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IBM CEO Rometty swaps heads of strategy and servers

Musical boardroom chairs – possibly related to x86 server and other spinoffs

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Ginni Rometty, who has been CEO at IBM for a year and a half, is making two big changes in the upper echelons of her management teams; she is swapping the head of corporate strategy and the head of its Systems and Technology Group, and it is presumably to get better results than IBM showed in its first quarter of 2013 in its systems, storage, and chip businesses.

The very small game of musical chairs may also have something to do with a rumored spinoff of all or a portion of IBM's System x x86 server business to Chinese PC and server maker Lenovo Group. IBM has not confirmed or denied those rumors, and Lenovo merely said to the Hong Kong Exchange where its stock trades that it was in talks with someone to possibly buy something.

Rometty announced the executive changes in an email sent out on Wednesday, and it sees Rod Adkins, who has been running the Systems and Technology Group (well, sort of, and El Reg will explain in a moment) for several years, exchange jobs with Tom Rosamilia, who has worked for Adkins running IBM's System z mainframe and Power Systems businesses. This is what the email to IBMers from their CEO said:

Effective today, Rod Adkins will become senior vice president, Corporate Strategy, reporting to me. Rod takes on this role at an important time. As you know, our strategic beliefs about the new computing model, new markets and clients, and the evolution of our own company – our continuous transformation – are really taking hold.

We are in a leadership position, and we will extend it by continuing to act aggressively on these beliefs. Rod comes to his new position with a wealth of leadership experience and insight in both business and technology. We will look to him to bring that leadership and insight to bear in helping to shape our long-term enterprise strategy.

Succeeding Rod as the leader of Systems & Technology Group will be Tom Rosamilia, reporting to Steve Mills. Tom has a rich background in all aspects of systems, from Power and mainframe to WebSphere. Tom will help the STG team further accelerate its transformation in pursuit of high-value opportunities.

Adkins was a possible CEO candidate to replace Sam Palmisano, who stepped down as CEO in October 2011 and relinquished the chairman position at Big Blue last September. Adkins took over as general manager of STG in the wake of the insider trading scandal surrounding Raj Rajaratnam, which caught up Robert Moffat, very likely a much stronger contender for the CEO job until he spilled some beans about Sun Microsystem and AMD deals to the wrong people.

Adkins headed up development and manufacturing for STG and has spent three decades at IBM in various roles in IBM's systems and software businesses.

Rosamilia is also an IBM lifer and is very likely one of the top contenders to be CEO when Rometty retires a few years hence if she sticks to the traditional retirement age of 60. He was named vice president of corporate strategy and general manager of enterprise initiatives, reporting directly to Rometty, when she took over as CEO.

Prior to that, Rosamilia ran IBM's System z server business, and then added on running the Power Systems business during the Power7 transition. And importantly for any executive who wants to be in charge of IBM, Rosamilia has an extensive software background, too.

He joined IBM in 1983 as a software developer for the MVS mainframe operating system and took over as head of development for mainframe software in 1996. He has managed several different database products (DB2, IMS, Informix), and was in charge of development for the WebSphere middleware line for many years.

The question now is precisely what is IBM going to do with Systems and Technology Group. Officially, with Steve Mills being in charge of the combined Systems and Software Group – a combination IBM usually ignores even though it was done nearly three years ago – he is presumably deciding what IBM needs to do to bolster its Power Systems business and spin off what are presumed to be unprofitable x86 servers to Lenovo or someone else.

The most important thing to consider is that two software guys are deciding the fate of hardware at IBM, and they report ultimately to someone with a services background.

It would not be at all surprising to see IBM sell off entry x86 rack and tower servers to Lenovo and then go on and sell its fabs in Burlington, Vermont and East Fishkill, New York to maybe GlobalFoundries or Taiwan Semiconductor Manufacturing Corp and then outsource manufacturing of Power and mainframe processors to the buyer while retaining final assembly for Power, mainframe, and FlexSystem machines.

IBM cannot keep losing money on its hardware business, and it may not have enough business of its own to justify being a wafer baker – especially considering how costly riding down Moore's Law has become. ®

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