IBM is set to open four new data centers in California, London, and Sydney, as it tries to stay competitive in the cloud business amid steadily declining overall revenue.
The company plans to announce the new data centers — two in London, one in San Jose, and one in Australia — one day after releasing quarterly earnings results that upped its streak of consecutive quarters with year-over-year declining revenue to 21, which is a lot. IBM now has 59 data centers supporting its cloud computing efforts, and the new data centers join several other IBM facilities in their respective areas, increasing reliability for customers in those regions.
IBM is fighting from behind when it comes to public cloud computing. Various market share surveys put it in fourth place, more or less, well behind Amazon Web Services, Microsoft Azure, and Google Cloud Platform. Gartner’s cloud infrastructure Magic Quadrant, which is really only useful for judging cloud also-rans, ranked IBM behind Alibaba and Virtustream in terms of ability to execute.
But as both Microsoft’s Scott Guthrie and Google’s Greg DeMichillie pointed out at our Cloud Tech Summit last month, there are only a handful of companies that can afford to make the investments in hardware needed to compete in the market for public cloud services. IBM is definitely one of those companies, with revenue of $19 billion and net income of $2.3 billion in the past quarter, despite heading in the wrong direction.
If that decline is ever going to reverse, IBM will have to dramatically expand its cloud revenue. The bright spot in Tuesday’s earnings release was a 17 percent increase in cloud revenue, although it’s not clear exactly what IBM considers “cloud” revenue. And, for context, AWS revenue was up 42 percent year over year during its last quarter.
Here’s what IBM’s global data center footprint looked like as of April 2017. Note that the four new data centers are all going into existing regions.