Tuesday, May 27, 2014

IBM Shows Robust Growth In Cloud: Does It Matter?

This article was originally published by Seeking Alpha on May 19, 2014

By Sarfaraz A. Khan. Research Asst. Gohar Yousuf

IBM continues to show strong growth in cloud revenues after spending billions on developing its cloud offerings.

However, the company has a lot of work to do before this starts having any impact on its top line growth.

IBM has touted two major cloud deals, but these might not have any meaningful impact on the growth of its cloud revenues.

International Business Machines (IBM) has been readjusting its portfolio by moving away from less-attractive products and investing on higher-margin operations. So far, the company has sold its storage disk drive business, personal computer unit and the server business and a services unit. Meanwhile, the business is eying considerable growth in cloud computing-related revenues.

Heavy Investments

IBM has spent billions to ramp up its cloud offerings, including heavy investments for its Watson Group. Since 2007, the company has spent $7 billion on 17 cloud-related acquisitions. The company currently has a massive portfolio of more than 1,500 cloud patents. The company's target is to generate $7 billion in revenues from its cloud offerings by as early as 2017.

Over the years, IBM has become the biggest provider of services to enterprises in the Infrastructure as a Service (IaaS) industry, according to research firm IDC.
IDC's results were based on a survey covering more than 400 enterprises, of which 35% named IBM as their top choice in both public and private clouds.

IBM is ahead of Cisco (CSCO), Hewlett-Packard (HPQ), AT&T (T) and read full article on Seeking Alpha