IBM’s filed its Q2 2017 earnings report this week, which was never a pretty sight in recent years, and sure enough the company suffered through its 21st straight quarter of declining revenue. It’s an astonishing streak. If IBM were a sports team, I’m guessing the coach would have been fired long ago.
The loss comes against the backdrop of a company in transition, and the cloud is a big part of that. Consider that IBM acquired Softlayer back in June, 2013 to give them an infrastructure piece it hoped would help to compete with AWS, Google, and Microsoft. Four years have now passed since that acquisition, and it has made almost 40 other acquisitions since, yet revenue numbers continue to be stubbornly pinned in the red.
One need only look at the revenue chart here to see the sad story in stark terms. While it’s not quite at the peak of being down 13.8 percent in 2015, the most recent quarter has revenue down 5 percent, which believe it or not, is a slide from the previous quarter, and marks three straight quarters of revenue drops from the previous peak in Q3 2016 when it almost made it into the black.
To give you a sense of just how long this has been going on, the last time the company saw positive revenue was in Q1 2012.
Come together, right now
There was actually some good news as CNBC reported that cloud revenue generated $3.9 billion for the quarter, a 15 percent increase over last year’s report, but even that couldn’t halt the slide. While the company is clearly making some progress selling cloud services, it’s hasn’t been enough to push it into positive revenue
It’s also worth noting that last week, IBM announced it was opening four new data centers as it continues to invest in cloud infrastructure and increase its presence throughout the world — it has little choice. The newest locations included two in the UK, where Google opened a new London region earlier this month. IBM also added data centers in San Jose, CA, and Sydney Australia, giving them a total of 59, across 19 countries, according to ZDNet.
IBM is clearly continuing to make investments like expanding its data centers, but it’s a company that’s struggling to turn things around by selling a modern set of cloud services. In many ways the approach is sound, but so far at least, it hasn’t been able to execute well enough to finally generate some positive revenue — and it has to find a way to change that soon.
Photo by Mike on Flickr. Used under CC by 2.0 license.
[…] because in spite of its iffy earnings reports over the last five years, Synergy Research reported that IBM had 7 percent of the cloud […]