IBM still searching for its place as it targets the edge

IBM’s struggle over the last decade has been well documented, but with a pivot following a pivot, the $34 billion Red Hat acquisition is beginning to make waves.

Jamie Davies

May 5, 2020

3 Min Read
IBM still searching for its place as it targets the edge

IBM’s struggle over the last decade has been well documented, but with a pivot following a pivot, the $34 billion Red Hat acquisition is beginning to make waves.

Today marks the launch of IBM’s Think Digital event, a virtual conference to discuss everything and anything IBM. There will of course be numerous announcements across the extravaganza, but the Red Hat focused boasts are some of the most interesting.

“In today’s uncertain environment, our clients are looking to differentiate themselves by creating more innovative, responsive user experiences that are adaptive and continuously available – from the data centre all the way out to the edge,” said Denis Kennelly, GM of IBM Hybrid Cloud.

“IBM is helping clients unlock the full potential of edge computing and 5G with hybrid multi-cloud offerings that bring together Red Hat OpenShift and our industry expertise to address enterprise needs in a way no other company can.”

Multi-cloud is a term which will become increasingly important over the next few years, as enterprise organisations aim to realise the power of cloud computing, marrying the benefits of ‘best in breed’ with rationalisation projects to improve operational efficiencies. On top of these complex operational challenges, the edge is becoming a much more prominent proposition for all in the ecosystem.

Built on Red Hat OpenShift, IBM will now offer several new services and products to enable companies in this new digital environment. The Edge Application Manager or Network Cloud Manager, for example, take IBM into new segments in the on-going pursuit of relevance.

“IBM’s new version of Edge Application Manager and introduction of Telco Cloud Manager is part of IBM’s hybrid cloud strategy which is now extending through telcos to the edge,” said Nick McQuire, VP of Enterprise Research. “The moves essentially put IBM’s marker down on edge computing which represents a new era of computing outside the data centre and the public cloud.

“With the emergence of 5G and low-latency applications which are acting as accelerators, telcos too must transform so IBM is hoping that its relationships with telcos globally, though Red Hat and its services and arm, will make it better placed than the hyper-scalers to take advantage of this shift.”

As McQuire points out, this is an effort to further differentiate the business, but also evolve the company to ensure it is operating in more sustainable markets in the future. The issue over the last few decades has not only been IBM’s relevance to market trends, but also its ability to compete in the new segments.

In January 2018, IBM reversed a trend which had been haunting the management team. This earnings call offered investors the first period of year-on-year revenue growth for almost six years. Big Blue had been on the decline, but it seemed to be turning around the business with its cloud computing unit and AI proposition Watson leading the charge.

However, the business failed to accelerate around the turned corner.

In the cloud computing segment, IBM failed to keep pace with market leaders, falling off as Amazon Web Services, Microsoft Azure and Google Cloud proved they were in a different league to the rest. And in AI, the segment has not boomed as some might have anticipated, though IBM still has one of the worlds’ leading technologies in Watson.

With these two ventures failing to live up to the lofty promise, although they did push the IBM business back into growth, Red Hat is supposed to offer an alternative play at the enterprise connectivity and IT markets.

What is worth noting is that AWS, Microsoft and Google, as well as other cloud competitors, have made moves into the enterprise edge market as well. With the emergence of 5G, the cloud industry could well be ready to move into the next phase of development, but the question is where does IBM fit in?

IBM has dipped its fingers in numerous pies, but Red Hat is a definitive move ahead of a new surge in the cloud market. Companies don’t spend $34 billion on organisations which are going to supplement offerings, this is another material shift in the IBM operations as it continues to search for its place in the digital ecosystem.

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