IBM claims its cloud revenues grew more than 70 percent in the first half of 2013. That sounds impressive -- but in many ways it's meaningless, especially as channel partners try to sort out IBM's private and public cloud offerings. Here's why.
IBM remains a massive hardware and software provider. The company also is building out SmartCloud -- which spans private cloud, IaaS, PaaS, SaaS and consulting/implementation services. IBM has never really publically discussed how much revenue each area generates. Instead, IBM offers sweeping generalizations about its cloud momentum.
During an earnings call last week, CFO Mark Loughridge said, "Cloud, through the first half of the year, up very, very strong."
In stark contrast, many rivals are offering far more details about their cloud revenues:
- Oracle President Mark Hurd has stated that the company's SaaS business is above the $1 billion annual run rate.
- Microsoft CFO Amy Hood last week said Office 365's annual revenue run rate now tops $1.5 billion, and more than half of the Fortune 500 now runs Windows Azure cloud services.
- SAP says its cloud revenues are approaching $700 million.
What Do the Numbers Mean?
What about IBM? CFO Loughridge would only say that cloud revenues were up 70 percent in the first half of 2013. But here's the problem with the statement:
- What are the actual dollar figures? Up from $10 million to $17 million? Up from $1 billion to $1.7 billion? Something else? Only IBM knows.
- How much of the so-called "cloud" revenue is simply hardware and software purchases that businesses use in traditional data centers rather than true clouds? Only IBM knows.
- How much of the cloud revenue involves the critically important IaaS, PaaS and SaaS offerings? Only IBM knows.
Here's the reality: IBM's top-line revenues have declined five consecutive quarters. In terms of actual dollars and cents, IBM's cloud revenue growth can't be all that impressive since it isn't dramatic enough to offset revenue shrinkage elsewhere in the company.
Still, IBM's cloud fortunes could be rising. Much of that upside could involve SoftLayer, a Top 100 Cloud Services Provider that IBM acquired in July. (The latest Top 100 CSP list will debut July 30 on Talkin' Cloud.)
During the IBM earnings call last week, Loughridge said: "We [have] closed the acquisition of SoftLayer Technologies, the world's largest privately held cloud computing infrastructure provider. As businesses add public cloud capabilities to their on-premise IT systems, they need enterprise grade reliability security management. IBM has built a portfolio of high-value private, public and hybrid cloud offerings. With SoftLayer, IBM will accelerate the build out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovation."
Poke around IBM and you'll discover the company's channel team has high hopes for SoftLayer. It's a safe bet IBM's partner program will connect MSPs with SoftLayer's infrastructure as soon as possible.
How much cloud business will that generate for IBM? I hope, at some point, IBM is willing to share those details. In the meantime, percentage growth figures say little about the true state of IBM's cloud business.