IBM failing to meet cloud forecasts

Leaked documents from Biggish Blue shows that the company is getting its fingers burnt by trying to flog cloud packages.

While the entire IT industry has been foaming at the mouth for The Cloud, it seems that IBM is having difficulties actually making cash from it.

Information Week, which got its paws on the documents, said IBM’s cloud computing revenues are smaller and less “cloud-intensive” than customers and Wall Street analysts might think.

The documents put IBM’s 2012 cloud-related revenue is $2.26 billion. While most of us would be in cloud nine earning that sort of cash, in 2011, IBM issued a roadmap saying cloud revenues should be reaching $7 billion by 2015. It has a while to go before the deadline creeps along, but it should be earning much more than that.

In 2011 IBM hoped $3 billion would come from new business, so it was suggested a hefty $4 billion would be linked to cloud delivery of current products. To do that Biggish Blue would have to convert most of its products and customers – which clearly has not happened quite yet.

A significant amount of IBM’s cloud revenues are tied to hardware, which are often used to run private or partner clouds.

This is stuff sitting in their data centre and not the sort of products like Amazon EC2, and IBM SmartCloud, an ex employee told Information Week.

Now it seems that the Securities and Exchange Commission is also unhappy with Biggish Blue and is investigating the company’s cloud revenue.

IBM said the company established the whole category of private cloud five years ago.

At the time everyone was told large companies have gigantic data centres and a lot of stuff they want to control from a privacy or security perspective. IBM said the first major opportunity from its client base was going to be the company helping them build cloud delivery, the employee said.

But there are some fears that, where cloud compute capacity is concerned, x86-based systems and standards are cannibalising IBM’s higher-margin mainframe and Power server businesses, a Credit Suisse analyst told Information Week.

The new platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) offerings are killing off IBM’s traditional middleware gear.