• IBM is spinning off 25 percent of its business in order to focus primarily on cloud computing and associated AI efforts: the company will be smaller and more simple.
• Although IBM has talked, over the past 10 years, about becoming a corporation more in tune with the atmosphere of the "new" Modern Corporation, it has failed to do so.
• With the new CEO, Arvind Krishna, put into place in April, the company may actually be headed in the right direction, one that is fully competitive in this new age.
• I have not written much about IBM Corp. (NYSE:IBM) in the past. I just did not find much interesting about what was going on there.

I wrote about IBM last July 2019 at a time when they were making some changes as a result of their acquisition of Red Hat, an open source software firm.

Today, I focus on IBM because it announced that it is spinning off its infrastructure business so that it might become a more focused organization. This is a major change for the company and has important implications for the future.

The acquisition of Red Hat was led by IBM CEO Ginni Rometty, a move that really seemed out of line with what she had been doing in her previous seven-year term at the helm of the company. As I reported at the time, the purchase was referred to as a "transformational acquisition," one that would lead to a change in what IBM was.

It was not altogether clear what the direction of the company would be in the future.

New Leadership

Well, Ms. Rometty remained the CEO of IBM until this April, six months ago, when Arvind Krishna moved into the CEO position. Ms. Rometty, at that time, became executive chairman of the company.

Mr. Krishna joined IBM in 1990, at IBM's Thomas J. Watson Research Center, and in 2015 was promoted to senior vice president of IBM Research. He later became senior vice president of IBM's cloud and cognitive software division. He has a Ph.D. in electrical engineering.

This first major action of Mr. Krishna's will substantially shrink the company and allow it to become more focused in the future. The picture that is drawn is that IBM will focus upon cloud computing and the AI business. It will, according to management, work in the "hybrid cloud", to assist companies manage software and other systems across different cloud services and their own data centers. This direction was substantially helped by the acquisition of Red Hat.

In effect, IBM is shrinking according to a well-thought out plan.

Note that IBM is not the only "legacy" firm to move in this direction. General Motors (NYSE:GM), under the direction of Mary Barra, is also "shrinking" its business in order to gain focus. GM was one the largest producer of cars in the world. Now, it is number three, and Ms. Barra does not seem concerned that it might drop lower.

Here, we see some of the "legacy" firms realizing that the age of the conglomerate is over and that smaller, more focused is better… a lot better.