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Why 2014 Will Be a Crucial Year in IBM's History

Earlier this week, IBM closed its acquisition of Cloudant, a privately held database-as-a-service (DBaaS) provider, which lets developers create mobile and Web apps. Big Blue has been touting Cloudant as reinforcing its 'Blue Mix' effort, as well as a complement to its Big Data and Analytics technology.

Big data refers to the management of vast quantities of unstructured data, or information that is outside the realm of traditional databases. Examples include email messages, PowerPoint presentations, audio, video and social media information.

Charles King, principal analyst at research firm Pund-IT, feels the Cloudant acquisition reflects one of the company's long-standing obsessions. "The company's historical focus on enterprise customers and its deep understanding of their computing infrastructure requirements, development organizations and other IT practices is well-known in the industry to the point where competitors use it as a goad," he wrote, in a recent note. "But in Cloudant, IBM appears to have found a kindred spirit."

IBM, however, continues to feel hardware-related strain while it shifts into more lucrative areas. The company missed Wall Street's revenue forecast in its recent fourth-quarter results, weighed down by weakness in hardware sales. Revenue from the company's Systems and Technology business declined 26% year-over-year in the fourth quarter, while Sofware and Services revenue grew 3% and 2%, respectively. The company's Business Analytics revenue climbed 9% over the same period, with Cloud revenue climbing a massive 69%.

"It appears IBM is getting more focused on revenue growth, including lowering the base through divestitures," wrote UBS analyst Steve Milunovich, in a note. "We think it is too early to buy the stock but have argued that 2015 should be a better year."

Shares of IBM, which have dipped more than 9% over the last 12 months, gained 0.5% to reach $188.09 in Thursday trading.

--Written by James Rogers in New York.

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