IBM Should Spin Off Its Legacy Business Of Installing Software And Consulting Services

Summary

• Installing software on premise and offering software as a service on the cloud are two incompatible businesses for IBM.
• A separation of the two helps IBM both salvage the declining legacy software business and further promote the rising cloud business.
• Having two different software operations is the natural solution, given that eventually software products will be different for on-site installation and on-the-cloud access.
• A spin off would benefit shareholders with fairer valuation on the legacy business and potentially some uncovered value for the rest of the IBM.

IBM (NYSE:IBM) has in the past been known for taking initiatives to adapt to changing technology and business environments, most notably the divestiture of its early PC operation and recent sale of its older server business. Over time, IBM has built itself into a more focused provider of software, consulting, system and data analytics. But within its narrower business realms, technological changes continue to bring new challenges. One that's in the forefront now is the shift in business software use from on-site installation with follow-on consulting services to off-site cloud subscription services via the Internet.
IBM is making strides with its own cloud offerings to tailor to the changing needs of many business clients, now preferring to purchase software with ease and flexibility on the cloud. However, the company continues to retain its old system of selling licensed-based software under this new business scheme with no real compatibility between the two. This will eventually come as a great concern for the company when its own history of many innovations at different times demands at last a similar action amid the current technological change.

see more: http://seekingalpha.com/article/3331135-ibm-should-spin-off-its-legacy-business-of-installing-software-and-consulting-services