IBM Grows Cloud Revenues as Total Revenue Declines in 2Q17

Wednesday Jul 19th 2017 by Sean Michael Kerner
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IBM continues its shift toward cloud and strategic growth areas like Linux.

IBM reported its second quarter fiscal 2017 revenues on July 19, once again emphasizing the strength of its cloud business, even as other older areas of the business decline.

For the quarter IBM reported revenue of $19.3 billion, for a five percent year-over-year decline. Net income for the quarter was reported at $2.3 billion, for a seven percent decline from the second quarter of fiscal 2016.IBM Cloud Revenues 2017

Looking specifically at IBM's cloud business, Big Blue reported second quarter revenue of $3.9 billion, for a 15 percent year-over-year gain.

"IBM's cloud revenue on a trailing twelve month basis is now over $15 billion; that's nearly 20% of IBM's revenue," Martin Schroeter, SVP and CFO at IBM, said during his company's earnings call.

Why Customers Are Choosing IBM for Cloud Services

As to why companies choose IBM for cloud services, Schroeter emphasized that it's about trust.

"They trust IBM and the IBM cloud to protect and preserve not only their data, but also their insights and AI training engines to ensure all of the value from their data accrues to them," Schroeter said.

IBM's embrace of blockchain technology is also impacting cloud adoption. Schroeter said that while it's still early, IBM is seeing a lot of opportunity leveraging blockchain in the cloud and across multiple industries.

New Mainframe Arrives to Help Stem Decline

In IBM's systems segment revenue was reported at $1.7 billion for the quarter, marking a 10 percent year-over-year decline. IBM is aiming to reclaim ground in the systems space with its new z14 mainframe, which was announced on Monday.

"After three years of development and working with more than 150 clients, this is the world's most powerful transaction system capable of running more than 12 billion encrypted transactions per day and provides breakthrough pervasive encryption," Schroeter said.

"This data encryption engine encrypts all data associated with any application, cloud service or database all of the time without the possibility of human intervention, and that's with no application change and no performance impact," Schroeter continued.

IBM's Power server business is also struggling somewhat, due to the continued decline of UNIX.

"The Power growth rate improved sequentially but was still down; the improvement reflects our transition to our growing Linux market, while continuing to serve a high value but declining Unix market,"' Schroeter said . "Our Linux on Power revenue grew and we gained share. We again had double digit growth in Linux workloads."

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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