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IBM Forecasts $7 Billion In Cloud Revenue

The firm is plunging fully into the cloud, launching a range of cloud services tuned to the needs of enterprise users.
IBM will package its cloud services as a basic infrastructure offering of servers, storage, and software in the IBM Smart Cloud Enterprise, or as a more customized offering in Smart Cloud Enterprise Plus, where customers may set certain elasticity requirements. IBM load balancing would add more servers as demand on a customer's application increases to meet that elasticity need. "Plus" service would also offer backup and recovery services.

Public cloud services frequently offer load balancing, but backup and recovery has often been left to the discretion of the customer and his ability to implement a second set of servers and have them available in the cloud, loaded with the same application and data as his primary server.

For the first time, IBM will offer its true blue customers (i.e., IBM shops that have bought IBM Power chip servers, from mainframes to p Series) the option of using its own Power chip servers in the cloud to run IBM Unix (AIX) applications. In the past, IBM's cloud, like Terremark's, Amazon's EC2, or Google's App Engine, ran software designed for Intel's commodity x86 instruction set servers.

IBM software development and testing facilities in its Research Triangle Park, N.C., data center, one of its early cloud offerings, for example, were all based on x86 architecture. IBM's other four cloud data centers are located in Toronto, Singapore, Boulder, Colo., and Ehningen, Germany.

IBM will also follow Amazon Web Services and Rackspace in offering enterprises the option of building out a private cloud in an IBM data center accessed over the Internet. IBM will offer guarantees of isolation, security, and dedicated servers to the customer, if they desire them. Telford said "private cloud" is an extension of IBM's experience in offering hosted and outsourced services for the enterprise.

In addition, IBM will offer SAP applications as software as a service (SaaS). It has previously offered SAP apps as an outsourced service, but a cloud SAP offering would mean new efficiencies for customers. SAP users often run 4-5 instances of a SAP application, with one used for testing, one being updated as the next production system, and another being used for related development. In the cloud, the customer will be able to invoke such occasional uses as needed, without keeping all five running all the time, leading to considerable savings, he maintained.

IBM acquired several young cloud computing companies to get the technology that brought it to Thursday's announcements. They include Cast Iron Systems, an integration company, for an undisclosed amount last May; Coremetrics, a supplier of Web analytics and online sales metrics that IBM expects to offer as a cloud service, last June; Sterling Commerce, a B2B supply chain software supplier, for $1.4 billion last May; and Unica, a marketing automation software maker for $480 million last August, Telford said. IBM has spent a total $3 billion on cloud acquisitions, he added.

Of the $7 billion in expected 2015 cloud revenue, $4 billion will be gained by existing IBM business units expanding into cloud services, and $3 billion will be new or incremental revenue to IBM's existing business, he said.