IBM InterConnect 2017: Hybrid Cloud Offers IBM the Best Chance to Differentiate

C. Drake

Summary Bullets:

  • In contrast to HPE and Cisco, which have recently retreated from maintaining public clouds, IBM continues to assert its strengths as a public cloud provider.
  • IBM should build on its capabilities to deliver hybrid cloud solutions, while also preparing for strong competition from Microsoft, Dell EMC and VMware.

The cloud was the central theme at this year’s IBM InterConnect conference in Las Vegas, with IBM emphasizing the growing strength and competitiveness of the IBM Cloud, while also launching several new initiatives to support enterprise hybrid cloud deployments. These include a new strategic alliance with Red Hat that is intended to make it faster and easier for enterprises to deploy OpenStack-based hybrid clouds and the launch of a suite of tools for managing hybrid and multi-cloud environments – some of which utilize IBM’s artificial intelligence (AI) and machine learning engine, Watson, to offer predictive management capabilities.

During her keynote, IBM’s CEO, Ginni Rometty, presented the IBM Cloud to a packed stadium as “the platform for the next era of business.” The IBM Cloud comprises the company’s Bluemix (PaaS) platform and its SoftLayer (IaaS) business, whose services are delivered to customers via IBM’s international network of data centers. In contrast to infrastructure vendors such as HPE and Cisco, which have recently retreated from maintaining their own public clouds, IBM can exploit its strengths as a public cloud provider to compete in the market against heavyweights such as Amazon, Microsoft and Google. Rometty arrived at IBM InterConnect directly from Beijing, where IBM has just secured an agreement to open a new China data center. IBM has numerous customers of on-premises data center and private cloud resources that are also looking to add a public cloud dimension to their IT footprints, just as they remain committed to maintaining their on-premises resources.

At the same time, IBM knows that it isn’t enough to compete on price; it also needs to differentiate its offering with value-adds. One way it has sought to do this is by making Watson central to its cloud services business. Not only is Watson used to shape the security of the IBM Cloud, but it also provides the APIs for many services used by IBM Cloud customers.

Although Watson is certainly an important differentiator for the IBM Cloud, it’s notable that AWS and Google Cloud Platform are also prioritizing AI and machine learning as part of their service offerings, making for a tough battle ahead.

Going forward, IBM’s best recourse is to capitalize on its infrastructure strengths and grow opportunities in the market for enterprise hybrid cloud. IBM’s numerous customers of on-premises data center and private cloud resources are also looking to add a public cloud dimension to their IT footprints, as they remain committed to maintaining their on-premises resources.

IBM should build on the initiatives announced at InterConnect with a coherent message about its hybrid cloud capabilities. At the same time, it should prepare for competition from key rivals which have also spotted opportunities in the hybrid cloud. They include Microsoft, which plans to use its Azure Stack hybrid cloud platform to recreate the Azure public cloud experience behind enterprise firewalls, as well as HPE, Dell EMC and VMware. Dell EMC’s hybrid cloud strategy involves capitalizing on assets within the Dell Technologies group, including those of VMware. For its part, VMware has established a strategic partnership with AWS that allows it to run the VMware platform within the AWS cloud.

About Chris Drake
As Principal Analyst for Data Center Technology at Current Analysis, Chris is responsible for covering the emerging technologies that are remapping the traditional data center landscape. These include software and hardware products that are required to support public, private and hybrid cloud architectures, as well as the underlying virtualization and orchestration technology that is needed to enable process automation and workload management. He also covers the Converged Infrastructure market, with a focus on the latest generations of vendor pre-certified and optimized hardware/software stacks.

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