IBM Opens New Data Centers
The cloud war is really catching on and every player is on an investment spree to outdo competition and to establish a firm grip in the cloud market. IBM today announced that it will be opening four new data centers – two in London, one in San Francisco, and the other in Sydney, Australia. IBM already has a presence in these four cities, so in this sense, it is only expanding its presence and not really exploring a new market.
This can be seen as an wide arching attempt by IBM to stay alive in the cloud business, as its competitors are expanding their presence all over the world. Recently Google announced that it plans to expand into India, a potential cloud market, to take on competition from Microsoft and Amazon, that already have a strong presence here.
While its competition for the other big companies, the success of cloud can be crucial for the very operations and future of IBM. If you analyze the quarterly earnings, you’ll see that IBM’s revenues have been declining for some time now. In fact, the results announced for the second quarter of 2017 show that IBM’s decline is steeper than what we may think. This is the 21st straight quarter that its revenues have declined, and has sent panic waves not just in the management, but also in the investor community as a whole. Due to this, IBM’s stock fell by 2.5 percent on Tuesday as revenue estimates fell below expectations.
IBM believes that its cloud business can help it to get past this dubious record and this is why it is going all out. Some market studies put IBM in the fourth place, after AWS, Microsoft, and Google. But, Gartner puts it behind Alibaba and Virtustream as well, especially in terms of its infrastructure.
But, the good news for IBM is that it is in a position to invest in infrastructure and over time, even get a firmer grip in the cloud industry. This is definitely a big advantage for IBM because not many companies have the money to invest heavily in cloud infrastructure. With an annual revenue of $19 billion, IBM can give other cloud companies a run for their money, provided it leverages this investment with a good mix of products.
Already, there are signs that IBM is focusing on its cloud business. In yesterday’s results, the only bright spot is the 17 percent in cloud revenue, though IBM hasn’t clearly specified what it groups under the “cloud revenue” category. Nevertheless, it’s a positive start and is something that the company can build on.
Another advantage that IBM has is Watson. It already has a lead over others in the world of cognitive computing, and this could be a big plus going forward.
In all, not everything is lost for IBM. The next few years are crucial and hopefully its management can make the right decisions to steer the company back to the top again.