IBM has endorsed its cloud business to be one of the crucial parts of its ongoing transformation. In 2013 when IBM acquire cloud infrastructure provider Softlayer, the company got entry into the public infrastructure-as-a-service business. It got a base for its array of cloud services.
It’s public cloud business is far smaller as compared to the market leaders Amazon Web Services and Microsoft Azure. The news that a major IBM cloud customer is leaving adds to this concern.
Whatsapp is a SoftLayer customer before the acquisition by IBM. Whatsapp has plans to shift to Facebook’s own data centers later this year.
In spite of this news, the company’s efforts to position itself as one of the major cloud computing companies won’t have any negative impact. There are two major reasons for this –
No negative impact on IBM’s cloud
The reason behind WhatsApp having facebook’s data center is that Facebook has no shortage of readily available cash, and building its own data centers gives it complete control over its infrastructure. Already it has its own massive data center. It has also shifted its all acquisitions to the in-house data center. Like Instagram, acquired in 2012, was moved from AWS to Facebook’s own servers in 2013 in a year-long effort.
At Facebook’s scale, running in-house infrastructure is simply less expensive than paying a public cloud provider. This move isn’t proof that IBM’s cloud is inferior. Facebook spends roughly the same amount annually on capital expenditures as IBM; it would be silly to continue paying another company for cloud infrastructure.
Deeper than public cloud
Its revenue from cloud business is $14.6 from last 12 months and Facebook was spending just $2 million each month with IBM. So even if Whatsapp is leaving IBM as a customer it is a minor issue and nowhere it should impact the credibility of IBM in the market.
Moreover, the company’s high-value services are major cloud growth driver. IBM’s analytic business is only partly related to the cloud business but it generates revenue of $4.5billion just in the first quarter. Also, Analytics revenue grew by 7% year over year.
Date: June 12, 2017