As IBM struggles to transform itself into a cloud and artificial intelligence (AI) provider, it’s betting big on enterprises choosing its cloud and Watson-based services. But it remains to be seen if this investment will pay off for Big Blue.
IBM today said it opened four new global cloud data centers including one in San Jose, California.
The announcement comes a day after IBM’s second quarter 2017 earnings report. The company’s cloud business was a bright spot amidst otherwise dreary financials. IBM’s revenue declined for the 21st straight quarter.
Cloud Data Centers
In addition to the San Jose facility, two of the new cloud data centers are in London and one is in Sydney, Australia. The facilities are designed to help enterprise customers build Internet of Things (IoT), blockchain, and AI applications by providing cloud infrastructure that is tuned for cognitive and big data, the company said.
The four new facilities bring IBM’s global cloud data center footprint to 59 across 19 countries. This includes 23 in the US.
In April, IBM opened four other US cloud data centers. At the time, SDxCentral spoke with Francisco Romero, IBM’s VP of cloud infrastructure operations, about building eight new facilities before the end of the second quarter.
“We’re moving away from a customer, on-premise type cloud deployment and really doubling down on the hybrid approach,” Romero said.
IBM’s focus on enterprise customers, and supporting their legacy systems while helping them migrate to the IBM Cloud, sets it apart from other cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform, he added. This spans from infrastructure-as-a-service to Watson and other cognitive cloud services.
But even its growing cloud services couldn’t stop IBM’s revenue from falling in the second quarter.
Q2 2017 Earnings
The company’s cloud business saw 15 percent growth year over year and brought in $3.9 billion in revenue for the quarter. Its legacy business, however, continued to decline. The company’s 19.3 billion revenue represented an almost 5 percent drop, year over year. Its non-GAAP net income was $2.8 billion, down 2 percent.
IBM pointed to revenue growth in its “strategic imperatives,” which includes cloud computing, as-a-service offerings, Watson, security, and mobile. Revenue from these areas grew 5 percent and made up almost 46 percent of IBM’s total revenue in the second quarter.
On a call with analysts, IBM CFO Martin Schroeter said enterprises are increasingly moving to IBM Cloud, citing customer wins including American Airlines, Lloyds Banking Group, Bombardier, BMW, and Comcast.
“Our cloud is hybrid, built for the enterprise, that’s public and private, and integrated with on-prem data and workloads,” he said, adding that customers are deploying IBM blockchain and Watson in the cloud.
These enterprise cloud customer wins, along with acquiring Verizon’s cloud and managed hosting business, “will help improve our revenue trajectory in the second half,” of 2017, Schroeter said.