IBM's Q1 2016 earnings show major revenue growth in cloud and SaaS, which should continue as IBM expands Watson, Swift and other products.

Christopher Tozzi, Contributing Editor

April 19, 2016

2 Min Read
IBM Promises Strong Cloud Revenue Growth through SaaS, Watson and IoT

IBM is enjoying major revenue growth in its cloud computing business and expects it to continue thanks to partnerships with companies like VMware, new SaaS investment and cloud-based data analytics solutions from Watson. That’s according to the company’s first-quarter 2016 earnings report, which is out this week.

The Q1 2016 earnings report, which was published April 18, shows cloud revenue growth of $10.8B over the past twelve months. For the quarter, the company reported cloud revenue totaling $2.6B, a 36 percent increase. SaaS components in particular were up 46 percent.

IBM seeks to send a strong message that its momentum surrounding cloud offerings will continue. In remarks about the earnings, Patricia Murphy, IBM’s VP of investor relations, cited IBM’s acquisition of The Weather Company’s digital assets, which add “a high-volume, cloud-based, insight-driven platform” to the company’s operations, she said.

Murphy also mentioned new partnerships with VMware surrounding hybrid cloud products, as well as GitHub, which runs a code-hosting repository for open source developers and will collaborate with IBM on building new cloud applications for the enterprise.

These partnerships represent traditional cloud investments, but IBM is working on less orthodox cloud initiatives, too. In December, it introduced a SaaS offering for developers to build and test applications using Swift, a programming language for mobile apps that Apple open-sourced recently. Also notable was the company’s acquisition of UStream, which it says it will leverage to advance its cloud video offerings.

Last but not least, there is IBM Watson, the AI and data analytics platform that first made headlines in 2011 for competing successfully on Jeopardy! Now, Watson has evolved into a robust, cloud-based platform for analytics, offering APIs for solving a range of business intelligence challenges. IBM said that the number of developers using Watson tripled over the past year, and the enterprise user base has doubled. The company expects this growth to continue as it rolls out new features to Watson, including analytics tools for the healthcare industry and IoT.

All of this news shows that IBM, the company once known largely for selling servers, is now heavily invested in doing the opposite: Offering cloud services so that organizations no longer have to buy their own servers. By all indications, the cloud has become a central part of IBM’s business operations, and there is strong evidence that it will continue to drive impressive revenue growth in the coming year.

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About the Author(s)

Christopher Tozzi

Contributing Editor

Christopher Tozzi started covering the channel for The VAR Guy on a freelance basis in 2008, with an emphasis on open source, Linux, virtualization, SDN, containers, data storage and related topics. He also teaches history at a major university in Washington, D.C. He occasionally combines these interests by writing about the history of software. His book on this topic, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” is forthcoming with MIT Press.

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