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Inside IBM’s Cognitive Solutions Performance in 2Q16

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Growth in 2Q16

Earlier in this series, we discussed IBM’s (IBM) recently announced fiscal 2Q16 results, in which IBM continued its no-growth revenue story. However, IBM’s Strategic Imperatives segment continued to post growth. In fiscal 2Q16, the segment grew by 12% to $8.3 billion.

By comparison, IBM’s Cognitive Solutions segment consists of solutions software and transaction processing software. IBM’s IoT (Internet of Things), Watson Health, and focus areas of its cloud computing business fall under this segment. The segment’s revenues grew by 3.5% to $4.7 billion in fiscal 2Q16. Within this segment, cloud revenue grew by 55%, as the below chart shows.

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Cognitive Solutions’ revenue growth was buoyed by the acquisition and integration of the Weather Company assets and Truven Health Analytics into Watson. Prior to Truven, IBM acquired Merge Healthcare for $1 billion. IBM also announced the acquisition of Phytel and Explorys to boost its Watson Health Unit in 2015.

Cloud, mobile, IoT, and cognitive computing technologies

Cloud computing, mobile, IoT, and cognitive computing are expected to be the technologies that will shape the near future of the IT (Information Technology) space. It’s this expectation that has pushed technology players such as Microsoft, IBM, Oracle (ORCL), and Google to invest billions in the cloud and other rapidly developing technologies.

Notably, while IBM dominates the hybrid cloud space, it’s Amazon (AMZN) that leads the overall cloud space. Amazon is followed by Microsoft (MSFT), IBM, and Google (GOOG) (GOOGL), which collectively account for half of the cloud space.

In the next part, we’ll go deeper into IBM’s Strategic Imperatives segment.

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