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5 cloud and big data insights from IBM’s earnings call

Jim Baum, IBM Netezza, at Structure Big Data 2011
Jim Baum, IBM Netezza, at Structure Big Data 2011

IBM shares were trading up Tuesday morning after it reported strong second-quarter results yesterday. While Big Blue got a profit boost from recently released mainframe products, it also gave us some indications for the future growth of the cloud and big data. Mark Loughridge, IBM’s senior vice president and CFO for Finance and Enterprise Transformation, said IBM is still on track to double its cloud revenue in 2011 compared with the year before.

Because IBM’s definition of cloud can be pretty loose (i.e., it sells a lot of software, servers and services that conceivably could be labeled as cloud) take that with a grain of salt. However, here’s what we can learn:

The private cloud business is doing well. So much so that Loughridge said, “In private cloud, IBM’s average transaction size more than tripled from a year ago.” It also released new software to create private clouds during the quarter.

New products can keep revenue growth up. IBM has made more in the first of 2011 in cloud than it did the year before and said it had 2,000 cloud wins to date, but some of that success comes from new products such as the new private cloud software mentioned above as well as the “IBM Smart Cloud” infrastructure as a service product that launched also during the quarter.

New markets help boost growth too. IBM saw strong growth in emerging markets such as Brazil, Russia, India and China (the BRIC countries) but also growth in cloud deployments in places like Africa. Many emerging economies are turning to cloud computing as they build out their IT infrastructure, leapfrogging the legacy client server paradigm. IBM appears to be benefitting from this trend.

Big data is big business. IBM’s business analytics software grew by double digits for the seventh consecutive quarter. The company’s distributed database products experienced double-digit growth in the base business, and Netezza’s transactional volumes were up 70 percent versus a year ago,according to Loughridge’s prepared remarks.

Is it time to say sayonara to Sun (s orcl) gear? IBM’s Power brand of servers are winning over the competition, especially the former Sun boxes now owned by Oracle. Loughridge said that IBM had 250 competitive displacements that resulted in more than $300 million of business. About 60 percent of these wins came from Oracle’s legacy Sun-installed accounts, and 30 percent came from HP-installed accounts–a ratio holding steady from the previous quarter.

So there we have it. IBM has long been seen as a bellwether for the overall IT industry and for business spending on technology in general, and now it can help us predict the future for the cloud and big data.

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