More Cloud on IBM’s Horizon, And That’s a Good Thing
International Business Machines (NYSE:IBM) has made a big purchase for its cloud computing division, buying Cloudant Inc. for an undisclosed price to boost the company’s database-as-a-service options and continue with CEO Meg Whitman’s turnaround plan, which involves shifting focus to technologies like cloud computing as IBM moves away from its struggling hardware business.
Cloudant’s services are used by app developers to create mobile and web apps. IBM said that Cloudant already has clients in a wide variety of industries including gaming, financial services, mobile device manufacturers, online learning, retail, and healthcare. IBM says that Cloudant’s services are quicker and easier for app developers to use in comparison to its competitors.
“IBM is leading the charge in helping its clients take advantage of big data, cloud and mobile,” said Sean Poulley, vice president of Databases and Data Warehousing at IBM, in a press release. “Cloudant sits squarely at the nexus of these three key transformational areas and enables clients to rapidly deliver an entirely new level of innovative, engaging and data-rich apps to the marketplace.”
IBM says that its own cloud computing division will help Cloudant reach its full potential and give more app developers access to the best server technology. “Cloudant could not have found a better home than IBM,” said Cloudant co-founder Adam Kocoloski.
Cloudant already works with SoftLayer, which was purchased by IBM for $2 billion last year. IBM is hoping that its ownership of both SoftLayer and Cloudant will help it catch up to cloud rival Amazon’s (NASDAQ:AMZN) Amazon Web Services. Amazon arguably pioneered the concept of cloud computing and its business accounts for the vast majority of cloud contracts. In the fall, Amazon won a $600 million cloud contract with the U.S. Central Intelligence Agency from IBM, even though IBM has more experience with government contracts.
IBM posted its seventh straight quarter of declines last month due to falling demand for the company’s hardware, causing executives to forgo bonuses. The company’s hardware category has done so poorly that rumors have suggested IBM may look to sell its iconic semiconductor chip business. This is after the company recently sold its low-end server business to the Chinese tech company Lenovo (LNVGY.PK) for $2.3 billion.
The purchase of Cloudant is only the latest in big plans that IBM has for cloud computing. The company said last month that it will invest $1.2 billion into building more data centers for its cloud computing operations. IBM plans to build 15 new data centers across five continents in addition to the 13 data centers it already operates. The newest data centers will be located in China; Washington, D.C.; Hong Kong; London; Japan; India; Canada; Mexico City; and Dallas, Texas. IBM also said that it will undergo further cloud expansion in Africa and the Middle East in 2015.
The shift away from server hardware and toward cloud-based computing has hit IBM hard, but the company is hoping to bounce back by spending heavily on the technology.
More from Wall St. Cheat Sheet:
- IBM, Executives Hurt as Sales Fall for 7th Straight Quarter
- Can IBM’s Big Cloud Investment Help It Compete With Amazon?
- No More IBM Chips? Company Looks to Sell Its Semiconductors
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