IBM adds four new cloud data centres as second quarter results hit

IBM has issued its financial results for Q217, with revenues down 5% year over year but with its cloud arm leading ‘continued growth in strategic imperatives’.

According to the release (pdf), total revenues were at $19.3 billion (£14.9bn), compared to $20.2bn this time last year. The first half of the year totalled $37.4bn, down from $38.9bn in 2016. IBM said its second quarter cloud revenues were at $3.9 billion, up 15%, with cloud revenues over the last 12 months totalling $15.1bn.

IBM puts its revenues into four primary buckets; cognitive solutions at $4.6bn, global business services, at $4.1bn, technology services and cloud platforms, at $8.4bn, and systems, including systems hardware and operating systems software, at $1.7bn.

“In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world’s leading companies to the IBM cloud,” said Ginni Rometty, IBM chief executive officer in a statement. “We continue to innovate, adding regtech capabilities to our portfolio of Watson offerings; developing solutions based on emerging technologies such as blockchain; and reinventing the IBM mainframe by enabling clients to encrypt all data, all the time.”

IBM’s focus on blockchain and artificial intelligence (AI) was made abundantly clear at the company’s InterConnect event in Las Vegas in March. Rometty told attendees of her belief that blockchain “will do for trusted transactions what the internet has done for information”, and how quantum computing will solve problems businesses ‘never knew [they] had’.

Signifying the cloud push, the company has also announced the arrival of four new cloud data centres yesterday, with two opening its doors in London and the others in San Jose and Sydney. IBM’s global cloud data centre footprint now sits at almost 60, across 19 countries.

The company name dropped two customers, in the shape of and oilfield services provider Halliburton, with John Considine, general manager for cloud infrastructure services, saying “we continue to expand our cloud capacity in response to growing demand from clients who require cloud infrastructure and cognitive services to help them compete on a global scale.”

Given the continued downturn in overall revenues – revenue falling for the 21st consecutive quarter – analysts would be expected to have a pessimistic outlook. An excoriating note from Jefferies, reiterating ‘underperform’, said that while IBM’s Watson is one of the most complete cognitive platforms, the company is ‘outgunned’ in the war for AI talent and return on investment could be negligible.

Yet writing for Seeking Alpha, Thomas Pangia – a long IBM supporter – argued the company’s declining revenue trend should be a thing of the past by 2019, adding its strong cash flow was also a positive.

Among the highlights for IBM this quarter is buying Verizon’s cloud and managed hosting service, collaborating with Nutanix to help enterprises with hyperconverged deployments, as well as securing a cloudy client win with American Airlines.