IBM Going Full Throttle in Its Evolution to Cloud Platforms

NEWS ANALYSIS: The key investment for IBM at this time is in cloud platforms and data centers, and the company is going all in for staying ahead of the IT curve.


IBM, king of all IT product and service providers at age 106, is well into the process of yet another makeover to stay ahead of the technology curve.

While the company is still very profitable and bringing in $75 billion-plus per year, its revenue has leveled off for the last five years as it makes a turn from its conventional businesses (IT hardware and accompanying professional services, IT systems consultancy, etc.) to new-generation cloud platforms and application development.

The good news for IBM was that its cloud-related revenue grew 17 percent this last quarter, led by its "as-a-service" offerings, which were up 32 percent year-to-year. The company’s total cloud revenue amounted to $15.1 billion during the last 12 months, or about 20 percent of IBM’s overall revenue, so there’s still a long way to go in the transition.

The key investment for IBM at this time is in cloud platforms and data centers. More specifically, the company has said that it is aiming squarely toward architecting a single cloud platform tuned for artificial intelligence, high-performance computing and other heavily data-centric use cases.

Big Blue Opening Four New AI-Inclusive Data Centers

IBM revealed July 19 that it is continuing expansion of its network of cloud data centers with four new units: two in the UK (London), one in Australia (Sydney) and one in U.S. (San Jose, Calif.).

In total, IBM now has nearly 60 cloud data centers in 19 countries. This geographic dispersion is an important factor because global enterprises navigating the transition to the public cloud are subject to many different regulatory requirements related to security, privacy, governance and other key issues.

IBM has built its cloud with Watson AI to be a highly differentiated platform focused on the needs of businesses and industry verticals. The platform allows clients to integrate data from their existing system with other kinds of data in the cloud, and it uses Watson to make sense of all of it.

Oh, by the way, the IBM Bluemix cloud brand is being phased out. For the time being, until some other marketing exec comes up with a better idea, it will simply be known as IBM Cloud.

There's joy in simplicity.

Here is a summary of key cloud news that IBM announced throughout the last quarter:

  • Lloyds Banking Group signed a 10-year cloud services agreement with IBM because of its strong banking industry expertise and security at the core of IBM’s cloud services. IBM will enable Lloyds to meet consumer demands by transforming from branch structures to digital channels, embracing the API economy without compromising their existing systems and focusing on end-to-end cost reductions.
  • American Airlines will use IBM Cloud as the foundation for a massive cloud transformation designed to make internal processes more efficient, faster, easier and adaptable. The airline will migrate, its customer-facing application, airport kiosks and critical enterprise workloads to IBM Cloud.
  • IBM became a pilot partner of BMW CarData, which will use IBM Cloud and IBM Watson IoT with cognitive and data analytics services to enable third parties, such as automotive repair shops or insurance companies, to develop entirely new customer experiences.
  • Bombardier announced that is extending its long-term partnership with IBM through a new six-year deal valued at approximately $700 million, which includes IBM Services and IBM Cloud management of Bombardier’s worldwide IT infrastructure and operations. The services management agreement spans 47 countries and represents one of IBM’s largest cloud partnerships in Canada.
  • IBM Continues to build upon its global expansion of in-country data centers, IBM opened four new cloud data centers in the United States and its fourth location in Australia, to support the growing demand for its cognitive services.
  • NVIDIA and IBM announced that IBM is the first major global cloud provider to make the NVIDIA Tesla P100 GPU accelerator available on the cloud, geared toward speeding AI workloads. IBM also achieved new performance benchmarks with the P100 GPU accelerator on the IBM cloud, reducing deep learning training time by up to 65 percent, compared to NVIDIA Tesla K80 GPU.
  • Comcast Business is the latest telco to work with IBM for direct, dedicated links to IBM Cloud’s global network of data centers, allowing Comcast Business to provide enterprise customers added flexibility with more choices for connections to cloud services. 
  • Following its March launch of a new container service to speed up and simplify the development of cognitive apps, IBM continues to evolve its Kubernetes support, which went live in May. Available on IBM Cloud, the service uses Kubernetes system leveraging a Docker engine.
  • The launch of Istio and Microservices Builder point to IBM’s data-first focus and ability to connect, manage and secure networks of different microservices for developers.
  • Through a global bidding process, IBM was selected by a consortium of seven of Europe’s largest banks to build and host a new trade finance platform that will be based on IBM Blockchain and run on the IBM Cloud. 
Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...