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TheStreet Open House

IBM Tries to End 2013 with a Cloudy Bang (Update 1)

Stocks in this article: IBM

(Story updated with IBM cloud sales breakdown in final paragraph)


NEW YORK (TheStreet) -- IBM (IBM - Get Report) is giving investors a flavor of what's to come in its cloud lineup in 2014. The company has publicly stated several times that 2014 will be a year of big announcements against top competitors such as Google (GOOG), Amazon Web Services (AMZN) and Microsoft (MSFT), and IBM appears to be staying true to its promise by showing no signs of slowing down in 2013.

From its November announcement offering its Watson supercomputer as a cloud-based applications tool to the $2 billion acquisition of cloud company Softlayer in summer, IBM looks poised to continue its mission to dazzle the public with new announcements on its cloud progress all the way through year-end. On Friday, the company stated that is to become a cloud storage broker through its newly minted software technology called InterCloud Storage, or ICStore.

ICStore uses an object storage interface that allows clients to drag and drop files to be backed up or shared on the clouds of their choice, independent of the vendor. The company said that the tool addresses everything from space efficiency and data synchronization to metadata coordination. So if a cloud fails, the back-up cloud can immediately respond and ensure data availability to the user. No synchronization or communication among cloud clients is needed through ICStore.

Recently-acquired SoftLayer is serving as the default storage provider for ICStore and is providing the object-based interface. IBM said that ICStore and SoftLayer together can allow clients to overcome limits in their cloud storage capacity by routing to an alternative storage system such as easily migrating from a remote public cloud to an on-premise private cloud, optimizing the overall efficiency of data storage management.

Separately on Friday, IBM also furthermore said that it has reached cloud infrastructure agreements worth $1.3 billion over seven years with Dexia and several other major financial institutions in Europe by acquiring a controlling stake in Dexia's financial IT services property Associated Dexia Technology. Associated Dexia will be renamed Innovative Solutions for Finance under IBM.

Cash-rich IBM has been ramping up its efforts to invest in the cloud to cultivate new sources of revenue growth. Since 2007, the company has invested more than $6 billion in acquisitions to accelerate its cloud initiatives.

In October, IBM for the first time revealed a cloud revenue breakdown, showing an increase of more than 70% year to date as third-quarter revenue exceeded $1 billion when factoring in the SoftLayer purchase. As the company's progression in the cloud continues, the market should see increased M&A momentum from IBM going forward and expect the company to gain greater control over an aggressive space dominated by stiff price competitors such as AWS. "We still think cloud and Big Data could be long-term positives for IBM," UBS analyst Steven Milunovich mentioned recently in a note.

--Written by Andrea Tse in New York.

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