IBM storage revenues skid to the finish line

IBM storage hit another blue period last quarter. After pulling out of a revenue slump to start 2018, IBM last week closed an uneven year with declining sales of storage hardware, mirroring flat overall earnings for the quarter and fiscal year.

A bright spot: IBM cited a spike in demand for its hybrid cloud platforms, fueled by increasing adoption of big data and interest in AI.

IBM breaks revenue into four broad product sets: cognitive solutions, global business services, cloud technologies and hardware systems. IBM lumps storage in its systems segment, which generated $8 billion, up 2% year over year.

CFO James Kavanaugh blamed the slide mostly on lower demand for midrange IBM storage products, which include IBM Storwize, and DS8880 mainframe arrays.

“The storage market remains very competitive, with ongoing pricing pressures,” Kavanaugh said.

Demand for all-flash IBM storage is strong, Kavanaugh said, although he provided no figures. He said IBM will extend NVMe across its storage portfolio this year.

IBM’s latest focus is helping customers build IBM storage clouds for AI and edge projects. New Z Series mainframe systems and high-performance Power9 processors have been rolled out to enterprises that require advanced analytics or cloud computing.

IBM cloud revenues increased 12% last year to more than $19.2 billion. Software-as-a-service revenue closed the year with an annual run rate of $12 billion, up 21%.

Without disclosing details, Kavanaugh said the number of new clients using IBM Cloud Private “accelerated” last quarter, and he cited growing adoption for the IBM Private Cloud for Data platform.

The proposed IBM-Red Hat acquisition is on track to close this year . Kavanaugh said the combined company will “hit the ground running. We see an opportunity to lift all of IBM by selling more of our own IBM Cloud, our analytics and AI capabilities on OpenShift across multiple platforms.”