Last month, IBM put out its most recent earnings report – and one statistic stood out. For the first time in more than five years, revenue did not decline from the previous year’s quarter.
Cloud revenue was $17 billion for the year, while run rate in the company’s as-a-service offerings was more than $10bn. Speaking to analysts, James Kavanaugh, IBM senior VP and chief financial officer, said the company was ‘doing a lot of work to reposition [the] business, to help move clients to the future, investing, shifting skills and reallocating capital… in short, a lot of heavy lifting.’
Revenues reversing a longstanding downward trend point to IBM enjoying the fruits of its labour – for now. But the truth is, that from containers, to blockchain, to machine learning, IBM has been looking at a series of emerging technologies for some time – and it is now looking to utilise its expertise to give clients a competitive advantage.
One of the key ways the company is doing this is through Garages, a space for companies big and small to test out these technologies and see how it affects their operations. IBM launched its tenth, in Copenhagen, earlier this week. And according to John Considine, general manager of cloud infrastructure services, it’s ‘fantastic’ to go through the problem-solving process with organisations.
“It might be our deep learning, our analytics and data, certainly our cloud platform to create a solution that’s, believe it or not, workable,” he tells CloudTech. “[It’s] a short period of time just to say this is feasible, it can be done, and you can get on this innovation and transformation pretty quickly.”
The artificial intelligence and machine learning angle is of particular note given the recent news of an extended partnership between IBM and Salesforce. Salesforce named IBM its preferred cloud provider, while the latter named the former its preferred platform for customer engagement. But the intrigue was on how the two companies would do it – namely, combining the insights of Watson and Einstein respectively.
“One of our theories leading into the cloud, for the past few years, of course is that data is enormously important for the enterprises,” says Considine, “and given more than 80% of the world’s data is still maintained behind the corporate firewall, our focus has been how do we enable the businesses to take advantage of that data, to combine it with new processing techniques, new data sets, and new capabilities.
“[It’s about] all the things associated with machine learning and deep learning, analytics and bringing all of these things together in a form that allows them to tap into those resources and deliver not only application modernisation, but really even process reinvention.”
Another partnership recently continued and extended was that of NVIDIA. The GPU and chip provider is bringing its Tesla V100 GPU to the IBM cloud. Considine explains how important this is for machine learning; to train a 300 MB model – something in the region of 300 million trillion maths operations – takes hours rather than years with a data centre full of standard processors. “That kind of acceleration is critical for us and for the market to be able to make the value of these artificial intelligence and deep learning models reachable and actually relevant,” says Considine.
Take containers as another example. As this publication said at the start of this year, 2017 was notable for the rise of container technologies, not least because the largest cloud vendors, from Amazon Web Services (AWS), to Microsoft, and Oracle, signed up for the Cloud Native Computing Foundation (CNCF), home to the Kubernetes project. IBM – along with Google, Intel, VMware and others – was a founder member in 2015. Todd Moore, IBM vice president for open technologies, sits as the CNCF’s governing board chair.
Considine takes up the story. “A while ago – probably a year and a half ago, in cloud time a long time ago, [we] started making some significant investments in containers,” he says. “Partly because we have so many patents, so much research in the area, we really adopted the value of containers, and have been busily transforming a lot of our services to be container-based internally.
“Part of this process has been to take our learnings about how to make these transformations – and you can think of this for everything in our SaaS properties, even some of our cloud properties, we’ve really gone through a process of effectively retooling to take advantage of this containers environment,” Considine adds. “It really has been good for us internally, helping us chart the roadmap and then work with our customers to take them through that application modernisation in that container journey.”
The earnings report meant another marker in the continual ‘cloud wars’ discussion. Like a lot of things, it depends on what you call cloud. For cloud infrastructure services, AWS is the clear winner. In fact, some may argue, it won a long time ago.
As AWS passed $5 billion in quarterly revenues earlier this month, Synergy Research, a long time tracker of cloud infrastructure figures, described the market leaders as setting ‘a fierce pace.’ According to the analyst firm’s figures, AWS has approximately the same level of market share as its four nearest competitors combined – Microsoft, IBM, Google and Alibaba – and continues to grow.
Yet there is more to cloud than infrastructure. This is the view that Bob Evans, formerly chief of communications at SAP and Oracle and now a strategic comms advisor, holds. Writing a regular column for Fortune, Evans posits that Microsoft is the real leader – taking into account infrastructure, software, platform and more – ahead of Amazon and IBM. For the most recent quarter, Evans argues that IBM was ‘a huge winner on multiple fronts’.
“The narrative – and it is dead wrong – repeated relentlessly and tirelessly by many in the media and amplified by some analysts that Amazon is the runaway winner in the cloud is baseless, sloppy and terribly misleading,” wrote Evans. “It’s time for that long-running string of extremely fake news that ‘Amazon rules the cloud’ to come to an end.”
So how does IBM see this ‘cloud wars’ narrative? Considine says he understands the issues with analysis when some companies obfuscate their definition of cloud, or what goes in which revenue bucket. Ultimately however, it all comes down to the investment in emerging technologies.
“Here’s the trick: for us, we are the enterprise cloud,” says Considine. “And this investment we’ve made in the technologies, in the underlying infrastructure… [there’s] huge growth this year in our infrastructure both in geographic and capacity expansion, but as well as new features and the rate of delivering new features.
“These are just fundamental things that pile on to deliver the capabilities we need – but these are focused in really providing solutions for the enterprises, and then helping them make this transformation.”
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