IBM's 4Q and FY14 Earnings: Transition Has Yet to Yield Good Results (Part 8 of 17)
IBM has increased its focus on offerings for the cloud and big data space
In 2014, IBM (IBM) sold off its x86 and semiconductor technologies. With the sale of low margin hardware units, IBM is trying to streamline its hardware business and shift its focus on POWER 8 servers and System z mainframes. In February 2014, the company announced integration of its high-end POWER Systems servers for hosting and developing applications on SoftLayer cloud infrastructure to boost its Watson Technology.
To gain diversified exposure to IBM, you can invest in the iShares US Technology ETF (IYW) and the Technology SPDR ETF (XLK). IYW and XLK invest about 4.2% and 3.51% of their holdings in IBM, respectively.
SoftLayer brought hybrid cloud to System z and POWER servers
In June 2014, IBM’s SoftLayer introduced Direct Link, which was available only to a few customers before. Direct Link is a specialized content delivery network for creating hybrid clouds. Firms can connect their private IT infrastructure to public cloud resources by directly accessing the SoftLayer platform that streamlines the delivery over the network. This offering is similar to Microsoft’s (MSFT) Windows Azure Express Route and Amazon’s (AMZN) Direct Connect.
Microsoft’s Express Route facilitates enterprises to extend their private networks to Windows Azure using fast, low-latency network connections. AWS Direct Connect enables data transfer through a private network connection between AWS and the company’s data center or corporate network. Cisco’s Intercloud service enables enterprises to have a multi-cloud or a hybrid cloud.
With system z, firms can connect to an application server on the SoftLayer Cloud Server to form a Hybrid System z-Enterprise Cloud. The resulting Hybrid System z-Cloud Enterprise Architecture provides secure transactions combined with the dynamics of the cloud. IBM stated that zEnterprise helped it consolidate over 30,000 servers across the world, resulting in an 84% improvement in data center efficiency and a 50% reduction in power and cooling. The system also led to savings of $1 billion.
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