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What Could the VMware Deal Do for IBM’s Position in the Hybrid Cloud Space?


Mar. 7 2016, Published 6:07 p.m. ET

IBM-VMW partnership should ensure swift migration to IBM’s cloud

IBM (IBM), known for its strategy of alliances and acquisitions, announced its partnership with VMware (VMW) in last week of February 2016. We’ll discuss IBM’s latest acquisition of Resilient Systems in detail in the later parts of this series. Both these companies have partnered with IBM to facilitate businesses that run VMware’s vSphere virtualization on their servers in order to migrate workloads to IBM’s SoftLayer.

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With this partnership, existing IT workloads can be migrated through VMW’s virtualization software without requiring any rewriting, packaging, or modification. With this partnership, approximately 80% of companies that run VMware’s vSphere can be shifted to IBM’s cloud. According to Pat Gelsinger, VMware’s CEO, VMware’s vSphere has an 80% market share in the corporate data center space. Thus, partnering with VMware should further strengthen IBM’s position in hybrid cloud space.

IBM is a leader in hybrid cloud space

According to Synergy Research’s recent report, IBM continued to be a top performer in the hybrid cloud space while Amazon.com (AMZN) ruled the overall cloud space in 2015. Microsoft (MSFT) recorded the highest growth, at 128%, in the cloud space in 2015.

In early November 2015, IBM announced the acquisition of Gravitant to boost its position in the hybrid cloud space. Gravitant’s flagship offering, CloudMatrix, enables enterprises to have a hybrid approach that lets them compare and analyze varied cloud service offerings currently available. It thus aids in their subsequent decision to buy, manage, or monitor those cloud services. In 2015, along with private cloud, hybrid cloud registered a 45% growth.

Investors looking for exposure to IBM can consider investing in the iShares Russell 1000 ETF (IWB). IWB has 8.5% exposure to application software and invests 0.61% of its total holdings in IBM.

Continue to the next part for a closer look at IBM’s deal with Resilient Systems.


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