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August 6, 2015

IBM should cut its legacy losses and hit the cloud

Is a reluctance to shift legacy to cloud hurting IBM's cloud transition?

By James Nunns

IBM is trying its best to counter the slow decline of legacy software and tools with its cloud, but progress is slow.

Having seen consistent declines in its server hardware, the company’s troubles have been added to by a dip in some of its core software products. Its recent financial statement revealed a 10% drop in overall software revenues (3% adjusting for currency).

IBM is far from the only company that is going through this transition, with companies like Microsoft, Sage and SAP all navigating their way from legacy software to the cloud.

Middleware products have also taken a hit, with WebSphere, Information management, Tivoli and Rational tools dropping 7%, meanwhile, operating systems revenues fell heavily by 17%.

Some of the drop in IBM’s legacy applications could be down customers preferring its Web-based software, such as its Softlayer cloud and Bluemix development environment.

This is no surprise, again in you look at a company like SAP, although they have suffered less dramatically, the shift from legacy to cloud is on-going and will impact business.

IBM doesn’t appear oblivious to this, as it makes a number of moves around the world to bolster its cloud business.

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In Canada, the company is opening a new Bluemix Garage in Toronto, the purpose of this is to accelerate the design and development of cloud applications. While it is slightly surprising that this is the company’s first in Canada, it’s not a surprising move overall.

Steve Robinson, GM, Cloud Platform Services, IBM, said: "Today’s rapid app development cycles require developers to use new tools and methodologies from across the ecosystem to quickly turn new ideas into enterprise-class cloud applications at consumer scale and innovate at the speed of cloud."

This is just one of many moves that the company is making. The company has seen big cloud win with Marriott, the U.S. Army and Coca Cola and its private cloud market share is impressive.

Perhaps what the company needs to do is to place more focus on making everything cloud, as this appears to be the way the market is heading. It has so far not taken a strong approach to making its core products hybrid cloud fit.



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