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IBM’s big management shakeup

July 2, 2021, 6:59 PM UTC

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IBM kicked off the July 4 weekend with a major management shakeup.

President Jim Whitehurst, previously the CEO of Red Hat, the business software firm that IBM bought in 2019 for $34 billion, is stepping down.

Since that acquisition, Red Hat has become crucial to IBM’s so-called hybrid-cloud strategy. Like its fierce competitor VMware, IBM sells software for companies to manage their IT services, either from their own data centers or those of cloud computing giants like Amazon and Microsoft.

When IBM said in 2020 that former CEO Ginni Rometty would be replaced by Arvind Krishna, analysts noted the significance of the additional appointment of Whitehurst as president. It was an unusual move because IBM doesn’t typically give outsiders such prominent leadership positions. Still, the company was keen to let the respected Red Hat executive help steer corporate strategy following a difficult time. Before he took the job, and during Rometty’s tenure, IBM had experienced 22 consecutive quarters of declining sales.

In IBM’s latest quarter, sales rose a meager 1% to $17.7 billion, underscoring the company’s continued growth challenges.

IBM shares fell 4.4% in midday trading on Friday to $140.36, implying that investors are concerned about the management shakeup.

For what it’s worth, Krishna said that Whitehurst will become his “senior advisor,” but it’s unclear how long that will last. At Salesforce, co-CEO Keith Block stepped down after just 17 months, and then only spent a year as the senior advisor to Salesforce CEO Marc Benioff.

On Friday, Krishna detailed several other leadership moves. Among them, Bridget van Kralingen, senior vice president of global markets and a former member of Fortune’s Most Powerful Women list, is leaving the company and being replaced by IBM executive Rob Thomas. Meanwhile, Ric Lewis, a former Hewlett Packard Enterprise executive, will become IBM’s senior vice president of systems. 

Indeed IBM’s long-running turnaround effort continues. 

Jonathan Vanian 
@JonathanVanian
jonathan.vanian@fortune.com

NEWSWORTHY

Donald Trump’s possible return to social media. President Donald Trump's team has debuted a Twitter-like service, but it's unclear how involved he will be with the site, according to Politico. The new GETTR service says it's “fighting cancel culture, promoting common sense, defending free speech, challenging social media monopolies, and creating a true marketplace of ideas.” The new service comes after Trump, who is banned from Facebook and Twitter, recently started a blog that was soon shut down after failing to draw a big audience, The New York Times reported.

The misinformation plague. The attorney general for the District of Columbia is investigating Facebook over allegations that it's failing to do enough to prevent COVID-19 misinformation from proliferating on its services, Bloomberg News reported. A spokesperson for the attorney general said the probe “aims to make sure Facebook is truly taking all steps possible to minimize vaccine misinformation on its site and support public health.” Facebook, on the other hand, said, “We have consistently provided updates on our blog about our efforts to combat Covid-19 misinformation.”

Big money in big data management. Hewlett Packard Enterprise (HPE) said it would buy technology company Zerto for $374 million. Zerto specializes in software to help companies manage, back up, and protect their corporate data in case of disasters. HPE’s acquisition comes just weeks after it said it would buy Determined AI, a startup specializing in machine learning tools. Both acquisitions show that HPE is investing in its software business, intended to help companies manage and analyze their data.

What a business relationship. New Qualcomm CEO Cristiano Amon told Reuters that his company, whose core business is selling mobile chips, wants to also make a big business out of selling chips to laptop makers. Amon said that Qualcomm hired a team of Apple chip experts to help with its bid. As the report notes, Qualcomm risks losing Apple as a major customer because the iPhone maker is designing its own smartphone chips “to displace Qualcomm's communications chips.”

FOOD FOR THOUGHT

The cost of the cloud. A provocative piece from Andreessen Horowitz partners Sarah Wang and Martin Casado questioned whether businesses are indeed saving money by using cloud computing services from companies like Amazon and Microsoft. Using examples from firms like Dropbox, which decided to build its own data centers after years of only running on Amazon’s cloud, the venture capitalists explained the “paradox” that cloud computing can be both a cost saver and a money sucker. At a certain point, companies need to evaluate their cloud usage to determine if they can cut their tech spending by running their IT services the old-fashioned way: in their own data centers.

Now, The Economist has decided to pontificate on the nerdy world of “cloud economics” in an analysis of the Andreessen Horowitz piece. As the publication explained, Andreessen Horowitz is concerned about the potential high cost of cloud computing because it can affect the profit margins of the startups they invest in.

From the article: Mr Casado and his colleague, Sarah Wang, estimate that a group of 50 such publicly traded software firms could halve their cloud bills by doing the same, collectively saving $4bn a year. That could, using generous price-earnings multiples, improve their market value by around $100bn. You don’t have to be a super-sleuth to suspect an ulterior motive: if Silicon Valley unicorns take the hint, higher valuations could make venture capitalists like Andreessen Horowitz more money when they go public.

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BEFORE YOU GO

Sound the alarms? Neighborhood dogs will undoubtedly be barking late into the night on July 4 at the sound of fireworks. For law enforcement in Sacramento, Calif., the noisy holiday poses a challenge: the celebration can sound like gunshots.

The Sacramento Police Department and Sacramento County Sherriff’s are using the gunshot-detection technology from ShotSpotter to help discern the sounds of violence from mere entertainment, according to a local ABC news affiliate report. As the news station reports, “ShotSpotter is a microphone system that is placed across a city that detects noises like fireworks and gunshots and tells law enforcement the difference.”

The idea of installing microphones citywide to monitor illegal activity presents some potential privacy issues, which the report doesn’t address. A Forbes report from 2016, however, digs into some of the privacy questions raised by ShotSpotter, as well as the effectiveness of the technology. A more recent report from industry publication Smart Cities Dive explains that Oakland, Calif. is debating whether the technology is worth the investment.

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