Tags: IBM | Bet | Cloud | Computing

IBM Places Big Bet on One-Time Nemesis, Cloud Computing

By    |   Monday, 12 May 2014 03:26 PM

Growth at once-invincible IBM has been elusive in recent years, and the company is betting a share of its future on cloud computing, The New York Times reported.

Cloud computing, which relies on the ether of the Internet for hosting and processing data, threatened IBM’s traditional hardware and software lines, but now it’s regarded as friend rather than foe.

“We are transforming this company for the next decade,” IBM CEO Virginia M. Rometty told the Times. “That is not a one-year job, not when you’re a hundred billion-dollar company.”

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It would not be the first time the technology giant has adapted to changes in its ever-evolving marketplace. Over the years, personal computing, the Internet and Indian services firms seemed like mortal threats, but each time IBM evolved.

To make way for the new, IBM sometimes jettisons the old. Earlier this year, for instance, IBM said it was selling its division that makes industry-standard server computers — once part of the lifeblood of the company — to Lenovo for $2.3 billion.

The Times reported IBM was slow to grasp the key importance of cloud computing, according to analysts, even though it was so disruptive to the company’s business model.

That certainly changed by last June, when IBM purchased cloud computing start-up SoftLayer Technologies for $2 billion. Then in January, the company said it was investing $1.2 billion in cloud data centers toward an agenda of 40 cloud-dedicated centers in 15 countries by the end of this yea.

The company is also pouring money into a software development tools initiative to attract outside programmers in the cloud applications area.

“IBM has made investments and there is a real urgency now in its cloud business,” Frank Gens, chief analyst for technology research firm IDC, told the Times.

IBM remains highly profitable, with net income of $16.5 billion in 2013, in part because of its installed client base at corporations and government agencies.

“Planes don’t fly, trains don’t run, banks don’t operate without much of what IBM does,” said Rometty.

Under her leadership, profit has been more important than growth at IBM. “We don’t want empty calories. So when people keep pushing us for growth, that is not the No. 1 priority on my list.”

ZD Net reported that this week IBM is launching software-defined storage technologies based on the approach that allowed Watson, its data-driven artificial intelligence project that will be offered as a cloud service, to comb through data.

The technologies enabled Watson to process 200 million pages of data and 4 terabytes of content for its appearances three years ago on the "Jeopardy" TV game show, where it defeated human competitors. The storage technology integrates storage and memory to deliver instant results.

The Washington Post reported IBM is now aggressively marketing the Watson technology to the federal government, in particular to federal health-care organizations that could use it to process health records, diagnose diseases or help researchers.

Editor's Note: 38 Trades That Could Turn $1,000 Into $49,000

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Growth at once-invincible IBM has been elusive in recent years, and the company is betting a share of its future on cloud computing, The New York Times reported.
IBM, Bet, Cloud, Computing
Monday, 12 May 2014 03:26 PM
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