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IBM Continues Its Climb to the Clouds

New hybrid technologies are the latest addition to the Big Blue growing portfolio.

• By Keith Ward
• 03/02/2015

When people think of IBM Corp., they typically think of a few things; for many, it's mainframe computers. Some still think of desktop computers, although the company sold off that business to Lenovo years ago. Others think of services, which became a more important part of its business as hardware fell off. Now, IBM wants to be known for something else: cloud computing.

As Computerworld reported, Big Blue expects to make $40 billion in annual revenue by 2018 from a combination of activities, one of the most important of which is its cloud business.

The Hybrid Model
IBM has a host of different cloud offerings, including Infrastructure as a Service; hybrid cloud for both on- and off-premises clouds; Platform as a Service; and a large marketplace of cloud-based services from itself and partners (of which IBM claims to have more than 500). There's a lot there, but IBM still faces the hurdle that its name doesn't spring immediately to mind when it comes to cloud computing.

The hybrid cloud business is its most recent entry, and IBM recently announced a series of technologies and services that it hopes will grab market share. Here's how Robert LeBlanc, newly named senior vice president of IBM Cloud, described its vision:

"Today, we are launching a new class of hybrid cloud innovations that extend open standards capabilities for the enterprise … Data location across an ever growing number of clouds is an increasing concern for customers and we are unveiling new portability and developer services to make this easier to manage."

One of those "new portability" technologies is IBM Enterprise Containers. These are essentially Docker containers with IBM management tools, distributed across the IBM Bluemix cloud development platform. Bluemix is getting a localized update this summer, IBM says, delivering the cloud platform into a local datacenter while still being a fully managed service (hence the "hybrid" designation).

The move to greater emphasis on cloud computing comes at a tricky time for IBM. It suffered through a tough 2014, with revenue down 6 percent from 2013, coming in at just under $93 billion. For the fourth quarter of 2014, earnings of $5.54 per share were 4 percent lower than the same period in 2013, when earnings were $5.76 per share. Net income for the quarter of $5.5 billion was down 11 percent from Q4 2013, when it came in at $6.2 billion.

On the other hand, the "strategic imperatives," as the company calls it -– which include its cloud business -– grew 16 percent to $25 billion. That makes up 27 percent of Big Blue's total revenue, demonstrating the importance of the new direction. IBM reported that its cloud business jumped to $7 billion over the last year, a 60 percent increase.

Silver Linings Playbook
That provided the cheerful prognosis from IBM President and CEO Ginni Rometty, who was able to find her company's silver lining in the cloud: "In 2014, we repositioned our hardware portfolio for higher value, maintained a services backlog of $128 billion and achieved strong revenue growth across cloud, analytics, mobile, social and security," she said in the earnings press release.

It's all part of how IBM is "… making significant progress in our transformation, continuing to shift IBM's business to higher value, and investing and positioning ourselves for the longer term," Rometty said.