IBM Plans to Invest Billions in the Cloud and Analytics Space
IBM expects higher revenue contribution from cloud and analytics in the future
During the Morgan Stanley (MS) Technology, Media & Telecom Conference in March 2015, IBM (IBM) stated that it plans to invest $4 billion in key strategic areas: cloud, big data analytics, enterprise mobile, and security. The company expects these growth areas to grow from the current $25 billion in 2014 to over $40 billion by 2018. As of now, these areas contribute 27% to the overall revenues, though the company expects them to make up 40% of company’s overall revenues by 2018.
In 4Q14, IBM’s strategic growth areas did well as compared to its other core operating segments. Its offerings in these areas, including WebSphere, Rational Suite, Tivoli, target a rapidly growing market of mobile, social, cloud storage, and security tools.
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IBM leads the hybrid cloud market
According to Synergy Research, IBM leads the hybrid cloud market. In hybrid cloud, enterprises use the same cloud technologies in their own private data centers as well as a cloud provider. As the above chart shows, Amazon (AMZN) continues to be a leader in the cloud space with a 30% market share, followed by Microsoft (MSFT) that has a 10% market share. Google (GOOGL) and Salesforce.com are other leading players in the cloud space who managed to record 87% and 31% year-over-year growth in 4Q14, respectively.