IBM Analytics, which focuses on big data solutions, is huge by any standards. In the last three quarters, revenues from the division totalled $13.9 billion. In comparison, Salesforce, the CRM leader, made only $6.67 billion during full fiscal 2016, while Microsoft’s annualized cloud revenue run rate just exceeded $13 billion during the most recent quarter. Meanwhile, Amazon AWS reported $8.68 billion in revenues during the last three quarters.
Quarterly revenues from IBM Analytics grew 9%, 4% and 14% during the last three quarters compared to prior periods. Those growth rates do look a bit dwarfed when you look at the above-50% growth rates that Microsoft and Amazon enjoyed for their cloud services, but the fact that IBM’s Analytics division alone is much bigger than Amazon and Microsoft’s total cloud operations is indeed a huge achievement for a company that has been practically written off by many.
“IBM Analytics delivers on the promise of cognitive business. Our portfolio provides the first and only end-to-end ecosystem of data, analytics and cognitive capabilities and expertise. Available on the cloud, on premises or in hybrid deployments, our portfolio helps organizations uncover insights that improve business processes and ideas that drive game-changing outcomes.” – IBM
The above paragraph perfectly encapsulates IBM’s positioning in the cloud industry as a deployment-agnostic cloud service provider (CSP).
Of course, analytics based on an artificial intelligence backbone does require high-performance compute power, which is why a cloud deployment is the ideal solution. But the message IBM is sending to the customer is that it doesn’t matter what kind of a deployment model you choose, our products will work for you, whether you want to run things on your own private cloud, choose a public cloud or have a bit of both via the hybrid cloud model.
The big question here is: Why would IBM, whose Analytics unit is on the threshold of becoming a $20 billion dollar business in its own right, take the deployment-agnostic approach when the entire technology industry is racing towards the ‘Software rented for a monthly fee’ model – or SaaS model – that stays within the confines of public cloud?
The answer to that question also lies in the way IBM is trying to exploit its inherent strengths while also taking a differentiated positioning in the cloud race.
IBM’s strength lies in its relationships with the largest companies in the world, most of whom are already its clients. IBM also knows that the bulk of these companies will prefer the hybrid cloud model so they retain a greater measure of control over their data; in addition, there are those who will not move out of their private clouds.
In order to leverage that strength, IBM Analytics has decided to take the deployment-agnostic route for its analytics business. That way, they don’t rub their existing clients the wrong way, but are also there to support those clients who are seriously looking at public cloud as an option.
That middle ground has worked wonders for them so far because they don’t need to take Amazon or Microsoft head-on. Their preferred hybrid cloud model is already the most used cloud deployment method around the world, and it will grow even bigger as more enterprises offload their workflows onto cloud environments.
From that standpoint, the company’s positioning of IBM Analytics for various models of cloud deployment is ideal. Not only can they leverage the relationships they already have for their hybrid cloud offering, but they can attract new business by pushing this deployment-agnostic model for their best performing product – Watson.
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