IBM (NYSE:IBM) sees a big opportunity in rolling out cloud services to companies, and it recently announced a new cloud hosting services platform offering multi-tenant solutions to businesses at reduced prices. One of its new initiatives, the SmartCloud Enterprise platform, will help provide infrastructure-as-a-service (Iaas) services to companies based in India, which will be hosted in its Asia-Pacific cloud computing data centers. We will see additional moves like this as Big Blue looks to get secure market share vs. competitors like HP (NYSE:HPQ), Dell (NASDAQ:DELL) and Oracle (NASDAQ:ORCL) that are all vying for a larger piece of this the promising “public” cloud market.
We have a $185 Trefis price estimate for IBM, which is about 10% above the stock’s market price.
Cloud Hosting a Huge Market Due to Cost Benefits
IBM believes that there is $7 billion worth of potential in cloud hosting services in the next four years and earlier unveiled new pricing structures and licensing options to encourage more businesses to take advantage of cloud computing technology. [1]
The newly launched solution will provide businesses with 30% cost savings and a reduction in application development tasks leading in an effort to promote widespread adoption among companies. IBM reports that nearly 60% of companies are looking to embrace cloud computing over the next five years given the cost benefits involved. [2]
In particular, IBM’s SmartCloud Enterprise aims at this year’s $500 million Indian public cloud market as well as the projected $2.5 billion market in 2015. [3] The development is likely to boost IBM’s strategic outsourcing revenues resulting in a potential upside to our $185 Trefis price estimate for IBM’s stock.
Notes:- IBM announces new measures to help boost cloud adoption, hostway.co.uk [↩]
- IBM unveils new cloud hosting services platform for businesses, hostway.co.uk [↩]
- IBM targets Rs.11,000 crore Indian cloud market, eetindia.co.in [↩]
