This content is part of the Conference Coverage: IBM Think 2022 news, trends and analysis

IBM steps up its cloud partnership strategy with AWS deal

Still lagging behind the Big Three in the cloud market, IBM hopes its coopetition partnership agreement with AWS will help close down the market share gap.

Unable to make up ground against the top three cloud providers, IBM has adopted the philosophy of "if you can't beat them, join them."

IBM this week signed a multiyear Strategic Collaboration Agreement with AWS to make a wide variety of IBM software available as a service on AWS Marketplace.

The deal also calls for the two companies to make joint investments that make it easier for companies to consume IBM's offerings and integrate them with AWS. These include a number of integrated go-to-market programs, developer training, and software development for select vertical markets such as travel, oil and gas.

The IBM offerings available on AWS cover an array of different technologies, including AI, security and sustainability. The products are built on Red Hat OpenShift Service on AWS and cloud-native apps running on AWS.

IBM's SaaS products will complement IBM's 30 or so software products that can be deployed manually from the AWS Marketplace. Other services available on AWS Marketplace include IBM API Connect, Db2, Maximo Application Suite, Security ReaQta, Security Trusteer, Security Verify and Watson Orchestrate, with others to follow later this year.

AWS and IBM's coopetition deal

One consultant believes both parties can benefit from the deal by gaining access to the other's customer base.

"AWS has built its success around small and medium-sized companies, so now IBM's software has a new audience to sell to," said Frank Dzubeck, president of Communications Network Architects. "And AWS now has access to some of the largest corporate accounts and doesn't have to go knocking on doors on cold calls."

Since the arrival of Arvind Krishna as CEO two years ago, IBM has placed a much higher priority on establishing partnerships with both longtime business partners and competitors alike. The company also made open source more integral to its companywide software strategy, as is evidenced by the $34 billion it spent to acquire Red Hat -- a deal in which Krishna served as one of the principal negotiators.

Arvind Krishna, CEO, IBMArvind Krishna

This has provided steady growth to the software and services side of the company's business. Last month, IBM reported that revenues from strategic partnerships grew by "double digits" with Salesforce, SAP, AWS and Microsoft Azure contributing the most to that growth.

"When you hear us say, 'Let's create,' it's an invitation from us to all of you [IBM customers]," Krishna said in his IBM Think conference keynote this week, referring to the company's latest marketing campaign slogan. "But it's also an indicator that we are open to partnerships."

Under Krishna's leadership, IBM has doubled down on its commitment to hybrid clouds, while AWS and Microsoft have battled for leadership in the public cloud market.

"Hybrid cloud is becoming a reality for our users," said Tom Rosamilia, senior vice president of IBM Software, at the Think conference. "Deepening our partnership with AWS is a major step toward giving users the chance to choose a hybrid cloud model that works best for them."

While partnering has helped grow IBM's cloud revenues, the company still lags behind the Big Three. At the end of 2021, AWS controlled 33% of the cloud infrastructure services market, with Azure owning 22% and Google Cloud with 9%. Combined, the three companies own 64% of the entire market. IBM is fifth behind Alibaba in the low single digits, according to data from market researcher Statista.

They [IBM] haven't captured the imagination of data scientists and developers yet. They are starting to make money with security and consulting, but they haven't made their case yet with a cohesive cloud strategy.
Judith HurwitzIndependent technology consultant

What contributed to IBM being an also-ran in the cloud market goes back a decade to when the company announced its intention to more seriously compete in the cloud market. Out of the gate, the company failed to present a cohesive strategy, according to some analysts. Also, a number of cloud acquisitions the company made along with way -- most notably, SoftLayer -- failed to pan out.

"When they came out with their cloud platform, the technology was not ready; it didn't have viable cloud capabilities," said Judith Hurwitz, an independent technology consultant. "Plus, they came out with four or five different clouds, and it was difficult to execute that strategy."

IBM still hasn't given users enough reasons to buy into their cloud strategy, because it has failed to distinguish what its value is compared with its major competitors.

"They haven't captured the imagination of data scientists and developers yet," Hurwitz said. "They are starting to make money with security implementations and consulting, but they haven't made their case yet with a cohesive cloud strategy."

As Editor at Large with TechTarget's News Group, Ed Scannell is responsible for writing and reporting breaking news, news analysis and features focused on technology issues and trends affecting corporate IT professionals.

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