My first two predictions for 2020 — IBM and Trump
For 20+ years I've been writing predictions every January and I guess I'm doing another set now. But this time will be different for several reasons. For one, January is almost over, so it will slough over into February. For another, I always start by going back to the year before and grading my previous year's predictions. I'm the only guy in this business who does that. But this year I am going to bury the score a bit because I need to start with a prediction or two simply because both are immediate and really can't wait. So I'll do the scoring on Monday, but today I have two 2020 predictions to get out of the way. And, finally, there is one more difference between this year and every other: this year I'll not just say what I think is going to happen, I'll also say what I think should happen. I'm old and cranky and there are only a couple of these so just bear with me.
Prediction #1 - IBM sells a division and disappears into Red Hat. My first prediction - actually a whole series of predictions - is about IBM. Readers tell me, "Nobody cares about IBM anymore!" but I can't shake the lingering shadow of Big Blue, so please humor me.
On Thursday IBM shares got a big boost because Ginni Rometty stepped-down as IBM CEO. Ms. Rometty was a failure as CEO, not because she was a woman but because she was a bad corporate visionary. Following Sam Palmisano - the luckiest SOB in American business - Ginni Rometty just didn't have Sam's luck. Nor did she have his eye. She bought 57 companies in her time running IBM. How many of them can you name? How many of those acquisitions can you say were successful? Red Hat, maybe?
Here's what just happened at IBM and what will happen next. Despite the shuffling of chairs, Ginni Rometty is still in charge for another year as chairman, during which time she'll fine-tune her golden parachute and prepare IBM for yet another transition that will happen when she actually leaves the company a year from now.
IBM has three divisions - Global Technology Services (GTS), Global Business Services (GBS), and Red Hat. GTS is the legacy IT business, GBS is the professional services business invented by Lou Gerstner to save IBM the last time it was in huge trouble, and Red Hat is Linux. GTS - that part of IBM most of us still think of as IBM - will probably be sold by summer. Either it will go to private equity (depends on the total debt load) or it will be sold to HPE or maybe to Oracle. Either way, it's not a likely success story, but Rometty has no real choice. IBM is, at this point, smoke, mirrors, and buybacks. The GTS windfall will land in Ginni's final quarter, juicing her payout, which might be the major point of the deal.
Whoever buys GTS will be a big winner for a few years. The losers will be all the IBMers who go with that deal. There will be massive layoffs of redundant staff, salespeople, and support teams. Profits will soar as the IBM staff is fired. The new owners will create a cash cow to pay down the purchase price while expanding their IT footprint. But supporting data centers and large integrations of hardware are so last century"
IBM's new CEO is Arvind Krishna, formerly head of the Cognitive Computing unit - IBM's cloud guy. Except Cognitive Computing was never really cloud. Cognitive has been a mishmash of cloud, supported by revenue streams that are anything but cloud. It's cloud in name only and will be the part that goes next summer, possibly with Mr. Krishna still at its head.
The next chairman of IBM after Rometty will be current Red Hat CEO Jim Whitehurst. If Whitehurst is as smart as I think he is, he started yesterday looking for a new job. It's not that he really intends to leave, but as the next savior of IBM, Ginni et al will pay anything to keep him.
Cut your new deal now, Jim, while demand is greatest.
Whitehurst will turn IBM into Red Hat, which will take HQ to North Carolina and mean most of the remaining GBS staff will be gone in a year. That's because software is everything for Red Hat, which means certifications proving staff can actually do what they are being paid to do. But IBMers don't believe in certifications; they are IBMers. In the end, nothing can be done for these people, so the answer will be to release anyone without the proper certifications, helping Red Hat realign the company in 2021.
It still won't save IBM.
They'll go down in the coming year or two along with the rest of the industry we used to call IT. I'll explain more about that in another prediction next week.
Let's just say that IBM's loss is AWS's gain.
Now for a prediction based solely on my 50 years as a journalist. Since it has nothing much to do with tech, you should probably stop reading"
Prediction #2 - The Deep State has a last laugh at Trump.As I sit here writing, the Trump Impeachment is streaming on my computer and I predict we're all about to have a Pentagon Papers weekend.
President Trump isn't very nice to the help, from what I've heard, and in his current gig, "the help" is a couple million federal workers, many of whom are deeply offended by the President's policies and his contempt for what they think of as their careers.
Don't piss-off the help - a lesson that Trump seems to have failed to learn.
The prospect of a Trump impeachment victory will, I think, be seen by some career federal employees as an opportunity for them to respond with that Pentagon Papers moment. The pending Senate vote is a tacit call for someone - anyone - to come forward with documents that will shake-up the impeachment proceedings and strengthen or otherwise augment the case for Trump's conviction in the Senate next week. So it has to happen by Monday.
This is an interesting game. Somebody right now is getting to work knowing that they have in their files something far worse for Trump than Ukraine.
It is unlikely to be a matter of yet another angle on the same Zelensky story, it will be something entirely new - an informational shot to the head that the President won't ever see coming. Payments from oligarchs, outright stealing from the government - it could be anything. It could be everything.
Maybe this smoking gun I'm describing doesn't exist, but given the President's history, would we really be surprised if there's something waiting to be revealed that is beyond horrible for America? Something too big, too bad, and too blatant for even Mitch McConnell to ignore?
I'd put the certainty at 99+ percent, but somebody in the know has to cough it up. That coughing can be pretty casual, really: no subpoenas, no declassifications, just send it anonymously to the big papers. Remember Daniel Ellsberg didn't have to wait for a Supreme Court decision to do the right thing.
This must be a thrilling time in the life of President Trump. He loves to flirt with danger. If he has done something blatantly illegal and self-serving, his world is now totally filled with potential snitches. There is nobody the President can trust, from Presidential appointees to Marine guards, to the FBI agents he has worked so hard to revile and alienate to the West Wing lunch ladies.
This weekend in Washington should be especially interesting.
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