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IBM Cloud Revenues: Where Partners Fit In

When IBM delivered stronger-than-expected Q3 2016 results yesterday, the technology giant pointed to multiple growth areas — including cloud services.

Still, IBM’s long-awaited turnaround and business recovery isn’t complete. The company’s overall revenues fell ever-so-slightly to $19.2 billion during the quarter. And the company will need to work overtime to plug more MSPs and ISVs into its cloud services.

Among the signs for potential optimism: The company’s strategic imperatives revenues (including cloud, mobile, security and cognitive computing) was $8.0 billion during the quarter, up a healthy 16 percent from Q3 2015.

IBM Cloud Revenue Progress

Also, IBM’s cloud revenue was $12.7 billion over the last 12 months, but that figure can be misleading since it includes CapEx spending rather than pure OpEx figures. IBM’s cloud as-a-Service annual run rate was$7.5 billion in the quarter, up an impressive 66 percent vs. Q3 2016. But that figure also can be a bit misleading, since it involves a “run rate” likely based on the final month of the quarter, rather than actual as-a-service revenues during the period.

The bottom line: IBM should do a better job of fulling disclosing its actual cloud revenues. But the anecdotal evidence suggests the company’s business is moving in the right direction.

Still, the health of IBM’s overall partner ecosystem is worth watching. On the ISV cloud front, IBM touts growing relationships with Workday and VMware. But VMware just last week named Amazon Web Services (AWS) as its preferred public cloud provider. In my view, that doen’t exactly bode well for IBM over the long haul.

It’s also unclear if or how IBM is embracing MSPs that support SMB customers. Key partners include Continuum, which runs an MSP-centric BDR (backup and disaster recovery) platform in IBM’s cloud. IBM attended a recent Continuum partner gathering in Boston, but didn’t flex its muscle at the MSP-centric conference. Frankly, that was a missed opportunity for Big Blue.

Meanwhile, IBM’s mobile and security offerings certainly present opportunities for small, midsize and enterprise-centric partners. But the big Cognitive Computing push (i.e., IBM Watson) still seems beyond the reach of most small partners.

Of course, IBM deserves equal time on these topics. We’ll be reaching out to the company for more views in the days ahead.

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