Big Blue Hopes To Move Closer To The Cloud By Taking The Mobile Route

| About: International Business (IBM)


For business customers, it's still not a clear choice between upgrading outdated in-house IT and investing in cloud-ready computing systems.

IBM hopes to use business customers' existing mobile platforms to help them jump onto certain cloud offerings.

IBM's business applications and cloud infrastructures are the key to its planned mobile-based cloud offerings, rather than Apple devices.

It seems that IBM (NYSE:IBM) has decided on what the launching pad should be for moving more of its business applications up to the cloud, at least for now. In its latest effort to adapt to the changing environment of enterprise computing, IBM has come to realize that at this time, mobile devices may be easier access points for business customers to reach cloud-based computing services. Abandoning an enterprise's on-site IT structure of mainframes and servers and trying to connect a different type of computing setup to the cloud may not happen in a flash at a lot of companies.

This is hurting IBM sales in both its traditional on-premise, software-licensing operations and emerging via-the-cloud, software-subscription activities, evident by the company's current nine straight year-over-year quarterly revenue declines. When faced with a tough choice between continuing to have self-managed IT and becoming reliant on cloud computing outsourcing, business customers may have a wait-and-see attitude: unsure about upgrading outdated in-house IT configurations, but also reluctant to invest in cloud-enabled computing systems.

By taking the initiative of directing business customers to certain cloud uses through their mobile devices, IBM may prevent itself from being further victimized by the ongoing enterprise-IT dilemma. The partnership with Apple (NASDAQ:AAPL) is a breakthrough for IBM, offering an alternative cloud solution to a seemingly sticky enterprise-IT situation. The use of mobile phones and tablets by company employees is already ubiquitous, with the iPhone and iPad being a clear favorite. So, a cloud-related enterprise-IT platform is actually there, only to be fully tapped to receive a wider array of business applications from the cloud.

Unlike a company's on-site, full-fledged computing system that can adequately process and execute any installed business applications, less powerful mobile devices may not function to their best intended purposes unless supported by added computing capability accessible over the Internet. Lacking computing power for complex applications, mobile devices are inherently cloud-dependable, making them a natural part of the infrastructures for certain cloud offerings. In a mobile-based cloud service, mobile devices are critical as they serve as the interface between end users and the cloud. But the key to the IBM-Apple deal's success rests on IBM's ability to have both killer business applications and seamless cloud infrastructures.

Apple will be mostly along for the ride, selling a lot more iPhones and iPads in the process. If the move is embraced by business customers, IBM may extend its mobile business applications offerings through other brands of mobile devices, potentially including BlackBerry (NASDAQ:BBRY). Speaking of BlackBerry, the notion and concern that IBM, by teaming up with Apple to serve business customers, is entering BlackBerry's so-called stronghold of business services shows a lack of understanding of the entirely different businesses between the two. There's almost no service overlaps in terms of business application and IT management software from the two companies.

The most known business service from BlackBerry is BBM, or BlackBerry Messenger, and the only business software by BlackBerry is its BlackBerry Enterprise Service, which is really not a business application, software used in managing business operations, but rather a mobile computing technology solution to security and integration of mobile devices. Messaging application and mobile security are hardly the reason why IBM is having this business pact with Apple, which actually is expected to handle any potential security issues of the devices.

If IBM had aligned with BlackBerry instead, the business pursuit would then be good for BlackBerry, struggling to sell more phones, but IBM wouldn't encroach on its mobile messaging application and security technology services. IBM offers a wide array of business application services from supply chain solutions to customer contact centers, enterprise marketing management, etc., all helping business customers to become more effective with many aspects of their operations. The goal for IBM here is to try to deliver some of those services from the cloud through mobile devices to business customers. Neither Apple nor BlackBerry is a provider of comprehensive business applications as IBM is.

The IBM-Apple business cooperation may be a potential game changer for IBM's cloud operations. IBM has been building up its cloud infrastructures, especially with the acquisition of cloud provider SoftLayer, in preparation for the shift of enterprise computing to the cloud. If IBM's mobile-device-based cloud offering takes off, it will not only test the full readiness of its cloud infrastructures, but also increase the utilization of its existing data centers, helping better recoup previous cloud investments. It's reasonable to expect that other business software providers and mobile device makers may soon follow suite, and there may be a faster adoption of cloud uses via mobile by business customers.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.