First, the good news: IBM's true cloud revenues -- the type involving 'as a service' -- hit $4.5 billion in 2015, up a whopping 50 percent from 2014. And IBM's overall Q4 2015 financial results beat Wall Street's expectations. But plenty of challenges remain for IBM and its channel partners.
As you poke around IBM's results it's easy to be confused by some of the numbers. For instance:
1. Top Line Cloud Figures: For the full year, IBM's total cloud revenues (public, private and hybrid) increased 43 percent (up 57 percent adjusting for currency and the divested System x business) to $10.2 billion. ChannelE2E Reality Check: Those numbers include traditional hardware and software that are somehow involved in cloud projects. ChannelE2E prefers to focus on IBM's 'as a service' revenues, which much more closely reflect how the company is adjusting to the cloud world.
2. Strategic Imperatives: Fourth-quarter revenues from the company’s strategic imperatives --- cloud, analytics and engagement --- increased 10 percent year to year (up 16 percent adjusting for currency). For the full year, revenues from strategic imperatives increased 17 percent (up 26 percent adjusting for currency and the divested System x business) to $28.9 billion and now represent 35 percent of total IBM consolidated revenue. ChannelE2E Reality Check: Overall that's good progress. But remember: IBM is lumping in some traditional hardware and software sales into these "strategic imperative" outcomes.
IBM Transformation: One-Third of the Journey?
Roughly 35 percent of IBM's overall annual revenues now come from the strategic imperative areas -- cloud, analytics, mobile, engagement, etc. Surely, IBM can't move the needle to a 100-percent strategic imperative model. But CEO Ginni Rometty is making progress.
But is she making enough progress -- and is it arriving fast enough? As of mid-2015, Amazon commanded 29% of the cloud market -- followed by Microsoft, 12%; IBM, 7%; and Google, 6%., according to Synergy Research. Anecdotal evidence suggests Amazon Web Services is growing faster than IBM's cloud, though IBM has a more targeted focus involving enterprise and midmarket adopters.
Rometty must also deal with a headline that returns to haunt her every quarter: IBM's year-over-year quarterly revenues have now declined for 15 consecutive quarters.
IBM PartnerWorld: PWLC 2016
Still, IBM's mix of cloud, mobile, analytics and security solutions remain on thousands of partner radars. The company is set to host IBM PartnerWorld Leadership Conference 2016 in February.
It's a safe bet that more IBM SoftLayer and BlueMix solutions for partners will emerge there. Channel-friendly, MSP-centric companies like Continuum continue to leverage IBM's cloud to host business continuity and other services. But even continue has been hedging in recent months, give MSPs cross-platform public cloud options that will increasingly involve AWS, Azure and perhaps even Google at some point.
For Rometty, that means IBM will need to stay even closer to partners -- even as the company tries to overcome investor skepticism on Wall Street.
