Over the last three months, IBM continued its turnaround. Business is improving in cloud, analytics, social, mobile, and security. Unsurprisingly, IBM’s Analytics unit is improving, with sales up 20 per cent this year. The mobile business is showing traction, growing at an even faster rate of 40 per cent. Even though IBM’s sales growth is positive, the company is still in the early phases of its turnaround.
IBM is finding opportunities for Watson in the healthcare sector. Its Merge Healthcare acquisition in August will give Watson lots of medical images to work on.
In the area of big data, IBM is building solutions that look at both unstructured data (Twitter chatter) and structured data (credit card purchases, for example). This sounds great, but the signals, patterns, or any other meaningful data from Twitter might have limited value. The value of social chatter depends on who is supplying the content or why the volume of the content surged or declined over time. Despite these concerns, Twitter is taking the necessary steps to improve its site. It is adding Moments, which lets users find the best of what is happening on Twitter in an instant.
Twitter is also planning to change the 140-character limit. If that happens, the context and the level of detail for content posted on the site should improve. The posting limitation might have scared novice users away from the site. There is already a move from Facebook to improve Notes.
The trend for blogging might make a return. Twitter’s rumored updates will embrace the spirit of posting and sharing content online.
IBM’s other businesses weak
Demand for storage is still weak for IBM. High-end spinning disc drives are still in hot demand in the enterprise, but there is a shift happening in the industry. Flash storage is moving from the niche market to the mainstream. The shift takes time, and has an impact on software defined storage that IBM offers. As flash storage rolls out, IBM will eventually benefit as enterprises include such storage solutions in the server room.
Consulting services is also another segment where IBM is facing challenges. This is due to the shift away from enterprise applications and large ERP installations. Another area of weakness for IBM is operating systems.
On the bright side, project wins in cloud, mobility, analytics, and security will eventually offset a decline in IBM’s legacy businesses.
IBM’s success with Linux for its z Systems is notable. The Linux-based products is a testament to the value of open source in the enterprise. z Systems offers enterprises security in a hybrid cloud environment. Once implemented, these systems are scalable for customers.
Investments and acquisitions
Expect IBM to continue making small to mid-sized acquisitions to bolster its efforts in cloud and mobile. These efforts will work in broadening features for existing products.