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IBM Continues Its Acquisition Spree with Blue Box

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IBM acquired Blue Box to retain its dominance in the hybrid cloud space

On June 3, 2015, IBM (IBM) announced its acquisition of Blue Box, which provides private cloud-as-a-service that is based on OpenStack technology. The companies didn’t disclose the financial details of the acquisition.

Formed in 2010, OpenStack is a free open-source technology that provides an open integration framework that includes computing, storage, and networking.

On the same day, Cisco (CSCO) announced the acquisition of Piston Cloud Computing, a company that manages and deploys private clouds on open source technology.

The above presentation shows the developments that the OpenStack space has experienced over time. Apart from IBM, Rackspace (RAX), Redhat (RHT), HP (HPQ), and Mirantis are the top five contributors to the OpenStack space.

In the past, IBM has aggressively pursued the acquisitions route to gain a foothold in the cloud space. Please read IBM chose the acquisition route for the 2015 roadmap milestone to find out more.

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Blue Box complements IBM’s cloud strategy

IBM said that the inclusion of Blue Box to its services portfolio will strengthen its OpenStack lineup with a remotely managed OpenStack offering. Clients can now integrate cloud-based applications and on-premise systems into OpenStack-managed clouds, thus simplifying the deployment of workloads across hybrid cloud environments.

The Blue Box acquisition is in line with IBM’s initiative to strengthen its presence in the cloud space by either rapidly introducing the new product in the hybrid cloud or through strategic acquisitions. According to Gartner, 50% of all of the enterprises are expected to deploy hybrid clouds by 2017, which explains IBM’s focus on the hybrid cloud space.

IBM’s cloud offerings recorded good revenue growth

In its 4Q14 earnings release, IBM’s senior vice president and chief financial officer, Martin Schroeter, stated that the company’s cloud revenue stood at $7.7 billion, an increase of 60% on a year-over-year basis. Owing to the increased demand for higher value cloud solutions across public, private, and hybrid clouds, IBM managed to record good growth in its cloud offerings. IBM’s as-a-service offering revenues recorded $3 billion, an increase of 75% on a year-over-year basis. The acquisition of SoftLayer played a prominent role in IBM’s position improvement in the cloud space.

If you are bullish about IBM, you can invest in the Technology SPDR ETF (XLK). XLK invests 3.51% of its holdings in IBM.

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