IBM’s Red Hat Deal Laid Foundation for Split of Company Into Two Pieces

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“Red Hat gave us the confidence to do all of this,” IBM Chief Executive Arvind Krishna said after his company announced a restructuring

By Steven Rosenbush Oct. 8, 2020 6:55 pm ET International Business Machine Corp.’s acquisition of software company Red Hat last year helps underpin the technology and economics behind IBM’s decision to restructure.

“Red Hat gave us the confidence to do all of this,” IBM Chief Executive Arvind Krishna told The Wall Street Journal. PREVIEWSUBSCRIBE Mr. Krishna said there is plenty of room for growth and that the long-term winners in AI and the cloud are still to be determined. “We are only 20 to 25 percent of our way into the cloud journey. We are only 4 percent of the way into the AI journey,” Mr. Krishna said.

Red Hat, which IBM bought for about $33 billion, is key to what Mr. Krishna called the latest enduring platform in the company’s 109-year history. IBM said it has already built platforms in mainframe computers, information technology services and middleware, a term for software that sits between operating systems and narrower applications.

 

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