IBM Corp. (IBM) recently patented an invention that enhances the use of analytics for assessing and directing data in a cloud computing environment, thereby enabling more timely and efficient application processing and management.
Per IBM, this patented invention will give users more control over their cloud deployments so that they can extract maximum value from their IT (Information Technology) resources and that too at an optimal cost.
This new patented invention can also be used by Managed Service Providers (MSPs) and channel resellers to build and deliver value-added solutions. Managed service providers can use this patented invention to support customers’ specific workload demands and thereby deliver truly usage-based consumption pricing models.
The new patented technique performs real-time analysis of data such as online transactions, readings from sensors, financial quotes and video streams. We believe that the patented invention will simplify the work of users by providing them easy accessibility to the cloud. This, in turn, will enhance IBM’s business and profitability going forward.
For the last 21 years, IBM has been the leading recipient of U.S. patents. Currently, IBM holds 1,560 cloud patents focused on driving innovation, with more than a third of these inventions originating in the Systems and Technology Group.
We believe that IBM’s investments in new spheres including cloud computing, Big Data, mobile and security will boost software and services revenues in the long run. Nevertheless, we believe that these huge investments will weigh on the company’s profitability in the near term.
Of late, IBM is focusing more on analytics and cloud-computing to combat a massive slowdown in hardware sales and a persistent softness in traditional software. The recently inked deals with the likes of WPP, Deutsche Lufthansa AG and its Group companies, Thomson Reuters and ABN Amro Bank (worth about $4 billion).will help it to gain significant traction in the cloud computing market.
Additionally, divestitures of loss making units mean that these will no longer be a drag on the company’s profit.
However, intensifying competition from the likes of Oracle (ORCL), Hewlett-Packard (HPQ), SAP (SAP) and Microsoft (MSFT) remains a major headwind. Further, sluggish IT spending particularly for on-premise and data center hardware will continue to hurt the company in the near term.
Currently, IBM has a Zacks Rank #4 (Sell).
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