Tech Giant IBM Closes Blockchain Division Due To Covid-19

IBM has cut its blockchain team down to almost nothing after failing to meet revenue targets by 90% this year, according to CoinDesk. 

February 2, 2021 | AtoZ Markets – Tech giant IBM has almost completely cut its DLT technology department. According to CoinDesk, sources familiar with the situation attributed this to the failure of the revenue target by 90%.

Over the past year, they said, IBM cut over 100 blockchain-related positions in a "major reorganization."

The management decided to take this step after the division did not meet expectations in the context of the dynamics of financial results over the past two years. The team "failed to reach benchmarks despite the conclusion of various deals."

IBM denies claim it cut back on its blockchain unit

The company has, however, denied these claims it has greatly scaled back its blockchain unit and laid off the majority of the unit’s staff.

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“Our blockchain business is doing well. We have reformatted some of the divisions and their leaders during the annual review,” commented Director of Public Affairs Holly Haswell.

An interlocutor of the publication who worked at IBM does not consider this a regular occurrence.

“According to my estimates, every tenth employee remains in the blockchain division after the reorganization. The company has focused on hybrid cloud computing, the rest has been removed from the priorities, ”he explained.

IBM became one of the pioneers of the DLT space in 2016, investing large sums in technology with the potential to transform the business.

According to sources, the company's activities have now been reduced to research, while consultations have been discontinued. This casts a shadow on the use of blockchain in enterprise solutions and the prospects for the Hyperledger consortium, of which IBM was a prominent participant.

If in 2017 the tech giant called itself a "blockchain leader for business", then in the last year's report it eliminated any mention of DLT.

Over the past years, IBM has launched several projects under Hyperledger Fabric, including the largest retailer Walmart and the logistics leader Maersk. The interlocutors of the publication believe that the change in strategy is explained by the Covid-19 pandemic and the focus on profitable divisions.

Recall that at the end of 2020, IBM released a report on the use of blockchain in global markets.

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