I flew into Las Vegas from Heathrow yesterday, arriving in a much warmer – but still Summer-ending – climate. Goodness knows how many attendees there are here, where IBM is taking up the conference area of the MGM Grand Hotel. It was great to chat to a few customers, IBMers and fellow analysts about their expectations for the coming 3 days.
IBM is a company I watch very closely and is in the process of transformation from a ‘big iron’ hardware to a cloud services supplier , which seemed like a big gamble 2 years ago but is beginning to pay off. It’s not so much that the technology is changing with its mainframes, power and storage arrays still providing the backbone of its solutions – it’s more that the way in which customers can purchase workloads is shifting from running everything to contracting out parts.
One person’s Op Ex is another person’s Cap Ex and so the greater flexibility IBM gives its customers will make its own SoftLayer the biggest purchaser of its own systems and software (if it isn’t already). From a revenue and profit point of view the rapid move to offer cloud solutions is making IBM’s financial year very different than before, when sales were very seasonal (a big push to get ‘customer accepts’ installed before December 31st and the peaks and troughs of new processor introductions). You need to offer much more flexibility when selling cloud services, which is smoothing out the quarters in IBM’s revenues. Making enough profit is also a challenge for cloud service providers, which is more challenging than selling physical products.
Amazon is IBM’s biggest competitor for IaaS and PaaS services, mainly because the other system vendors were reticent in joining in so early. Now Dell has Virtustream I don’t think it’ll be long before HPE also joins in.
I’m looking forward to hearing more about IBM’s systems offerings, strategies and from its customers and partners over the next few days and will report back to you my thoughts.