IBM: Cloud Computing Will Cannibalize Other Parts Of The IT Business


IBM expects the adoption of cloud computing to add significant growth to its business over the next five years even as it cannibalizes much of its existing business.

Richard Michos, vice president of channel strategy for IBM, told a group of solution providers attending the Xchange Tech Innovators conference on Wednesday that cloud computing is one of four "megatrends" IBM expects to impact its goal to increase business over the next five years, and that they had better prepared for those impacts.

IBM is planning on earning $20 per share by 2015, compared to about $11.45 per share now, Michos said. "Obviously, we have a lot to do in a short time," he told the solution providers. "And we can only do it with you."

One of those megatrends is cloud computing, which IBM expects to add about $3 billion of net growth to its business by 2015. IBM is investing about $6 billion in R&D for cloud computing, he said.

However, lest solution providers think $3 billion is not a big deal to a company like IBM, Michos said that to reach that goal will require IBM actually grow its cloud business by $12 billion, as the growth in cloud computing is expected to erase $9 billion worth of sales of its current hardware, software, and services.

That cannibalism of existing business by the growth in cloud computing caused Juan Rosario, owner of Daroc Computing, an Texas, El Paso-based solution provider, to stop and think about the impact of cloud computing on his business.

"For a small businessman like me, with small shops and repair shops, the cloud will be a threat," Rosario said. "Seventy percent of my business comes from fixing things. One of the promises of the cloud is that there is no virus, no software upgrades."

Rosario said he is afraid the cloud could one day put small companies like his out of business. "I need to look at how to use the cloud," he said.

Phillip Durant, president of American Computer Enterprises, a Daphne, Alabama-based solution provider, said that Michos certainly showed the importance of being part of the move to adopt cloud computing.

"If IBM is focused on the cloud and putting $6 billion in R&D into the cloud, it shows us we need to be there," he said.

Michos told solution providers to not worry about whether IBM will swoop in and grab cloud customers from them. "Won't happen," he said. "We don't have the manpower to do that."

 

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