M+E Connections

Security was among the strongest business categories for IBM in its fourth quarter (ended Dec. 31), along with Internet of Things (IoT) and the Red Hat business that it acquired in 2019, with artificial intelligence (AI) playing a key role in the company’s strategy, the company said Jan. 19.

Those categories were among the standout performers for the company in its Cloud & Cognitive Software division, which includes Cognitive Applications (including Security and IoT), Cloud & Data Platforms (including Red Hat), and Transaction Processing Platforms.

IBM saw growth in Security and IoT in Cognitive Applications and Red Hat in Cloud & Data Platforms, the company noted.

The growth in Security was “fuelled by our modernised Cloud Pak for Security and services,” IBM CFO James Kavanaugh pointed out during an earnings call with analysts.

Total Cloud & Cognitive Software revenue grew to $23.4 billion for the fiscal year from $22.9 billion, but slipped to $6.8 billion for Q4 from $7.2 billion.

Cognitive Applications revenue was flat in Q4 compared to a year ago, “with growth in Security and IoT,” while Cloud & Data Platforms revenue increased 9%, “led by Red Hat,” the company said. Cloud revenue soared 39%.

“The opportunity in AI is massive while the current enterprise deployment rate is in the single digits,” Arvind Krishna, IBM CEO and chairman, said in the earnings call.

“Clients are now at the point where they are moving from experimenting with AI to deploying it at scale,” he said, adding: “To seize this opportunity, our AI platform is focused on data, automation and Security and now includes more than 30,000 clients who have turned to IBM to unlock value from their data. We’re helping clients across industries build ‘intelligent workflows’ by infusing AI into their core business processes such as hiring, supply chains and customer service. When it comes to data and AI, trust is paramount. IBM is unique in that we make a hard commitment not to monetise or use our clients’ data.”

IBM is also offering “the industry’s strongest commercially available cryptographic technology,” he said, noting: “We give clients the ability to retain control of their own encryption keys. In the fourth quarter, clients such as Air Canada, Sprint / T-Mobile, State Street and Humana used our rich data and AI capabilities to drive business outcomes.”

To strengthen IBM’s hybrid cloud and AI portfolio, it has announced 10 acquisitions since he became CEO and seven acquisitions just since October, he pointed out. “This includes five in Global Business Services, which add skills to help our clients with their journeys to cloud [and] Red Hat’s first acquisition as part of IBM that adds cloud-native security capabilities for OpenShift” containerisation software products developed by Red Hat, he said.

In early January, Red Hat announced plans to acquire software company StackRox, a leader and innovator in container and Kubernetes-native security, Kavanaugh noted.

IBM is “increasing investments – organic and inorganic – in innovation, expertise and ecosystems,” he went on to say, adding: “We’re investing in platform capabilities, including Security and industry-specific clouds. We’re investing in data and AI, and in technologies like quantum to create future market opportunities.”