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Security analysts at IBM X-Force Command Centers are using Watson to augment their investigations into cybersecurity incidents. (John Mottern/Feature Photo Service for IBM)

LAS VEGAS — IBM CEO Ginni Rometty seemed this week to be the living embodiment of what could be the company’s new mission statement: work with everyone.

IBM CEO Ginni Rometty during her keynote address at IBM InterConnect 2017. (Feature Photo Service for IBM)

When Rometty arrived here for the IBM InterConnect conference, she had come directly from Beijing, where IBM announced a deal to add a new data center in China through a deal with the Wanda Internet Technology Group. That announcement came on the heels of Rometty’s appearance in Washington, D.C. with U.S. President Donald Trump as part of a roundtable discussion on vocational training with U.S. and German business leaders during the state visit of German Chancellor Angela Merkel.

A similar philosophy underpins many of IBM’s newest cloud products and services. With its news this week, the company sought to transcend the traditional borders of the industry — working with a wide variety of partners to put its technology squarely in the middle of everything from multi-cloud and hybrid cloud solutions to the Internet of Things (IoT) and mobile device management.

With the moves, IBM is seeking to leverage its traditional strengths in business technology, aiming to differentiate itself from public cloud leaders Amazon Web Services, Microsoft Azure and Google Cloud.

Focusing on insights and the cloud

IBM rolled out a LOT of new cloud offerings at InterConnect. Some of the most interesting brought together IBM’s commitment to helping customers working with multiple cloud providers (as a kind of “cloud broker”) and its quest to leverage IBM Watson artificial intelligence technology to help customers derive a whole lot more insight from their data.

Rometty likes to say that “data is the world’s next natural resource,” and the key is extracting that data to glean insights.

“We have a very different view than others do on this,” Rometty said. “We think the value is insights. There are others who think the value of all this data is to find it and distribute it. In many ways, it commoditizes your data. Some people call it democratizing your data. That’s not what we believe we’re here for. We think we’re here to help you get a competitive advantage — to take that data, and more importantly, with an architecture that is data-first, we can guarantee you that your insights are your insights.”

IBM’s news included a group of cloud products under the banner of “IBM Cloud Integration.” To explain the need for these products, IBM cites a recent IDC study which it says predicts that more than 85 percent of enterprises will commit to multi-cloud architectures by 2018 — and that they’re going to need good tools to make all that work well. So IBM’s new solutions to meet that need are:

  • IBM Cloud Product Insight (designed to help IT admins or capacity planners manage how they are using various cloud environments and get the data needed to tackle products)
  • IBM Digital Business Assistant (which is supposed to be a proactive tool to “watch for complex situations across multiple clouds, alerting users to actions, taking action on their behalf, and learning from past interactions to provide recommendations on the best action to take.”
  • IBM Cloud Automation Manager (which IBM says is a Watson-based advisor that will help customers “make informed decisions and manage multi-cloud environments with automated provisioning, orchestration, and governance”).

Communicating value

Ed Anderson, Research VP of Cloud Services for Gartner, said he thought IBM “communicated a pretty strong message” about the value of its Watson-powered cloud offerings, while putting competitors on notice that it’s committed to the cloud market — “that they’re in this for the duration.” He cited investments in hybrid cloud, cloud security, cloud management and brokerage, including IBM’s recent work through IBM Cloud brokerage services and Gravitant, a cloud broker company IBM acquired in 2015.

He said that while it was good for customers that IBM announced a new “Flex” cloud storage offering with lower, more competitive pricing, the real message in the storage announcement was that IBM aims to be competitive with Amazon Web Services and Microsoft’s Azure.

“What IBM is saying is, first of all, that we think data in the cloud is your pathway to all these rich insights – especially if you can connect it to some of the intelligence capabilities of Watson. To complement that, they are saying – we’re going to make our storage super-cheap so when you push your data up to our cloud, it won’t cost you and arm and a leg,” he said. “The messaging says we’re in the game, we’re willing to compete, we’re willing to innovate and we’re not afraid to take some shots at our competitors. We think our platform is competitive and we’ll go toe-to-toe with them. That was a bigger message to me than the details of the storage offering.”

Larry Carvalho, Research Manager for Cloud Platform and Developer Services at IDC, suggested that low-cost pricing isn’t the only issue IBM needs to tackle around storage, or other cloud services. “Storage is just one component of a cloud stack and cost advantage will not help without effective higher end services (like database abstraction and tools for volume ingestion of data),” he said. “Costs will make a difference if packaged with differentiating IBM offerings like Watson, but lower cost of storage alone will not make a difference.”

Tough competition

Rodney Nelson, an equity analyst at Morningstar Inc., was skeptical about IBM’s chances against extremely tough and well-established cloud competitors like AWS, Azure and Google Cloud. He wasn’t sure whether IBM’s moves at InterConnect were going to make a lot of difference in the market.

“I don’t think there’s necessarily anything in these announcements that drastically change the competitive landscape,” he said. “The major cloud vendors are flooding the market with new features on a consistent basis… all have moderate to major leads on IBM in that regard.”

Rodney Nelson

Nelson did concede that IBM has something fairly unique in Watson, but suggested it may only be a short-term advantage. “I think we’d argue that Watson is probably the most compelling offering IBM can point to as a differentiator for its cloud business, but analytics/AI/machine learning are/likely will be hallmarks of the offerings from Amazon, Google, and Microsoft,” said Nelson. “We generally handicap the cloud IaaS (Infrastructure as a Service) race as a market that will likely consolidate around those three vendors (along with Alibaba which is growing a strong position in China).”

Given IBM’s huge historical strength in the enterprise market, many argue that IBM solutions need to make it easier for large customers to transition to the cloud in a way that lets them to run and manage both hybrid environments (which use a mix of traditional data centers and cloud environments) and multi-cloud scenarios (where customers may buy cloud services and capacity from a variety of providers). That’s what solutions such as the IBM Cloud Integration promise.

Gartner’s Anderson is bullish on this approach. “A lot of people have invested a lot of money in those legacy systems and they matter today. And they’ll matter in the future,” said Anderson. “IBM has taken a very progressive stance on saying we’re going to be an environment that brings all of that stuff together.”

He also suggested that IBM’s take on hybrid cloud solutions is as much a reflection of IBM playing to its own strengths (and traditional revenue sources) as it is to customer needs. “(Hybrid cloud) is pretty core to the IBM message and value proposition in contrast to AWS, in particular, which really is more about ‘hey, the past is dead, the future is public cloud and everything is going to move there’,” said Anderson. “So IBM is kind of taking a counter position to that.”

IDC’s Carvalho says that it shouldn’t come as a surprise that most customers like the concept of having certain workloads on-premise while moving external facing workloads to public clouds. “The success of this offering will depend on whether IBM is willing to support non-IBM public clouds too – like AWS and Azure,” he suggests.

According to Gartner’s Ed Anderson, the biggest achievement of IBM’s InterConnect this week was reminding both competitors and customers that they shouldn’t be counted out of the cloud market – and have some unique and new takes on cloud solutions.

“IBM is the biggest technology company in the world. They have a lot of presence around the world and the fact that they’re saying: ‘hey, we’re in this cloud market to win and we’re investing and innovating and we’re differentiating’ means that you can’t count them out,” he said. “For Microsoft and for AWS and Google, it’s worth noting that they’re got a big, powerful competitor that’s slugging it out. Some of IBM’s peers have ceded the market, exited it and moved on to other things. IBM hasn’t done that. They’ve said, we’re going to keep investing here.”

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