IBM inks $550 million managed services deal with Vodafone

IBM announced an 8-year managed services deal valued at approximately $550 million or €480 million with Vodafone as part of a Cloud business deal.
IBM and Vodafone deal
Vodafone Business customers will gain from IBM’s optimisation, automation and cognitive capabilities to run their business effectively in a cloud environment.

The venture between Vodafone and IBM will develop digital solutions, bringing the strengths of Vodafone’s IoT, 5G and edge computing with IBM’s multi-cloud and professional services capabilities.

The venture, which is expected to be operational in the first half of 2019, will focus on Vodafone’s British, German and Irish markets, targeting enterprises operating in industries such as retail, manufacturing, utilities, agriculture or transportation.

IBM CEO Ginni Rometty said: “IBM and Vodafone will use the hybrid cloud to securely integrate critical business applications, driving business innovation – from agriculture to next-generation retail.”

Vodafone CEO Nick Read said: “This venture with IBM allows us to focus on our strengths in fixed and mobile technologies, whilst leveraging IBM’s expertise in multicloud, AI and services.”

IBM is in the process of buying software company Red Hat for $34 billion. Analyst Dave Bartoletti at Forrester Research said the deal recognized Vodafone’s need for a partner to build out its cloud computing services, Reuters reported.

At the same time, IBM is moving away from competing head on with hyperscale cloud providers like Amazon Web Services (AWS), Microsoft Azure and Google that offer hosted memory, network and storage services that can grow with the needs of big, data-intensive businesses.

IDC Analyst Carla Arend estimates the global cloud market at $420 billion this year, with the market for global cloud connectivity worth another $2 billion. “The combined global market opportunity is huge,” she said.

Vodafone is already the No. 1 or No. 2 provider in Britain, Germany, Italy and Spain – and is stepping up its battle against BT, Deutsche Telekom, Telecom Italia and Telefonica in the fixed-line business market.

Vodafone aims to grow business service revenue, which currently accounts for 30 percent of its total, by combining fixed-line and mobile services with new technology in areas like AI and the Internet of Things (IoT).

Ireland and Britain have allocated 5G spectrum and Germany is about to auction frequencies for a mobile technology that will offer downloads far faster than on existing networks, as well as latency.

Michael Valocchi of IBM (left) and Greg Hyttenrauch of Vodafone Business (right) are the two co-leaders of the new venture.