As the competition heats up in the cloud sphere, IBM has recently acknowledged their performance last year did not meet expectations while acquisition deals.
IBM’s 2013 annual report stated that the company’s cloud business grew 69% in 2013, delivering US$4.4 billion of revenue. However, shrinking demand for hardware and weak sales have caused a tumble in revenue over the last seven quarters.
“With the fact that around 85% of new software is being designed with cloud compatibility in mind, it is of no surprise to see a surge of investments in such platforms.
“IBM has been slow in the cloud game and is trying to catch up now. What they needs is a strong business network that can help them get there and we already see this demonstrated through their recent acquisitions,” said Vivek Sood, CEO of Global Supply Chain Group.
Last year, IBM bought infrastructure-as-a-service provider SoftLayer for $2 billion, before committing another $1.2 billion to building new locations for its SoftLayer public cloud services.
While there has been a significant focus on cloud as a strategy, IBM, who provides cloud capabilities to eighty percent of Fortune 500 companies, is not quitting hardware.
The company’s CEO – Ginni Rometty – wrote in a letter to investors: “IBM will remain a leader in high-performance and high-end systems, storage and cognitive computing, and we will continue to invest in R&D for advanced semiconductor technology.”
One of IBM’s attempts to revamp its hardware offerings includes selling the majority of its low-end server business to Lenovo for $2.3 billion in January this year.
A Synergy Research report in February 2014 indicates that Amazon still dominates the pure cloud platform market, boasting a 65% growth in Q4, 2013 compared to an overall market growth of 52%.
The tech giant Google is also among those serious about competing against Amazon, with the announcement of Google Cloud Platform’s multi-country developer roadshow on Tuesday.
“Just like how big companies used to win big with hardware, they now need to apply a similar growth framework, not necessarily in terms of technicality.
“The idea of advanced product phasing is becoming more important, which is the ability to strategically roll out new products with a profit-innovation balance,” said Sood – also the author of “The 5-Star Business Network”.