IBM to pump $US4 billion into Cloud, mobile and analytics

With a $US4 billion investment, Big Blue aims to deliver $US40 billion in annual revenue by 2018

IBM CEO Ginni Rometty took to the Mobile World Congress stage Wednesday to announce a global competition to encourage developers to create mobile consumer and business apps powered by its Watson supercomputer platform.

IBM CEO Ginni Rometty took to the Mobile World Congress stage Wednesday to announce a global competition to encourage developers to create mobile consumer and business apps powered by its Watson supercomputer platform.

IBM will dedicate $US4 billion in spending this year to the Cloud, analytics and mobile technologies, as it struggles with seismic shifts that are changing the computing landscape it once dominated,

In return, by 2018 IBM expects to reap a combined $US40 billion in annual revenue from the areas in which it's investing, which also include social and security, the company said at an annual meeting on Thursday.

It could use the growth. IBM's sales declined to about $US93 billion last year, from just over $US98 billion in 2013, thanks to declines in some of its traditional businesses and the sale of two big hardware divisions to Lenovo and GlobalFoundries.

"Much of the decline in revenue has been engineered by us," IBM CEO Virginia Rometty reportedly said at the meeting. "We restructured the hardware business and it is now less than 10 percent of the company, and we returned that business to profitability."

Even as Cloud computing has brought new flexibility and opportunity to customers, it has also posed a considerable challenge to longstanding technology vendors whose primary revenue resides elsewhere.

Such is the case for IBM, which nevertheless claims to have expanded its cloud-related technology business by 60 per cent last year to $US7 billion. It has since appointed a new chief to its cloud unit and says its cloud, mobile and analytics efforts will account for more than 40 percent of total revenue in a few years.

Last year, its cloud, analytics, mobile, social and security sales grew 16 per cent to $US25 billion, accounting for 27 per cent of revenue.

On the mobile front, IBM established a partnership with Apple, and more such alliances are on the way, Robert LeBlanc, the new senior vice president for IBM Cloud, recently said.

Its previous investments in these key areas have included $US26 billion in Big Data and analytics, $US8 billion in Cloud and $US1 billion in its Watson cognitive computing system, noted Charles King, principal analyst with Pund-IT.

The four-year, $US40 billion return it expects on its new $US4 billion investment - which does not appear to include any potential acquisitions - seems achievable, King said.

"The areas IBM is targeting are all acknowledged growth markets, along with being areas where IBM is planning or delivering solutions that are highly differentiated - as in its Cloud offerings - or entirely unique, as with Watson," he said.

The biggest hurdle IBM faces is probably investors' notoriously short attention span, King added.

"In a market driven largely by quarterly earnings and other short-term measurements, four years might seem to be an eternity," he said. At the same time, "if investors offer IBM the time and space required to pursue this strategy, I believe they will be rewarded for their patience."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags cloud computingmobileinternetbusiness issuesIBMinvestments

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Katherine Noyes

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?