While I continue to believe IBM’s cloud resurgence will be short-lived unless CEO Ginni Rometty makes some sweeping changes, the company was certainly able to share some impressive Q4 results.
Yesterday, in a piece called Ginni Rometty’s Last Stand: A 5-Point Plan to Reignite IBM’s Growth, I argued that IBM is hamstrung by a corporate org structure tied to a past that no longer exists and that customers find confusing, hard to navigate, or both. So there’s clearly lots more for Rometty to tackle there.
But the full-throated presence of Red Hat in the marketplace seems to have given IBM a considerable lift for at least the short term, and those achievements deserve to be called out.
Because, for all of IBM’s troubles, it nevertheless has one of the largest cloud businesses in the world with more than $21 billion in cloud revenue for calendar 2019. And it’s holding in at #7 on my Cloud Wars Top 10 rankings.
Top 10 Rankings — Jan. 20, 2020
|1. Microsoft — Azure reliability is top priority as Q2 cloud revenue should top $12B|
|2. Amazon — An influential survey of CIOs shows Azure is more popular than AWS|
|3. Salesforce — 20-year itch: can Benioff outflank SAP in redefining modern CRM?|
|4. SAP — Can Morgan and Klein turn Experience Management into global standard?|
|5. Oracle — Larry Ellison brawling with SAP, Amazon and Salesforce|
|6. Google — Thomas Kurian is our CEO of the Year for driving customer-first culture|
|7. IBM — Bank of America says cloud has saved billions in IT costs|
|8. Workday — Can Bhusri continue to beat SAP & Oracle for huge Fortune 100 deals?|
|9. ServiceNow — McDermott’s moonshot: triple rev. to $10B, become ‘most admired’|
|10. TBD — New addition coming soon!|
So if Rometty can accelerate the overhaul of the company so that it is aligned with the needs and requirements of today’s customers rather than with the hierarchies and politics of IBM’s past, this resurgence might well continue.
In that spirit, here are 10 key numbers from IBM’s Q4 earnings call earlier this week.
- Calendar 2019 cloud revenue of $21.2 billion, up 14%.
- Q4 cloud revenue, including Red Hat, of $6.8 billion, up 23%.
- Red Hat has its first billion-dollar quarter ever, with revenue up 24%.
- 21 customers now doing more than $10 million in business with Red Hat. That’s up 100% from a year ago, and about half of those 21 are large IBM enterprise clients.
- In 2019, the Global Technology Services unit generated $8.5 billion in cloud revenue, up 13%.
- In the segment known as Cloud and Data Platforms, revenue was up 20%, leading CFO James Kavanaugh to comment that “we’re starting to see synergies of bringing IBM and Red Hat together.”
- 2,000 clients are now using Red Hat and IBM container solutions. On the Red Hat side, that’s OpenShift; for IBM, its Cloud Paks.
- With 2019 cloud revenue of $21.2 billion, IBM Cloud accounts for 27% of the company’s total revenue.
- In a segment bearing a name that only IBM could conjure up, “Cloud and Cognitive” revenue was up 9%.
- While Global Technology Services reported $8.5 billion in cloud revenue for the year, Q4 revenue for GTS was -4%.
Plenty of good news in there, to be sure. But I believe it will all go for naught unless Rometty remakes the company in the image of its customers. After all, that’s not a requirement unique to IBM—rather, it’s one of the foundational principles in the Cloud Wars.
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