IBM Cloud Computing Revenue Hits $1 Billion in Q3 2013

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In recent months, tech headlines have highlighted the shortcomings and challenges faced by IBM in today’s market. From court cases to waning profits, the company hasn’t seen much good news. That is, however, until IBM released their Q3 profits report showing over $1 billion in cloud computing revenue. This revenue stems from their purchase of various cloud service, domain hosting, and networking providers in the continued expansion of their cloud services division.

Shifting Focus from the Past?

IBM has always been a leading name in the manufacture and development of hardware technologies in the tech industry. As one of the oldest and most well-known companies in the information technology industry, name recognition has carried them into the twenty-first century. However, in recent quarters, earnings from their hardware production have begun to falter. As a result, the company has had to reanalyze its offerings to see where it could make up for the shortfall from struggling divisions. Aside from their successes in business analytics, IBM has also begun to focus on the ever-expanding cloud services market.

Acquisitions and Stiff Competition

Cloud computing has seen an unprecedented level of investment in recent years. With new companies bursting onto the scene, the market has become saturated with vendors offering a wide array of services for both public and private users. Along with these new companies came tech giants like Amazon Web Services and IBM who could invest massive amounts of capital into expanding their offerings. As a result, these two companies have started to acquire smaller successful firms and bring them under their control. IBM’s purchase of cloud web host SoftLayer, along with a planned $20 billion worth of acquisitions in the cloud computing market, shows just seriously these companies are taking the new opportunities in the cloud.

Legal and Financial Battles

Along with competition to bring in new contracts and new companies, these large firms are also competing in the courtroom. Recently, IBM lost a case in court to AWS over a disputed $600 million CIA contract. IBM’s loss was a major success for Amazon, but it also showed that IBM could be competitive for large federal contracts. This loss was further aggravated by the warning from Barclay’s Bank to investors to either hold or sell their IBM stocks. However, since IBM has already reached the $1 billion revenue mark in cloud services, it is clear that they are a capable contender for major contracts and will likely continue to bring in steady profits. To demonstrate that capability, IBM recently won a billion-dollar cloud computing contract with the Department of the Interior. As IBM continues to acquire smaller successful ventures and expand their service offerings, it is likely they will be able to raise their competitiveness with other large firms like Amazon.

Despite much of the negative press that IBM has been receiving lately, the company is still doing very well in the cloud services market. Their planned investments and previous acquisitions have cemented their place as a top contender in the cloud computing services market. While they’re not the only ones scoring major cloud computing contracts, it is likely that IBM will continue to make headway in its acquisitions and expanding its service portfolio to make their cloud computing services more marketable.

 

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Nick Barnett

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