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Why IBM Is so Focused on Blockchain

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Momentum from the cloud

Earlier in this series, we discussed IBM’s (IBM) recently announced fiscal 2Q16 earnings results. IBM’s Strategic Imperatives segment continued to post growth. However, a key point to consider here is that a majority of growth in IBM’s Strategic Imperatives came from the cloud space.

Although the cloud infrastructure space is expected to grow more than 30% per year through 2018, according to Gartner, any reliance on a single area for the revenue growth poses a concern for the company.

Out of the total $8.3 billion from IBM’s Strategic Imperative revenues, Cloud and Analytics contributed $3.4 billion and $4.9 billion, respectively. If we compare IBM’s analytics revenue in 2Q16 to with fiscal 2Q15 revenues of $4.8 billion, growth in analytics comes in at a mere 2% in 2Q16.

On the other hand, IBM’s cloud business grew by 30% to $3.4 billion in fiscal 2Q16, as compared to $2.6 billion in fiscal 2Q15.

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IBM is positive about blockchain technology

This could be the reason why IBM aims to expand into diverse areas to push its Strategic Imperatives segment. Currently, IBM is showing serious interest in blockchain technology. Blockchain is currently seen as a hot commodity in the financial world.

In its fiscal 2Q16 earnings release, IBM stated, “In the second quarter we delivered double-digit revenue growth in our strategic imperatives, driven by innovations in areas such as analytics, security, cloud video services and Watson Health, all powered by the IBM Cloud and differentiated by industry. And we continue to invest for growth with recent breakthroughs in quantum computing, Internet of Things and Blockchain solutions for the IBM Cloud.”

Mizuho Financial Group

In late June 2016, IBM, in collaboration with Japan-based (EWJ) Mizuho Financial Group, announced a blockchain test to put the technology into use in settlement procedures. Blockchain technology is the foundation of Bitcoin, the world’s first decentralized digital currency, also known as cryptocurrency. Cryptocurrency is an encrypted digital currency that works independently of any banks or regulatory authorities.

To know more about IBM’s interest in Blockchain technology, check out “Why Is IBM’s New Focus Blockchain Technology?blockchain technology”

Microsoft is another technology company that has shown serious interest in blockchain technology. In April 2016, Microsoft (MSFT) partnered with R3CV to develop Why Is IBM’s New Focus Blockchain Technology?blockchain technology. Before finalizing the partnership with Microsoft, R3CV was in talks with IBM and Amazon (AMZN).

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