IBM to Invest $4 Billion in New Businesses – Cloud, Analytics Software and More
The struggles of IBM are publicly known, whether it’s their underwhelming performance in the stock market or lackluster financials, IBM has been in the news for all the wrong reasons. Now, the company wants revive its dominance by making a massive investment in new businesses.
The investment in question is about $4 billion, CEO Ginni Rometty revealed in a statement. Since October, IBM’s shares have gone down 11% due to the company failing to achieve per share price goals by 64 cents during Q3 2014. Rometty, predicts IBM can earn $40 billion by 2018 after their modest investment in mobile, cloud, analytics software along with social communications.
She further goes on to say that every 2 out 5 dollars IBM earns will come from these new investments. All this sounds really good to hear, but in reality it will be a daunting task for the company. They are planning to invest such a big amount in sectors that are very crowded and competition is immense. Chances of success are slim.
IBM’s biggest competition will be Microsoft, who have already managed to grab a decent market share of the areas IBM is looking to target. Microsoft has placed its bets on the cloud and is doing well so far. IBM must properly consider the hurdles it will have to overcome in order to succeed.
Oracle is also an industry giant who just posted a quarterly income of $9.2 billion from cloud and software:
Software and Cloud Revenues was up 5% to $7.3 billion. Cloud software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) revenue was up 45% to $516 million.
Oracle alone won’t be a problem for IBM, but there are many likes who will be as a group. Ms. Rometty has been with IBM in the CEO position since 2012. Her efforts to push this company so that it will remain competitive are noteworthy. If there is someone who can pull this off, it’s her. However, it wouldn’t be a surprise if IBM fails to grab a decent market share.
Do you think IBM is heading in the right direction? Let us know of your opinions in the comments below.