Some people may have been ready to count out IBM in the cloud. The company, however, is clawing its way back into contention faster than many imagined. In a recent Forbes Magazine piece, IBM credits 16,000 AI engagements, 400 blockchain engagements, and a couple of quantum computing pilots as driving its return as a serious cloud player.
IBM uses blockchain to win the cloud
According to Fortune, IBM has jumped up to third in cloud revenue with $17 billion, ranking behind Microsoft with $18.6 billion and Amazon, with $17.5. Among other big players, Google comes in seventh with $3 billion
In the esoteric world of quantum computing IBM is touting live projects underway with JPMorganChase, Daimler, and others. Bob Evans, a respected technology writer and now the principle of Evans Strategic Communications, notes that the latest numbers “underscore not only IBM’s aggressive moves into enterprise IT’s highest-potential markets,” but also the legitimacy of the company’s claims that it has joined the top ranks of the competitive cloud-computing marketplace alongside Microsoft and Amazon.
As reported in the Fortune piece, CEO Ginni Rometty, speaking to a quarterly analyst briefing, declared: “While IBM has a considerable presence in the public-cloud IaaS market because many of its clients require or desire that, it intends to greatly differentiate itself from the big IaaS providers via higher-value technologies such as AI, blockchain, cybersecurity and analytics.” These are the areas that Evans sees as driving IBM into the cloud’s top tier.
Rometty continued; “I think you know that for us the cloud has never been about having Infrastructure-as-a-Service-only as a public cloud, or a low-volume commodity cloud; Frankly, Infrastructure-as-a-Service is almost just a dialtone. For us, it’s always been about a cloud that is going to be enterprise-strong and of which IaaS is only a component.”
In the Fortune piece she then laid out four strategic differentiators for the IBM Cloud, which in 2017 accounted for 22% of IBM’s revenue:
- “The IBM Cloud is built for “data and applications anywhere,” Rometty said. “When we say you can do data and apps anywhere, it means you have a public cloud, you have private clouds, you have on-prem environments, and then you have the ability to connect not just those but also to other clouds. That is what we have done—all of those components.”
- The IBM Cloud is “infused with AI,” she continued, alluding to how most of the 16,000 AI engagements also involve the cloud. She cited four of the most-popular ways in which customers are using AI: customer service, enhancing white-collar work, risk and compliance, and HR.
- For securing the cloud IBM opened more than 50 cybersecurity centers around the world to ensure “the IBM Cloud is secure to the core,” Rometty noted.
- “And perhaps this the most important differentiator—you have to be able to extend your cloud into everything that’s going to come down the road, and that could well be more cyber analytics but it is definitely blockchain, and it is definitely quantum because that’s where a lot of new value is going to reside.”
You have to give Rometty credit: She bet big that IBM’s strategic imperatives, especially blockchain and, riskiest of all, quantum computing would eventually pay off. The company had long realized it couldn’t compete in high volume, low margin businesses. She made her bet on what IBM does best—advanced research—and stuck with it. During those 22 consecutive quarters of revenue losses she stayed the course and didn’t publicly question the decision.
As Fortune observed: In quantum, IBM’s leveraging its first-mover status and has moved far beyond theoretical proposals. “We are the only company with a 50-qubit system that is actually working—we’re not publishing pictures of photos of what it might look like, or writings that say if there is quantum, we can do it—rather, we are scaling rapidly and we are the only one working with clients in development working on our quantum,” Rometty said.
IBM’s initial forays into commercial quantum computing are just getting started: JPMorganChase is working on risk optimization and portfolio optimization using IBM quantum computing; Daimler is using IBM’s quantum technology to explore new approaches to logistics and self-driving car routes; and JSR is doing computational chemistry to create entirely new materials. None of these look like the payback is right around the corner. As DancingDinosaur wrote just last week, progress with quantum has been astounding but much remains to be done to get a functioning commercial ecosystem in place to support the commercialization of quantum computing for business on a large scale.
DancingDinosaur is Alan Radding, a veteran information technology analyst, writer, and ghost-writer. Follow DancingDinosaur on Twitter, @mainframeblog. See more of his work at technologywriter.com and here.
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