Why IBM is buying Ustream: Cloud, marketing, analytics

Ustream may not be seen as an enterprise focused company, but IBM begs to differ. IBM will use Ustream to form a Cloud Video Services unit that'll be aimed at multiple industries and touch many functions.

IBM confirmed that it has acquired live streaming company Ustream in what amounts to a bet that video will become a valuable marketing and data asset for enterprises.

Terms of the deal weren't disclosed, but Fortune previously reported that the price tag was about $130 million in cash.

Ustream has been mentioned as everything from a competitor to Amazon's Twitch to a potential collaboration tool to a newfangled broadcast technology provider. But Ustream's services also have a business-to-business hook with customers such as NASA, Samsung, Nike and The Discovery.

For IBM, the Ustream purchase is fairly clear cut. Big Blue needed to round out its cloud video services and then use the content Ustream broadcasts as a hook to sell its marketing and analytics services. Ustream will also form an IBM Cloud Video Services division that combines IBM's intellectual property and a bevy of acquisitions.

Steve Canepa, general manager of IBM's global telecommunications and media practice, said Ustream will touch everything from its marketing platform to cloud to developers. "Video is becoming a first class data type and fundamentally changing the application architecture," he said. "Video has to be integrated seamlessly in your business applications."

The next obvious question is whether Ustream is an enterprise asset. Canepa said the tools still apply:

Whether in B2B or B2C or B2E (business to employee), the functions you need to provide to create a good experience are common.

The UStream acquisition lands following a tough year for IBM as it transitions to growth businesses to offset its legacy units. UStream plugs into IBM's cloud story. IBM's strategic imperatives--areas such as cloud, mobile, security and analytics--represent 35 percent of the company's revenue now. JMP Securities analyst Greg McDowell said that stat is "an encouraging sign that investments in cloud and analytics are beginning to pay dividends."

Here's a look at IBM's Video Services unit, which will be run by general manager Braxton Jarratt.

ibm-ustream-purchase-leads-to-cloud-video-services-unit.png

As for the master plan, IBM will do what it always does: Target industries with its various services and technology. Ustream will put a business spin on Webcasts, keynotes, training and education, customer care and various other videos.

Down the line, IBM sees Ustream as a big repository of unstructured data, which will provide fuel to its big data efforts and probably Watson.

IBM's statement noted that it is creating a cloud video platform that "enables clients to easily ingest, store and manage live and on-demand video, enhance them through analytics, apply rights management and language capabilities, and distribute them consistently across the globe."

Ustream is also using application programming interfaces and developer tools that will be integrated into IBM's Bluemix platform as a service. The general idea here is that enterprise cloud apps will be able to make liberal use of video.

IBM will also tie Ustream into its marketing tools. Ustream has tools that enable marketers to collect and automate leads and manage broadcasts. Ustream also has an internal communications version called Align as well as live video streaming at scale.

Ustream CEO Brad Hunstable, who is expected to remain at IBM, said that video is becoming a "favored form of communication" for business. IBM obviously agrees and now the chore will be to convince enterprises that they need to manage video as an asset that can be customized, analyzed and grow revenue.

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