IBM Shakes Up Hardware Business, Channel Leadership In Prep For 'Cognitive' Push

IBM has done a big shake-up of its hardware business and channel in the wake of a falling storage and systems business and in preparation for a push on its cognitive systems branding.

Source told CRN that Big Blue has quietly shifted several executives in the storage, Power Systems, and channel areas, and some of those changes were also reported in the IBM-focused newsletter IT Jungle.

The changes come after IBM on January 19 reported falling hardware sales for its fourth fiscal quarter of 2016, which ended December 31. IBM, in the fourth quarter, saw flat year-over-year sales in its cognitive systems and industry services business, and 2 percent growth in its technology services and cloud business. But it reported a 12 percent drop in hardware sales compared to last year's fourth fiscal quarter.

[Related: IBM Goes For High Performance, Capacity, Availability In New All-Flash Storage Family]

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Leading that data center hardware decline was a 34 percent drop in Power Systems and a 10 percent decline in storage sales. However, IBM's z Systems mainframe business revenues did rise 4 percent over that same period.

On the channel side, 30-year-plus IBM veteran Michele Stern late last month became IBM's managing director for its business with Arrow, the Tempe, Ariz.-based distributor. Stern had served as served as vice president of North America business partners since July of 2015.

Taking over for Stern to manage North American business partners on an interim basis, according to a couple of channel sources, is Neal Callahan, who is currently vice president for North America channels for IBM's Systems and Technology Group.

An IBM spokesperson confirmed Stern's new role, but was unable to confirm changes in Callahan's role. The spokesperson was also unable to respond to the other executive changes.

CRN has also learned that Paulo Carvao is, as of late January, IBM's new general manager for IBM systems client success, where he is responsible for routes to market for the company's compute infrastructure and Cognitive Systems. Before his new role, Carvao had served as general manager for IBM's hardware sales.

Sources also told CRN that Doug Balog is, as of late January, IBM's new general manager for worldwide storage client success, where he is responsible for global sales of IBM's software-defined storage and storage systems. He previously served as general manager for IBM's Power-based server business.

Robert Picciano, who has served for several years as senior vice president of IBM's Information and Analytics Group, is taking a new role as senior vice president of IBM's Cognitive Systems, according to IT Jungle.

Cognitive Systems appears to be a rebranding of IBM's Power business, according to channel sources and IT Jungle. This is despite IBM's move in the last couple years to label its Watson services with the "Cognitive" brand.

IBM seems to be looking to have all the changes in place before its upcoming Partner World conference, one solution provider close to IBM told CRN on condition of anonymity.

IBM has been working on rebranding parts of its business including the Power servers with the Cognitive moniker, but is not quite there yet, the solution provider said. "The branding has not yet reached that level, and doesn't yet make sense to everyone," he said.

IBM has done well with its Watson business, which carries the "Cognitive" moniker, but needs to keep driving advances to fend off a wide range of startups that are nipping at its heels with a variety of analytics and other software, the solution provider said.

"Watson is in many ways built on technology that has been around for a while," the solution provider said. "Startups are saying, look at our software that was built on cognitive computing. Much of the software that has gone into Watson was not developed specifically for Watson. Look at Watson Explorer, which used to be known as IBM Explorer."