IBM opens four new data centers

The new data centers in the US, the UK and Australia come as IBM looks to its cloud business to accelerate growth of its "strategic imperatives" revenue.
Written by Stephanie Condon, Senior Writer

IBM announced Wednesday that it's opening four new IBM Cloud data centers across the globe, bringing its total data center footprint to 59 across 19 countries.

Two of the new data centers are in London, giving IBM a total of five data centers in the UK. An additional data center is slated to launch later this year. These new facilities are part of a plan IBM announced last year to triple its cloud data center capacity in the UK.

The third new data center now open is in San Jose, Calif., marking its third facility in the region and 23rd data center in the US. Lastly, IBM opened a new data center in Sydney, giving it four across Australia.

The expansion comes a day after IBM discussed its second quarter financial results, which delivered revenues below expectations. Investors are still waiting for IBM's investments in "strategic imperatives" such as AI and cloud computing to pay off, which should help make up for its weakening legacy businesses. SVP and CFO Martin Schroeter said Tuesday that he expects revenues from "strategic imperatives" to accelerate in the second half of 2017, in part because of new cloud contracts.

IBM's cloud revenue in Q2 came to $3.9 billion, up 17 percent year over year adjusting for currency. Over the last 12 months, its cloud revenue has totaled $15.1 billion. Schroeter cited some of IBM's recent wins in the cloud market, such as the 10-year agreement it signed with Lloyd's Banking Group, one of IBM's largest cloud agreement ever.

Amazon Web Services continues to dominate the public cloud infrastructure market, while other competitors like Google and Microsoft are making aggressive efforts to catch up. Schroeter said IBM's cloud business will benefit from its sophisticated capabilities, such as Watson-powered services.

"Enterprises will move to cognitive on the cloud with someone they trust, who has leading tools and industry expertise and a data model and business model consistent with their goals," he said.

"That is the IBM Cloud plus Watson."

Some analysts, however, have questioned the value Watson can generate for shareholders, given factors like the need for consulting to implement Watson and growing competition from cloud competitors.

IBM is also stressing its focus on security in the cloud, highlighting that it is one of the first global cloud companies to adopt the EU's Data Protection Code of Conduct for Cloud Service Providers. Its cloud facilities "are designed to be state of the art in terms of privacy and security," IBM boasts, promising to help European clients prepare for the implementation of the General Data Protection Regulations (GDPR).

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