IBM And The Cloud: Danger And Opportunity

Grazed from WSJ. Author: Spencer Ante.

For International Business Machines IBM -1.10%, cloud computing is both an opportunity and a risk. And the risks of the cloud materialized in its most recent earnings announcement where IBM’s revenue fell short of analyst estimates.

The opportunity for IBM is in becoming a sort of arms provider for the cloud, selling customized hardware and software that helps governments, large and mid-size companies, or Web developers and hosting providers offer applications over the Web. In September, IBM ramped up its initiatives to sell cloud services to mid-size businesses in an effort to take on market leaders such as Amazon.com and Salesforce.com. In the third quarter, IBM said it achieved double digit growth in its cloud business, though it declined to detail the components of that revenue…

The risk is that cloud computing threatens to undermine the business of selling traditional software programs and related consulting services that help companies to run finance, human resources and supply chains. Instead of buying those expensive programs and paying companies like IBM to install, run and connect them with other systems, many customers are increasingly choosing the cheaper option of renting software from cloud computing providers like Salesforce.com, NetSuite and upstarts like Workday, which just held a very successful public offering…

Read more from the source @ http://blogs.wsj.com/corporate-intelligence/2012/10/17/ibm-and-the-cloud-danger-and-opportunity/