IBM Targets $40 Bn In Cloud, Other Smart Tech By 2018

by CXOtoday News Desk    Feb 27, 2015


IBM, which ruled computing in the age of the mainframe, is targeting $40 billion revenue from the cloud, big data, security and other growth areas by 2018. The aggressive target, set by IBM executives at the company’s annual investor meeting in New York this week, is the latest step for the technology giant towards emerging, high-margin businesses, and away from its previous strongholds in hardware and servers.

The $40 billion will come from areas which IBM calls its “strategic imperatives,” namely cloud, analytics, mobile, social and security software.That would represent about 44 percent of $90 billion in total revenue that analysts expect from IBM in 2018, according to a Reuters report.

Experts believe IBM is compelled to take the digital and SMAC route in order to grow and survive in a marketplace as many of its earlier businesses-  low-end servers, semiconductors and cash registers. - were shut down or sold and hence there was a strong need to ‘reinvent’ itself.

IBM Chief Executive Virginia Rometty told Reuters as the company plans to reinvent in the corporate world, catching up in cloud services will be crucial. A Bloomberg report also suggested, “IBM needs to get its head in the cloud.” as it has been seen that even the most reputed companies have struggled the most with the shift to cloud.

According to Gartner, businesses are increasingly look to data as the new basis of competitive advantage, they also are looking to take advantage of cloud computing as a growth engine that will help drive faster innovation. According to Gartner Research, 25 percent of net-new businessanalytics deployments will be in the form of subscription to cloud analytics platforms orapplication services by 2016.

However, experts also note there’s stiff competition in the cloud sphere, from vendors such as Oracle, HP, EMC,Cisco, who are experimenting with the cloud, and especially from Amazon that is leading in thec loud space. Despite some challenges, in this competitive an changing marketplace, IBM has no other way to go, but reinvent itself keeping in mind its potential cloud customers. Of course the  SAP partnership last year can be a right step in this direction, which can help strengthen its positions in the cloud computing space, experts believe.

Areas such as cloud computing, mobile, business analytics, social and security services contribute 25 percent of IBM’s revenue at present. The company is also looking to increase its focus on Watson. It plans to transform its Watson supercomputer from an inaccessible innovation to a resource that developers of a wide variety of apps and projects can put to use. Early in the year, IBM formed the Watson Group unit, signaling its intent to build a largebusiness around the computing tech by announcing that it was devoting $1 billion, and eventually up to 2,000 employees, to the unit.

The IT giant has opened Watson to developers working on medical and healthcare-related apps, and many startups are now using Watson Several startups are already using Watson’s computing power to answer people’s questions about their health. The Watson for Oncology software, built in conjunction with New York’s Memorial Sloan Kettering Cancer Center, is just one example of the potentially groundbreaking applications of the computingtech and IBM can use Watson as a lever to create records going forward, say experts.