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By Kim Yoo-chul
International Business Machines (IBM) is rebranding itself as a seller of cloud computing and data analytics, which many believe is a transition that carries risks.
But the headquarters of the U.S. tech giant seems to be paying more attention to the current status of its Korean affiliate IBM Korea that is losing its luster and trust under an ongoing managerial vacuum.
Despite worsening balance sheets, IBM Korea is still resistant to changing its stiff pricing strategy on mainframe products.
IBM Korea General Manager Jeffrey Rhoda has been tasked with implementing measures or contingency plans to save the subsidiary from further falls; however, he was forced to take the top seat as IBM's Korea business isn't that attractive, at leastfor IBM executives who want to be promoted or take a bigger role in China and other lucrative countries, sources said.
"IBM Korea is like a big ship that is to sea without knowing its final destination. The role of its Korean head is questionable. Some say Rhoda has more interest in checking internal affairs than coming up with measures for improvement," said one source, Wednesday.
Terms of Rhoda's contract were unknown. IBM has a rotating system to let its executives get senior posts in countries that the U.S. giant has operations in. That means, the authority of the Korean regional manager is limited as they want to use Korea as a stepping stone to further posts.
In this situation, its systems unit, the most critical business division of IBM Korea, is failing to impress despite its latest decision to replace the division head.
IBM Korea recently brought in an executive from SK Telecom to change the unit, which mainly handles the mainframe business. He previously worked for IBM before he went to the country's top mobile carrier.
"Local banks have less interest of IBM's mainframe systems as IBM products are less competitive in terms of pricing compared to those offered by key rivals Oracle and Hewlett-Packard (HP). Also, its storage business division has fallen under growing attacks from HP and EMC. Its systems unit has no option but to report a fall in profits this year from the previous year," said another source.
"I don't know whether Rhoda has seen reports or received regular updates about the continued dismal performance of its key unit," sources familiar with the situation said.
IBM's mainframe systems for use in local banks, institutions and public organizations were kicked out by Kookmin Bank and reduced at Woori Bank, the country's two leading banks.
It remains to be seen whether or Rhoda will find a new job or have a higher mission; his predecessor Shirley Yu-Tsui moved to the CEO post of Visa China.
The systems unit, a combination of hardware and software division at IBM Korea, reported profits of 438 billion won in 2014 from 553 billion won in 2013 and 582 billion won in 2012, it said.
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