Ginni Rometty, CEO, president and chairman, is stepping down, IBM announced Thursday. She will remain executive chairman of the board through the end of the year before retiring.
IBM's board of directors named Arvind Krishna CEO and a member of the board, effective April 6. Krishna serves as senior vice president for cloud and cognitive software and helped lead IBM's blockbuster acquisition of Red Hat in 2018.
The company also appointed James Whitehurst, senior vice president of IBM and Red Hat CEO, as IBM president, effective April 6.
Rometty has served since 2012, ushering the company into the modern era of cloud computing and setting sights on the future of technology. As CEO, her goal was to position the company to play a role in customers' future, as it has since the dawn of mainframes.
During her time as CEO, IBM acquired 65 companies including the $34 billion acquisition of Red Hat, which gave the company an edge in the hybrid cloud market. The deal illustrated to customers how IBM was innovating and responding to market trends, in fierce competition with Amazon Web Services, Microsoft Azure and Google Cloud.
Rometty "steered IBM through a very tumultuous period in the industry that challenged its roots, where it came from as a hardware provider and then getting into services," Craig Lowery, VP analyst at Gartner, told CIO Dive. "I think steering the company to the Red Hat acquisition showed that she was willing to take the right kind of risks to help IBM pivot where it needs to. But the question still remains, was it the right choice? We don't know yet."
Investing in research and development, year after year IBM is granted the most patents in the U.S. In 2019, it received 9,262 patent grants. In 2018, another 9,100.
This has helped buoy the company through years of lagging sales. And long-term customers help sustain its portfolio.
A company with this kind of size and history is expected to have a broad portfolio and organization that goes in many directions, Lowery said. "There's always an opportunity to rationalize the portfolio."
This is something Microsoft has done well with Azure, he said. Industry knows where its priorities lie in the market moving forward. "We've yet to see IBM be quite as strong, other than the acquisition of Red Hat because of the size of it, and these leadership changes are carrying that narrative through."
Naming a cloud executive CEO alludes to which direction IBM will pursue as the market shakes out.
In 2019, IBM launched a bank-focused public cloud in collaboration with Bank of America. Such an initiative capitalizes on legacy customers while meeting the needs of a specific vertical, a direction the IaaS market is going.
IBM's new leadership team, Krishna and Whitehurst, establishes the pillars of the company's focus moving forward. IBM is banking on the future of open source with Red Hat and will capitalize on Krishna's experience to weave in existing IBM clients.
Now they have to focus on getting the value out of the deal, Lowery said.