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Arvind Krishna

lines on the record: 81
first: 2025-12-01
most recent: 2025-12-01
sittings or episodes: 1
sources: podcast

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“We took a tool we built ourselves, we didn't use one of the industry tools on code to help our people do software development. Within four months, the team who embraced it, which is 6,000 people, so not a tiny number, was 45% more productive. Just to compare, because we have 30,000 others who don't yet use that tool compared to them. So those are real numbers. We are going to grow those teams. We're not trying to cut any of them. Because if I can be that much more productive at software development, that means that we can build a lot more products, which means we can go get more market share. It doesn't mean that it's a fixed amount of work. I think the amount of work is infinite. So we can be more productive. The calculus always is if it's that expensive to build it, is there enough margin in what I get built that it's a viable business? So if the answer is it's cheaper to build it, hey, I can sell it cheaper and still have great margin.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I think because people got trained in a certain set of technologies and people who are experts hold their expertise, they don't acknowledge it, but deeply is their identity. Now suddenly they go into work and the person who's been coding a product for 10 years finds that a kid coming in from college using some Gen AI tools is three times faster than them and they didn't know the code, but the AI knows the code, but they know how to use the AI.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Look, I've held a view for many years. People talked about, look, with all the wars, with all of the cyber attacks, with all these things, with interest rates, oh my God, doom is coming. GDP is going to fall. I kind of held the view, look, if I look at the demand, I think that global GDP growth near 3% looks likely. By the way, that ignores inflation. So in real terms, we are like 5%. I think that those two together are probably going to hold for quite some time.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Short sighted. But I also think that some of this is right now because if you look at the total employment numbers through some of what you talked about, I think people gorged on employment, I've used that phrase, during the pandemic and the year after. So some of that is just a I don't need so many people because I went up 30, 40, 50, 100% from 2020 to 2023. So there is going to be some natural correction. Business is never completely optimized. I think in engineering terms, it's an underdamped system. So when there's a need, it goes above. Now it's got to correct. It probably is going to go below what's needed. And then it'll kind of come to the correct equilibrium depending upon both market demand and growth.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Could there be up to 10% job displacement? I'll use that phrase. I actually believe that's going to be likely over the next couple of years. It's not 30, 40, but it is up to 10. In the total US employment pool, it is very concentrated in certain areas. Now, as you get more productive, companies are going to then hire more people, but in different places. So that was the point I was making. We are hiring more because people say, oh, I don't need the entry-level task, an AI agent can do it. Looking at them, really? Like, think strategically for a moment. Wouldn't I rather take an entry-level person and the AI makes them more like a 10-year expert? Isn't that more useful for me than the other way around? Because then where is my talent who's going to come up with the next great product? Where is the person who's going to be able to convince a client to deploy technology the way it should be deployed? So I think that's why I think maybe some are being...”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'm happy that Frontier is good. Let me just end by sort of talking about the near term, right? We spent a lot of time talking. We just need the gloss of external validation to make the changes that we're already going to make or make the layoffs that were already going to happen. And that is McKinsey's function in the world. And boy, that's a lot cheaper and faster to do by just letting the AI make the deck that no one ever reads in the end. I feel like I see that playing out. How do you think people should react to that inside of the timeframes that you are talking about where the real change comes?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I'm more optimistic than pessimistic. Is there some of what you described happening? Absolutely. But when I look at the number of top faculty, at least in the top, let's call it 20 engineering schools. It's not really decreasing. Is there some funding cuts? But we're talking like under 10%. It's not like it's massive. Other areas that are not the hard sciences by hard sciences I'm in physics, chemistry, math, and engineering, yes, there are much larger numbers than some of the others, but that's not where I spend my energy thinking. So if I think about sort of physics and hard engineering, I'd say there is some cuts, but it's not that extreme. I also look at the national labs. No cuts. So, hey, it looks pretty good.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“No, because I think that that is when it is so, so unknown, it should not be really companies that chase it. I think that academia should chase it. And I do think that there is enough AI researchers in academia who are going to be working around these topics. But when you don't make enough progress, there isn't going to be any media coverage or any other coverage. But from me talking to my friends, whether at MIT or at Illinois or at Chicago, there is work going on. I mean, like, it's just not occupying attention because the complete airways is LLMs only.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“A comparison I would make is there's now a core technology that everyone feels very invested in. You know, when I go to San Francisco, I live in New York and when I go to San Francisco, I joke that it's just a different planet. Everyone is much more optimistic about AI than I am maybe. And I look at the companies that are springing up, right? The people that have left Open AI to start superintelligence companies or AGI labs, they are all still betting on LLMs, right? The core of their work is still LLMs. The idea that you can feel the AGI is a lot of people using Claude to write code and saying they can feel the AGI. Are you worried that there's not enough investment in the stuff around the edges that might supplant or augment LLMs?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Don't know. I suspect there is. But we don't know. The same way as in 2016, you couldn't predict the current LLM technology.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“People who look at like golf ball trajectories, baseball, tennis balls, that's all machine learning. It's not being replaced. Really useful. But it's not going to answer questions. Deep learning will be replaced with LLMs. I actually think LLMs are here to stay. I don't think they'll go away. But what I'm on is, but that's not the end technology in AI, which is the next one and which is the next one will be an ad to. There's machine learning. I think that's robust. I think there's LLMs. I think that's robust. But it's statistical in nature. And so where's the deterministic piece? Where's the knowledge piece? And is there something beyond LLMs? Look, this stuff is 80 years old at this point. The first paper, I think, was 2017 when intention and this approach came to me. Intention and transformers, the two together. Is there another one?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“So let's look at three maybe. Machine learning was not actually replaced. Machine learning is incredibly useful for lots of simple tasks. Your little thermostat thing in your house uses machine learning, not LLMs.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“No, I'm actually, that was my question, and you started answering before I asked it. I'm on the same path as you. I think I look at what LLMs can do today. I look at how people talk about the scaling laws they might hit that need for more data that doesn't necessarily exist at the scale it might be needed. And I say, I don't think LLMs can do it. Like, I don't see here to their path for this technology to get to whatever everybody says it can do. And I would just connect that to what we started with, which IBM developed Watson and it was very good at its tasks. And it wasn't the right set of bets at that moment. And you had to pivot it. Do you see a next technology that LLMs would have to pivot to or that the AI industry would have to pivot to?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I think that this current set is great. I think it's incredibly useful for the enterprise. I think it's going to unlock trillions of dollars of productivity in the enterprise. Just to be absolutely clear, that said, I think AGI will require more technologies than the current LLM path. I think it will require fusing knowledge with LLMs. And we have words. I'm not sure that's the only way to create knowledge. People talk about neurosymbolic AI. But I think if I just say knowledge in a broader sense, hard knowledge that people have spent thousands of years discovering, if we figure out a way to fuse knowledge with LLMs, maybe. Even then, I'm a maybe. I'm not like 100%. But that's just sort of a geeky technical view.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“It's a belief that one company is going to be the only company that gets the entire market. I got it, that's a belief. That's what some people like to chase. And I understand that from their perspective, that's different than agree with. Understand is different than agree. And so I think it's fine. I mean, like they're chasing it. Some people will make money. Some people will lose money. And all the infra being built will be useful if it goes away. But if they make it, then they are the sole surviving company. I am not convinced, or rather I give it really low odds, like we're talking 0 to 1%, that the current set of known technologies gets us to AGI. That's my bigger gap.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“By the way, I love it. So at today's costs. So let's just ground in that because anything in the future is speculative. It takes about $80 billion to fill up a one gigawatt data center. Okay, that's today's number. So if you are going to commit 20 to 30 gigawatts, that's one company. That's a 1.5 trillion of CapEx. And to the point we just made, you got to use it all in five years because at that point you got to throw it away and refill it, right? Then if I look at the total, this things, the total commits in the world on this space of the chasing AGI seem to you like 100 gigawatts, at least announcements. That's 8 trillion of CapEx. There's no way you're going to get a return on that, is my view, because 8 trillion of Capex means you need roughly 800 billion of profit just to pay for the interest.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“The other one is a classic Silicon Valley startup. Some will succeed, some will not. I'll offer you an opinion. First, I don't think deeply about the whole consumer side and how much money they'll spend. It's interesting to observe, but I'm not going to pretend that I deeply.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Of the ones you mentioned, one has a huge amount of cash flow and ability to invest. So for them, it's not existential, but something that could be incredibly profitable.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Market estimate, or even whether consumers want that product, right? It's just a pipe dream. How do you reconcile those two things? Like really the bet is there will be AGI. At the end of the day, that is the whole market is someone's going to figure out AGI and then all of this will have been worth it. The press release from Microsoft announcing the restructured deal with OpenAI several times mentions in bullets that the terms expire when OpenAI declares AGI. I read that and I thought that this is the most remarkable press release I've ever read in my entire life. No one can even define this term and now two of the richest companies in the world are issuing press releases saying their deal will restructure itself when that happens. That's very different than your bet on quantum. How do you read that discrepancy?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Would call that a very sober, very thoughtful, conservative almost approach to deploying billions of dollars in CapEx against a technology that has not yet proven itself in the market, right? You've made some estimates. You have an idea of what your company can do to add value. You're going to do the hard research and then you're going to get there. I would just compare that to open AI, right? And the AI market that we see today, just this week, OpenAI, they converted to a for-profit. There's reportedly a trillion dollar IPO coming. There's everything we've talked about in the enterprise space where you can see maybe how AI and enterprise can help accelerate use of data and all this unstructured data that companies have fun. But the bet is in the consumer space, we're just going to build a full fledged agent that's going to run around and do stuff for you, and that will replace your smartphone. And none of that seems sober or conservative or based on a real.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“So, you need all those things, and I think we are one of the unique players who have a lot of those skills in-house. So it unlocks people to go do that and really, really motivates them and excites them. And I think that that is an advantage, I think we have today in terms of the underlying skills.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“And the last part, why us? I assume all of this, which I talked about, others could do. So then why would we succeed? Because I think it's much more. There's so much talk, and you mentioned the various Qubit technologies and cold rooms and alternate technologies. And I actually love the fact that there is that much. But that's not building a computer. And I always tell people, you need a great QPU and a great qubit. Absolutely. You also need a way for them all to talk to each other. You also need a way to go control all of them. You also need a way that it functions by itself. Without six quantum physicists standing in the room tuning it.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“That's a lot of action in 24 months. That'll be a very exciting two year period if you hit it. This is really interesting to talk about in comparison to AI, right? You're talking about how you estimated the market size for a nascent technology that you have to develop actual capabilities for You estimated how much of that market share you could take. And then you're obviously making some investments based on the potential return.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“It's really hard on hard engineering to put a dot and say, you know, this is not like building the next mainframe. There, I really know what I'm doing. I know exactly how many months it'll take and I can put. Here I kind of gave it a spectrum. Will we get to something remarkable in three, maybe three and a half years? I'm going to give it low odds. It's possible, but it's maybe 20, 30 percent Can we get there in four years? My odds go way up. Can I get there in five years? My odds go really high. So that's why ICF. Not to say it really is there. I think it'll be a bit of a spectrum. You will see some really early adopters come in. I'm hoping in three to four. Then there'll be more at the end of four maybe. And then the risk decreases for people after that.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Triangulat So we asked a couple of our friends in the consulting world, BCG McKinsey, hey, tell us, if we can arrive at some utility point, what do you think the value is? They both came back and gave us a pretty consistent answer, very slightly. But think of it being we think there's four, five, six, seven hundred billion of value in the early years per year. Great. How much do you think the tech world could get out of that? Probably 20 to 30 percent seems reasonable always. I said, okay, that's the size of the prize that we're going to chase. Now, how much of that share will we get versus others is sort of the question. And that's the journey we're on for the next five years.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“So it's an and. But the next one, if it has more immediate value, you can price at a different price point. Does that make sense? I think Jeep is quantum, so let's just use the word QPUs just to keep it simple. When they come are going to have an incredible value because they can solve problems that you actually cannot solve on GPUs and CPUs in any economic terms in the near term. The same way, look, everything you can do on a GPU, you could do on a CPU, just to be straightforward. But it's going to be a thousand times slower and not be maybe economically feasible. So GPUs opened up a whole class of new problems. QPUs are similarly going to open up. It's an AND. It's not a displacement. But given the finite dollars in the world, if there's an AND and we have a first mover advantage, like one of the companies you named did in GPUs, that opens up a possibility that the market is that big. So we did work because I don't want to.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I actually think that it's an and so if I call it the CPUs. GPUs did not replace CPUs, it was an AND. Now, GPUs are priced much higher than CPUs, so the market is bigger for GPUs than CPUs, but it was a complete and. It didn't displace what AMD and Intel and ARM do, just to be straightforward.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“So I'm curious about that, right? That is the kind of long term bet and the sort of early interest from people who think, okay, this type of computing will let us do many more things. And, you know, it's funny on the consumer side, I hear about it in terms of, well, when there's quantum computing, we'll need quantum proof encryption. And it's like there's a secondary market now based on whether or not you will succeed in quantum computing that almost has nothing to do with the quantum computing succeed. It's a bet, right? It's like it's a strange hedge against your success or Microsoft's success or whoever else is doing quantum. What is the actual success look like? Is it a step change in computing?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Even from clients. And then I said, how do I know there's enough interest? So I asked the team, put the software out open source. Now, I'll say for many people, including some of the current AI, that's not a common this thing that you do early on. I said, why open source? How will developers and universities use this stuff and get any excitement if you put a price to it? So we put out all our software open source. The fact that $650,000 people globally who use it, hey, it tells me that there is excitement and there is a movement and people are hungry for a new approach to do other kinds of problems. So those were the two validations on my framework that were useful. If that 650,000 had been 100,000, I might still be okay. The fact that it's 650 tells me there is real, real traction.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Commercial. There are 300 people working with us in a let's call it a research mode, a hundred that are pure in the end commercial, 100 over in the world of materials or medicine, and 100 who are pure academics, right? Rough buckets. That's why HSBC proved to itself we could do bond trading pricing on it. Vanguard proved to itself that if they get big enough, we could do a portfolio that better appeals to your needs. You have Daimler working on EV batteries. I have Boeing looking at corrosion on materials. So there is a proof point. They're not saying they'll buy it the way it is today. All they're saying is, hey, if you get to that point, this is really interesting to us. So there is a validation.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“You are right that you can't go check it with the customer because they don't know what to do with it today. But that's not fully true. So the first five years, 2015 through 2020, you got to have a belief of what it could do. And maybe because of some of my graduate school math background, it was like, wow, if we can do that, I can immediately see what kind of problems could get unlocked. But trying to explain that to anybody, but the people excited in the field is impossible. So let me completely acknowledge those five years is about an internal bet on a set of people and a possibility. Okay. But 2020 onwards, we began to say, got it, these are not utility scale. Let me acknowledge it. They're full of errors. They are small. Clients still get excited by it. So I did do a full check. We have 300 clients.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Put that into practice on kind of the farthest bet you're making, which is quantum all the big tech companies have quantum divisions. I've had Jerry Chow who runs part of your quantum team on the show before. That was a great conversation. I've looked at a lot of rooms where someone tells me that this is the coldest place on Earth to run their quantum, whatever qubit they're trying to generate on that day. None of that has paid off yet, right? We're not at close to what they call utility scale computing in quantum. That's not something your customers are asking for yet, right? Like that's outside of the purview of the structure and the culture you're deciding. That's a big bet that there will be a massive step change in how we build computers that unlocks vastly more value for everybody. And you have to keep that investment even through all the turmoil and all the data center investment that everone else is doing and Amazon saying we're laying off 14,000 people because of AI while you're saying we're going to hire more college graduates than anybody else. What is the decision to stay focused?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Deep technologists. I think I generally can understand where the tech can go. But I may not always fully understand what a client can do with the tech. That's why the first piece is really important. Then I triangulate because, hey, I don't know, like, talk to people. Talk to somebody inside. I don't mind at all reaching like 10 levels down in the ark to talk to somebody who I think has an opinion on that topic or knows about it. Talk to possible clients about it. Talk to partners about those things. It just informs your opinion. And maybe even more than that, when you're out talking to them in any case, keep your ears open for what they say that could actually inform some of those things later.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“You've always started with is there a value, if it's a decision that's going to impact what we do and how we do it, does a client benefit from this new way of doing it? If you're pretty convinced of that, and I'll come back to how you kind of get your conviction around it, I always believe that one should triangulate. So I always will talk to a number of people on the inside, on the outside, not maybe with a full description, because sometimes you don't want to give, but enough to validate my assumptions or what could the possible victory be if we made that big decision. You arrive at a conviction, you triangulate it with a few people, and then you ask yourself the question, what needs to change inside if we really want this to go all the way? And once you arrive at conviction and all those, you then are able to go execute. I build on my own strengths. So I think I'm a reason.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Change because he gotta say, How do the sales teams get paid? How do you have the right incentives? So those are sort of maybe the three first really big decisions for me in the first two years. As you do that, you also realize people tend to be very risk-averse. How do you unlock them into taking risk? To me, there's no risk-free path to success. If you want to be risk-free, you're going to be slammed against the bottom end of performance almost always. So how do you unlock risk-taking in people in a way that they feel motivated to do it more often than not?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“If you're going to grow, where are you going to grow? If you look at us, our brand permission is fundamentally being a technology company. Okay, that was scored for high innovation. So that means, now this is where people, I think many companies fall short. If you're clear about that, then things that don't belong in that should not be in the company. So that is why the spinouts that we did, which did take a couple of years to get done. Then I said we have to grow in software because that is where value is perceived by our clients. So if you go to grow in software, so you talk about structure, but that becomes a big fundamental change. That's where capital allocation, that's where resource allocation goes. And that's where you got to put way more investment than you historically have. Then if you're going to go with partners, how do you fundamentally line up with partners? So that is organization.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“My deck was three pages of prose. It was not like 100 pages of analysis. I actually believe that you should talk about what you want. I said we have to grow and my view is very simple. You've got to grow well above GDP growth. Otherwise, you're not going to be that brilliant.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“But just put me in the room. It's 2020. You're going through the interview process with the board. Did you have a deck that says we're doing too much commodity stuff? I'm going to cut it down and we're going to focus on these areas in the big bet.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I have a Red Hat there because remember when we made that decision that was 2018 that we announced it took a year to get through regulators to close it. It was 30% of our market cap very few companies spend 30% of their market cap on a conviction and a belief. So I keep the Red Hat there because to me it was clear. If that conviction turned out to be wrong, I should be fired. I actually don't people hesitate to say those things and I say if I'm that wrong I should not be working here and that is why I keep the Red Hat as a reminder to myself that not only must you have the conviction, then you must do the really hard actions it takes. So that's the culture part of making that conviction succeed because otherwise people will just fall back into the lanes they were in. There's comfort in doing things the way they've always done them.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I probably didn't spend 30 years aspiring to this job just to be up front. I think it was more of a job of discovery even for myself in the last couple of years before that. So I made the hybrid observation deeply in 2017. As I was making that, I said, okay, how do I test this? So I actually had a partnership with Red Hat. And I said it's...”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“No, it's great. One of the things that I think about all the time, a trope on this show is that if you tell me your company structure, I can predict like 80% of your problems, right? You might say culture and structure are divorced, but I see the connection and they feed off each other. So you were at IBM for a long time. Vanishingly few people will ever interview to be the CEO of IBM. What was that process like? Did you come in saying this company is focused all wrong? We got to let go of the commodity stuff. I'm going to make these changes. And then once you had decided to do that, how did you actually change the structure of the company to focus on those things?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“It to really get deployed. That was really the big inflection we made. So as opposed to trying to do lots of things. So that meant I used the word innovation. So that meant commodity services have to leave the company because you can't do both. It meant if we are going to be hybrid, I got to partner with everybody else that I talked about. So you begin with the clear view of what should be done and then you say, then it doesn't matter. I'll make all the hard decisions of changing the way the sales teams are paid, of changing the incentives of all the executives to align with what's then needed to make those things succeed. Sorry for a really long answer.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Actor subscribers. That's not where we have brand permission and brand credibility. But can I walk in to health insurance company and say, I'll make sure that your clients, in this case patients, health data is protected, but let's help AI unlock to make those people feel even happier, get quicker answers, easier answers, and we tend to have the trust with those people that we've never in 114 years misused that data, not even once. So you get that and then you can go give them the tech and get that deployed. So we picked those two. And then I said, what are we really good at? We're really good at building systems. And so the third bet that I decided earlier on is we're going to make a bet on quantum. Now let's see whether we can get it from being a science to being an engineering challenge. And then once it's an engineering challenge, then how do we scale?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Maybe an American cloud and something more sovereign. Okay, then there are people who use plenty of SaaS properties. There's a huge amount of economic value in what they've already written in their pre-existing applications. I'll use the word hybrid to describe that. Is there a place for a vendor to have absolutely leading edge tech to help our clients in that journey? So that's the hybrid approach that we took. And that clearly over time has shown to be of incredible value. About 60% of the total spend is outside the US. Even inside the US, anyone in a regulated industry is going to be hybrid in some sense. That's kind of the first. The second was let's focus on where AI can be deployed in the enterprise. Let's not go try to go compete. I will not try to compete with Google on building a chatbot that goes, what's the current number? I think they talked about yesterday, 650 million.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“It's much more about culture, focus and what we do and how we do it than sort of the formal organization structure. So if you say that you got to be focused on innovation and you got to be focused then on where you can provide a unique value back to your clients. So that's kind of the first question. And I'm clear. Our sweet spot is helping our B2B clients succeed. So you say, okay, well, that's a very big remit. What in there? So I held two points of view that was somewhat unique. One, I don't believe that the majority of our customers are going to go to a singular public cloud. Some will, but the majority will not. First of all, people outside the US tend to want to be somewhat split between”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“This brings me to IBM, right? This is the process you're in with IBM, and IBM has been in for many years now. You took over SEO in 2020. You'd been at the company for almost 30 years when that happened. I asked everybody these questions. You have a unique perspective here. You had been at the company for a very long time. You took over a CEO. How is IBM structured when you took over and how have you changed that structure now?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Margin The reason I'm asking, but those who build out that massive infrastructure, there is also a massive amount of cost that goes into, it's not like they can maintain it forever. I mean, as the Chinese have shown, you can build competing products. If you can keep running ahead, then people will prefer these devices. But if at the end of the day, the values in the apps today, as you're saying, then if that app is available on something else, if the friction and if the innovation in the main platform slows down, people will switch. It'll take maybe three to five years. So it's not like it's a guaranteed return forever. It will switch. And as many other companies have seen, that switch takes a few years. It doesn't take decades. When it happens, though, it's disastrous to the original company. Some managed to recover because the wake up and say, hey, wait a moment, I got to change. Some don't.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“There will be a few different. So if you go back to the smartphone analogy, you had one who built a vertically integrated stack. It was easier, more convenient device. And then to get access to that device, people had to come into the App Store. And so that was that model. The other model said we're completely open. It's an Android was the operating system. However, to get access to everything else, now you come into the App Store or you come into the search. And that was the second.”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“I wouldn't jump to that we know who's the winners today because we're kind of in the first innings of the game. There will be some winners. How about if I agree with you on that?”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT
“Does let me ask you one question there, and then I do want to ask you the decoder questions, and I want to talk about IBM specifically a little bit. That move, we're going to put all the economic activity onto the smartphone in many ways that that economy of applications, the biggest winner were Apple and Google because they collected an enormous amount of rent on the back of that transition, right? The app store taxes and the fees, and maybe that's going to get unwound now with whatever antitrust litigation or whatever's happening in Europe. But it happened, right? They collected a huge amount of fees. They are some of the richest companies in the world on the back of that. Apple just reported its quarterly earnings, that their services revenue is higher than ever on the back of app store fees. That's what that line really is. I think they run the TV business just to pretend that that's the reality is not the reality. Do you see that playing out in AI? Because I look at Open AI announcing what looks like an App Store. I look at Google announcing the Google search will have...”
2025-12-01 · Decoder with Nilay Patel · IBM CEO Arvind Krishna says there is no AI bubble after all · IDENTIFIED FROM THE TRANSCRIPT