Cloud revenue boosts IBM results as traditional services decline

IBM's cloud business is steadily starting to replace the company's traditional hardware and software divisions as its main engine for income and profit, the company's latest financial results have revealed.

Its end-of-year report for 2016 showed its cloud-as-a-service run rate grew by 63% year-on-year, up to $8.6 billion.

Cloud forms part of the company's "strategic imperatives" group, which also includes Watson and analytics, security, social and mobile technologies.

Its Watson AI has also proved attractive to businesses, with new agreements being signed with companies including Bank of America, Merril Lynch, HSBC, UBS, Bank of Tokyo Mitsubishi, Walmart and China Union Pay for its blockchain technology.

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News of the company's increased revenues comes hot on the heels of a new contract with the US Army announced last week, which will see it provide a large-scale data centre to run many of the army's existing apps. It's the first time a private company has entered into such an agreement.

“In 2016, our strategic imperatives grew to represent more than 40% of our total revenue and we have established ourselves as the industry’s leading cognitive solutions and cloud platform company," Ginni Rometty, IBM' chairman, president and chief executive officer, said.

“IBM Watson is the world’s leading AI platform for business, and emerging solutions such as IBM Blockchain are enabling new levels of trust in transactions of every kind. More and more clients are choosing the IBM Cloud because of its differentiated capabilities, which are helping to transform industries, such as financial services, airlines and retail.”

However, it hasn't been so rosy for the rest of the company, with IBM posting an 11% decline in total net income for the full year compared to 2015, although revenue only fell 2%. The majority of this loss came from a decline in the company's more traditional business areas, such as global business services and systems, including hardware and software systems.

Clare is the founder of Blue Cactus Digital, a digital marketing company that helps ethical and sustainability-focused businesses grow their customer base.

Prior to becoming a marketer, Clare was a journalist, working at a range of mobile device-focused outlets including Know Your Mobile before moving into freelance life.

As a freelance writer, she drew on her expertise in mobility to write features and guides for ITPro, as well as regularly writing news stories on a wide range of topics.