IBM revenue dips 3%, profit drops 29%

IBM has posted 3 percent drop in revenue to $20.2 billion, while net income dipped 29 percent to $2.5 billion in Q2 2016.

IBM’s revenue from focus areas increased 12 percent to $8.3 billion. Cloud revenue of IBM was $3.4 billion, showing 30 percent growth.

“In the second quarter we delivered double-digit revenue growth in strategic imperatives, driven by innovations in areas such as analytics, security, cloud video services and Watson Health, all powered by the IBM Cloud and differentiated by industry,” said IBM CEO Ginni Rometty.

IBM revenue in Q2 2016

IBM Cloud +30 percent
Analytics +5 percent
Mobile + 43 percent
Security + 18 percent
Cognitive Solutions + 3.5 percent
Global Business Services — 2 percent to $4.3 billion
Technology Services & Cloud Platforms –0.5 percent to $8.9 billion
Systems –23.2 percent to $2 billion

Sanjay Medvitz, research analyst at TBR, said: “IBM’s software business pursues long-term growth through the expansion of its high growth areas for analytics applications, and hybrid cloud. IBM has focused on re-positioning its legacy middleware and management solutions to enable hybrid cloud growth with enhanced analytics, automation and integration capabilities across clouds.”

Flat Software revenue growth in Q2 2016 represented the vendor’s first quarter without a decline in over a year. Software performance was driven by strong growth in analytics and security within its Cognitive Solutions segment. The vendor’s Software Solutions segment will be a key indicator of the vendor’s success over the next two years, grew 6 percent with notable success from Cognos and Watson. IBM will continue to prioritize the expansion of Watson capabilities and growth of key Solutions Software pieces such as Cognos Analytics, WebSphere Commerce and QRadar.

IBM partners with Cisco to fuel IoT growth with a boost in analytics capabilities

The new Internet of Things (IoT) collaboration between IBM and Cisco announced in June will help ease customer hesitation surrounding large-scale IoT projects by offering customers a hybrid IoT analytics approach that leverages edge-based IoT and centralized IoT.

For IBM, adding the availability of edge analytics will lower barriers of entry to IoT for customers, as edge analytics costs are lower because not all data needs to be transported, stored and analyzed in a centralized location or in the cloud. The combination of IBM’s Watson IoT technology and Cisco’s architecture and edge analytics capabilities greatly improves each company’s respective analytics offerings and will accelerate IoT revenue growth with the extended reach of each vendor’s customer bases.

The collaboration emphasizes IBM’s larger strategy focused on expanding analytics capabilities and Watson use cases for industry verticals. IBM’s strategic partnerships with Cisco will help it establish proof points for Watson’s artificial intelligence capabilities as IBM looks to establish and expand new revenue streams for long-term growth.

IBM’s strategy based on analytics, Watson and hybrid cloud requires enhancements of its traditional IT solutions

Similar to other software vendors such as Oracle, IBM innovates to make marquee management products such as WebSphere key pieces of its cloud portfolio. The reorientation of legacy software solutions under Bluemix, SoftLayer and Watson brands helps the vendor improve product relevance for changing customer preferences and apply them to hybrid cloud deployments. IBM announced WebSphere was 100 percent available via the cloud in Q1 2016.

IBM released a new version of its database software, DB2 V11.1 in June which is better designed for hybrid environments with easy data management and improved security capabilities for movement across on-premises and cloud. The vendor also launched IBM Spectrum Computing, new software that provides workload and resource management capabilities. The new solutions provide improved workload and application management by sharing resources across on-premises and cloud environments.

Baburajan K
[email protected]