IBM Could Become the Biggest Player in the Cloud

by Trefis Team
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Last week, IBM (NYSE: IBM) unveiled a new offering – IBM SmartCloud Foundation – to help companies speed up delivery, lower risk and better control the move to deploy cloud alongside their existing production environments. The new offering will allow organizations to install, manage, configure and automate the creation of cloud services in private, public or hybrid environments with higher level of control than before. IBM’s offering has come after a recent study by IBM Institute for Business Value that found that 90% of organizations expect to adopt or substantially deploy a cloud model in the next three years. [1]

Over the past few years, cloud computing has become a prime focus area for IBM, and the company now offers nearly an entire range of cloud services and solutions available anywhere in the market. By better integrating them and pitching its entire range of offerings collectively, IBM is taking a big swing at this huge market. Some of the other major and upcoming players in the cloud computing market today are Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Salesforce.com (NYSE:CRM), HP (NYSE:HPQ), Oracle (NASDAQ:ORCL), and Apple (NASDAQ:AAPL), among others.

We currently have a $219 Trefis price estimate for IBM, implying a premium of about 7% over the current market price.

See our full analysis on IBM

IBM to Offer Cloud Services and Solutions Collectively

The entire suite of IBM cloud offerings now includes everything from platform as a service (PaaS), infrastucture as a service (IaaS), cloud backup services, and software as a service (SaaS). IBM’s SaaS offerings again encompass a myriad of software with the latest addition of IBM Docs, a cloud-based Office productivity suite to create, manage, share and collaborate documents, spreadsheets and presentations.

While IBM Docs will have to compete directly with more popular and competitively priced products like Google Docs, Microsoft Office 365 and a number of other online office suites, IBM is betting on ”enterprise-grade security”  and its “collective” offering to draw customers. The same is true for most of IBM’s cloud offerings, i.e. they all individually have a number of competitors, but there is no other company that offers all of the them collectively. This could turn out to be huge strategic advantage for IBM.

Strategic Advantage will be Key in the Highly Competitive Cloud Market

The global market for cloud computing is estimated to reach $250 billion by 2016, [2] and will create $625 billion in saving for US businesses over the next five years, according to a study by SAP. [3] Clearly, these numbers are very large and this is why major tech players as well as new players are scrambling for a share of this market.

In this intensely competitive market where every player is mindlessly adding services and solutions to its cloud portfolio, a more strategic approach is what will determine who makes the most out of this mammoth opportunity. From the looks of it, IBM might just be doing that.

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Notes:
  1. IBM Addresses Next Shift in Enterprise Cloud Adoption, IBM []
  2. Cloud computing boom changing IT structures, hartfordbusiness.com []
  3. SAP-COMMISSIONED STUDY ESTIMATES CLOUD COMPUTING TO CREATE HUNDREDS OF THOUSANDS OF JOBS, SAP []
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