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Summary:

IBM, and every other tech company in the universe, likes to tout its cloud computing revenue without actually disclosing it. For its Q4 IBM claimed a whopping 80 percent growth rate in cloud revenue but no real numbers.

IBM LOGO

Mark Loughridge is really proud that IBM’s cloud business grew 80 percent year over year.  On Tuesday, Loughridge, IBM’s CFO, trotted out that stat repeatedly on the company’s  fourth quarter earnings call — although he never actually provided the revenue number. He also gave shout-outs to business analytics, the Smarter Planet initiative and the good old-fashioned mainframe as other bright spots on IBM’s roster.

So cloud is growing great. But exactly how is IBM defining its cloud revenue?

Some flows from sales of IBM’s SmartCloud Enterprise public cloud and an array of private clouds that the company manages for business customers. SmartCloud itself draws on other pieces pulled from the IBM overall software lineup including Tivoli provisioning and orchestration capabilities, some elements of WebSphere, and some development tooling from Rational Systems, according to an IBM spokeswoman. Sales of IBM’s new PureSystems converged hardware into cloud scenarios also gets counted.

And then there’s all the ancillary services that go into implementing and supporting cloud deployments at customers. As is usually the case, IBM wraps up all its hardware and software in a bunch of lucrative services. But other than those tidbits, IBM doesn’t really spell out what’s cloud and what’s not.

IBM is hardly alone in reporting murky cloud numbers. Amazon lumps revenue from Amazon Web Services into “other.” In September, Oracle started breaking out cloud revenue, although it appears to lump it in with new software license sales overall, so that’s a little confusing.

ibmgrowthIBM wants to move to a “higher quality” revenue stream based on the  big three axes of analytics, cloud and Smarter Planet. And, Loughridge said it is well on its way to hitting the 2015 $20.00 per share earnings target set two years ago.

Folks are watching this transition carefully. When Ginny Rometty took over as IBM CEO last year, she was expected to continue down her predecessor’s path of moving more into cloud services and analytics. She’s continued to spend on mobility, cloud and analytics acquisitions — with IBM buying companies like Varicent, Kenexa, Worklight, and Vivissimo in the past year. But the payoff is not clear.

I’m not alone in thinking that the lack of clarity on cloud revenue by IT providers — from Amazon to legacy IT players like IBM, HP, Oracle — is purposeful. They don’t want to tip off competitors and — I would bet — the real cloud numbers are nowhere near as rosy as they would like us to think.

  1. Ray Lane's split personality Wednesday, January 23, 2013

    At least HP has the decency to inform the public that it has a “multi-billion dollar” cloud business

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  2. Great piece Barb with call out for accountability rather than rank hype !

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  3. Maurice del Prado Jr Wednesday, January 23, 2013

    IBM’s CFO is Mark Loughridge, not Mike.

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    1. Thanks for the note — corrected.

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  4. Cloud Vigilante Thursday, January 24, 2013

    Hello Barb, nice review of IBM’s revenue. IBM seems to be still evolving its cloud business and technology and not reached at a point where it can boast about its cloud products. Perhaps that is why it is not openly saying which of the particular cloud products did good.

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    1. True, all of these companies are evolving — and all are being a tad disingenuous — i’d like to see them ALL specify how much cloud revenue they make and detail its sources — but that won’t happen for awhile. But when a company claims huge growth rates off an unknown base, it’s only fair to ask for real numbers. We can try anyway….

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  5. Charlotte Dunlap Friday, January 25, 2013

    Barb, once again great job trying to get a vendor to quantify a broad statement. I like your paragraph listing the products that drive IBM’s cloud revenues. FYI, going forward this list will likely also include IBM’s new PaaS products—SmartCloud Application Services and PureApplication System.

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