IBM and its Cloud business attracted some significant commentary
recently. First, Cloud received a call out in a front-page Wall Street Journal story
as one of IBM CEO ‘Ginni’ Rometty’s successful moves. Unmentioned was the
little detail that Cloud’s rolling 12 month revenues exceeded $7.7 billion. Clearly,
IBM is at the forefront with its sophisticated offerings of value-adding Cloud
services.
Additionally, IBM’s 2015 First-Quarter Results had Cloud
reporting revenue growth in excess of 75%, making it a significant contributor
to overall reported revenues exceeding 20% (30%+ if adjusted for currency and
divested business). Finally, Cloud services posts a very respectable $3.8
Billion 2015 annual run-rate (versus last year’s $2.3B).
Overlooked is the background to this highly respectable
performance. IBM quickly acted on their early recognition as Cloud began developing
into two distinctly different market segments. This is a common phenomenon as IT
markets mature, but one that started early for Cloud.
One segment provides low-end, commoditized Cloud services;
characterized by volume-pricing, infrastructure-as-a-service, basic support, combinations
of self- and roll-your-own services and cut-throat competition. The other
segment provides sophisticated services aimed at leveraging Cloud for higher-value,
higher profit opportunities. The focus is on realizing enterprise value from the
proper use of technology. This is the segment IBM pursues.
Examples from IBM’s first quarter deals include ShopDirect[1],
one of the largest UK’s retailers, and the Weather Company, that provides
weather data to a wide variety of companies and industries to help them better manage
their businesses[2]. Both have a low-end Cloud provider satisfy their
infrastructure-as-a-service needs.
However, when it came to data gathering and applying
analytics to gain insight for their own and customer use in a Cloud
environment, they turned to IBM.
• ShopDirect is working with IBM to scale their mobile offerings;
they add value by identifying and understanding mobile buying patterns to
customize marketing offerings.
• The Weather Company is working with IBM to analyze and apply
weather data collected from millions of sensors to provide unique weather-based
insights that serve the business needs of their customers in a variety of
industries, e.g. insurance and retail.
This trend is becoming increasingly common across Cloud
clients. IBM Cloud first quarter announcements included:
•
Marriott
will use IBM Cloud to offer faster digital services to web-savvy guests as well
as to acquire insight to improve services to this traveler cohort at over 4,000
properties across the globe.
•
The
U.S. Army will integrate the IBM Cloud with other existing Army IT systems to
process more than 40 million transactions each day.
•
In
a multi-million dollar agreement, Coca-Cola Amatil will move its Asia Pacific
customer planning and relationship management systems to the IBM Cloud. Hosting
the workloads in IBM’s two Australian SoftLayer centers speeds CCA’s response
to customer needs while delivering significant savings.
To accommodate the increased demand, IBM is adding six new
date centers (total 45) and expanding capacity in nine locales. In the last
quarter, new cloud centers were opened in Sydney and Montreal. And we are investing more than $1 billion in
IBM Bluemix, a cloud development platform, which allows ecosystem partners and
clients to develop cloud-based apps, such as analytics apps, and apply those
apps in all manner of cloud environments.
[2] Read the announcement and see video here: https://www-03.ibm.com/press/us/en/pressrelease/46446.wss
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