IBM May Be Selling IBM Watson Health to Focus on Cloud Computing – HITInfrastructure.com

February 26, 2021 -IBM is looking at a potential sale of its IBM Watson Health Business to streamline the company and become more competitive in cloud computing, according to a national news report.

The unit leverages artificial intelligence to help hospitals, insurers, and drug makers manage their data. Overall, the unit generated annual revenue of nearly $1.5 billion, but it is currently not profitable, The Wall Street Journal stated in its report breaking the news.

The units brands include Merge Healthcare, which analyzes mammograms and MRIs, Phytel, which assists with patient communications, and Truven Health Analytics, which analyzes complex healthcare data.

The company paid nearly $2.6 billion for Truven in 2016, $1 billion for Merge Healthcare in 2015, and around $230 million for Phytel, according to FactSet.

The corporation is currently studying alternatives for the unit that may include a sale to a private equity firm oranother industry player. The company is also reportedly considering a merger with a blank-check company.

Hybrid cloudis an IT architecture that incorporates a specific degree of workload portability, orchestration, and management across two or more environments. One of the main reasons healthcare companies look to deploy hybrid clouds is for control over IT spending, as those that used public clouds spent 26 percent of their annual IT budget.

This number is set to increase by 35 percent in 2021.

IBM has a market value of $108 billion, but has faded to the background as cloud-computing rivals Microsoft Corporation and Amazon rise to valuations over 10 times greater. IBM hopes that its shifted focus to hybrid cloud operations could increase its overall revenue.

In mid-October 2020, IBM announced that it is splitting into two separate companies to boost its hybrid cloud growth strategy to drive digital health information for its clients.

The company'sspinoff (NewCO) will operate its Managed Infrastructure Services unit of its Global Technology Services division. It will be the worlds leading managed infrastructure provider and will have partnerships with more than 4,600 technology-intensive clients in 115 countries.

At the time, IBM noted that it will focus on its open hybrid cloud platform, which represents a $1 trillion market opportunity. The company also tapped Red Hat to unlock the full value of the cloud for clients.

Back in 2019, IBMacquired Red Hat for $34 billion to boost innovation by offering a next-generation hybrid multi-cloud platform.The company saw the deal for Red Hat as an opportunity to gain on competitors in cloud computing.

The platform facilitates the deployment of AI capabilities to enable the power of data, application modernization services, and systems, IBM said in the July announcement.

IBM's open hybrid cloud platform, based on Red Hat OpenShift, enables a hybrid cloud approach that drives up to 2.5 times more value for clients than a public cloud-only solution.

In November 2020, IBM signed a definitive agreement to acquire Instana to help businesses better manage the complexity of modern applications that span the hybrid cloud landscape.

Instana will help IBM overcome challenges of managing application performances across various spaces and across two to 15 clouds, IBM explained in the November announcement.

Additionally, the collaboration will help further IBMs Hybrid Cloud and artificial intelligence (AI) strategy that strengthens its AI-powered automation capabilities. The partnership will include the launch of IBM Watson AIOps and the acquisition of WDG Automation.

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IBM May Be Selling IBM Watson Health to Focus on Cloud Computing - HITInfrastructure.com