconAngle on Twitter.