IBM IBM CEO Ginni Rometty On Tuesday, IBM announced that it is investing $1 billion over the next five years in a hot new area of enterprise tech called "software-defined storage."
This is important and interesting for a whole bunch of reasons — and shows that CEO Ginni Rometty has her competitive game on.
She's got a plan to move her massive 400,000-ish strong workforce from shrinking businesses and towards growth areas, even though it's painful, with a number of quiet layoffs involved.
To understand why this new $1 billion investment is cool, you need to know two things:
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"Software-defined" is a huge trend in the $3 trillion enterprise technology market.
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This is the second big move that IBM has made that puts it on a collision course with storage giant EMC, and the $17 billion storage market that it dominates with about 30% market share, according to IDC as reported by Forbes .
Software is eating the enterprise data center
"Software-defined" is a term that refers to taking expensive hardware, removing the all the fancy features from it that makes it expensive and putting those fancy features into software apps that run on special computers. You still need the hardware, but you need less of it, less expensive varieties and your data center becomes faster, more efficient, and less expensive — important for today's cloud computing needs.
Software-defined networking (SDN) is already happening, forcing market leader Cisco to respond.
LinkedIn/Dheeraj Pandey Dheeraj Pandey co-founder and CEO Nutanix It is also coming on strong in storage, forcing EMC to respond. The poster child for this new market is IPO-bound startup, Nutanix, which has raised a whopping $312.2 million from investors and was on track to book $300 million this year when it announced second-quarter growth earlier this month.
EMC has a software-defined storage (SDS) product of its own, ViPR, which is selling well and one of the six areas where EMC is heavily investing, it says.
$312.2 Million Second smart move by IBM
IBM's $1 billion commitment is the second big recent move it made to eat EMC's lunch. In December IBM cozied up with Cisco shortly after Cisco divorced its former close partner EMC.Â
Flickr/Cisco Cisco CEO John Chambers (left) and EMC CEO Joe Tucci Cisco and EMC had a successful joint venture, called VCE, that was on track to sell $2 billion of equipment from Cisco and EMC in 2014 (EMC said last fall) and is growing by 50% a quarter, (EMC said in January).
VCE makes a product that combined Cisco's popular computer servers with VMware's server software and EMC's storage.