IBM is sure expanding its cloud footprint beyond the American shores. The latest agreement is with a Chinese company called Wanda, under which IBM will bring more of its services to China.

Both these companies have entered into an agreement to create a new company called Wanda Cloud, that is expected to become operational by 2018. Through this new venture, IBM will offer select cloud infrastructure and PaaS technologies in China.

The newly-formed Wanda Cloud will license IBM technologies and implement them in Wanda-owned data centers. In addition, Wanda Cloud will also sell and distribute these cloud services to companies and individuals, and at the same time, will ensure that their offerings meet the Chinese regulations. The revenue from Wanda Cloud will be shared by IBM and Wanda, though the exact percentage has not been released by the IBM spokesperson.

Wanda Group of companies is a large conglomerate that is mainly engaged in commercial properties, culture and finance. In 2015, the assets of Wanda Group was a 634 billion Yuan while its revenue was  290.16 billion Yuan. In fact, this is the world’s largest real estate enterprise and is the biggest five-star owner in the world. Besides real estate, Wanda Group is also the largest cultural enterprise in China and also, the world’s largest cinema operator. In addition, it also the world’s biggest sports company.

Last year, it spun a new company called Wanda Internet Technology Group to make a foray into the Chinese technology market that is currently dominated by only a handful of well-known names. This agreement is likely to give a big boost to the Wanda Group as it plans to expand into the technology sector in a big way.

As for IBM, this partnership can strengthen its grip over the Chinese market, where American companies have to enter into agreements with local Chinese companies to offer their services. Already, it had  entered into an agreement with another Chinese company called 21Vianet to bring cloud services to China. This partnership is expected to expand its reach in a market that has virtually unlimited potential.

Currently, Alibaba is the largest cloud service provider in China. When Wanda Cloud becomes operational by next year, we can expect the competition to stiffen a bit in the Chinese cloud market, thereby threatening the dominance of Alibaba in this market area. For its part, Alibaba is looking to expand to other regions in the world to take on competition from giants like AWS, as it feels fairly secure in the Chinese market.

This partnership between IBM and Wanda Group, revealed during IBM’s Interconnect tech conference in Las Vegas, comes as a big surprise to many people. Nevertheless, it is sure to augur well for both IBM and Wanda Group, not to mention the many Chinese companies and individuals who can benefit from it.

According to research firm Canalys, the cloud storage market is expected to reach $135 billion by 2020, so it’s little wonder that all major companies are vying to get a lion’s share from this market.

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Adobe Systems Inc posted an impressive first-quarter results that beat the analysts estimates. It reported a revenue of $1.68 billion that amounted to an adjusted earnings per share (EPS) of $0.94. This was higher than what the analysts expected, which was a revenue of $1.65 billion and an EPS of $0.87. In fact, this revenue represents a 22 percent increase.

Much of this increase can be attributed to the astounding success of Adobe’s Creative Cloud Platform, which is one of  Adobe’s core media franchises. Total revenue from this line of business was $942 million, representing an increase of 29 percent. Also, this arm of business was responsible for 56 percent of Adobe’s total revenue.

This giant share of Creative Cloud Platform, in many ways, reflects the strategic shift made by the company over the last few years. A change in its business model, which is to move to a subscription-based revenue stream, has augured well for the company. Prior to this strategy, the company had focused much on the sale of its software package licenses.

So, why this shift boosted the company’s revenue? Earlier, a software license meant that users bought it once and used it across different systems until they ran out of its use. In other words, this was a one-time purchase only. On the other hand, a subscription model is a recurring stream of revenue, as users have to pay monthly or yearly for using the same package.

On the face of it, you may think the difference won’t be much because the company is getting a bulk amount while selling a software license as opposed to monthly billing. In addition, monthly billing leads to accrued income whereas an outright license sale can bring in current revenue.

Well, there are a few aspects you’re missing here. First off, when a user wants to use the same product across a number of computers, he or she will have to buy separate subscriptions because in most cases, one subscription is valid for one computer only In the case of an outright buy, the same cost was split across two or more computers, depending on the license terms of Adobe.

The second and the more important aspect is the elimination of piracy. Like many software companies, Adobe was also losing a substantial amount of money through software piracy where the same software was copied, tampered and resold in the black market. With a subscription-model, there is no such problem as anyone who wants to use the software has to subscribe for it. A simple and neat choice, that also makes management easy.

As a result of this change, Adobe was able to bring in more cash flow into its fold. Reports show that this company’s cash flow from operations increased by 47 percent to $730.37 million. The net income rose to $398.45 million or 80 cents per share. A year earlier, it was $254.31 million or 50 cents per share.

Due to this big result, the shares of Adobe was up by four percent during after-hours trading. Currently, it is trading at $127.25.

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