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Home » IBM Cloud Bounces Back with Q1 Cloud Revenue up 18% to $6.5 Billion
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IBM Cloud Bounces Back with Q1 Cloud Revenue up 18% to $6.5 Billion

Bob EvansBy Bob EvansApril 20, 20214 Mins Read
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Rebounding nicely from last quarter’s measly 8% growth in cloud revenue, IBM has jumped out to a solid start in 2021 with Q1 cloud revenue up 18% to $6.5 billion.

On my weekly Cloud Wars Top 10 rankings, IBM is #9 despite the fact that its cloud revenue for the 12 months ended March 31 is now $26 billion. 

CEO Arvind Krishna, who earlier this month completed his first year at the helm of the iconic company, used his opening remarks to paint a picture of vast potential in helping businesses blend traditional and new IT technology via hybrid cloud.

“As I’ve told you before, we see the hybrid cloud opportunity at $1 trillion, with less than 25% of workloads having moved to the cloud so far,” Krishna said in his opening remarks.

That figure cited by Krishna about the percentage of workloads now in the cloud made me think of a related statement made recently by Amazon CEO Andy Jassy regarding the extraordinary potential in the cloud market: Amazon Shocker: CEO Jassy Says Cloud Less than 5% of All IT Spending. While Krishna and Jassy are talking about different units of measure—workloads versus total IT spending—the impact is the same: the enterprise cloud represents a phenomenally huge opportunity.

It is precisely that opportunity that IBM is pursuing with its hybrid-cloud focus, Krishna said as he continued with his opening remarks.

“We are reshaping our future as a hybrid cloud platform and AI company… Businesses have made massive investments in their IT infrastructure, and are dealing with specific constraints such as compliance, data sovereignty and latency needs in their operations… This gives them a credible path to modernizing legacy systems with advanced cloud services and building cloud-native apps,” Krishna said.

“IBM’s approach is platform centric. Linux, Containers and Kubernetes are the foundation of our hybrid cloud platform which is based on Red Hat OpenShift. We have a vast software portfolio, Cloud Paks, modernized to run cloud-native anywhere. Our GBS expertise is a key factor in driving consumption and in helping our clients accelerate their digital transformation journeys. And our systems and industry-specific public cloud provide differentiated infrastructure.”

Krishna then described the expectation that will either establish his reputation as the leader of a profound transformation or mark the further decline of a once-brilliant company.

“The economics of our platform are designed to drive growth across all of IBM. The platform itself contributes and then, for every dollar of platform spend, clients spend $3 to $5 in software, and $6 to $8 in services.”

Let’s take a look at how that played out in Q1. Of IBM’s total Q1 cloud revenue of $6.5 billion, here’s how each of IBM’s 4 operating segments contributed to that cloud total:

  • in Cloud and Cognitive Software, cloud revenue was $1.8 billion, up 34%;
  • in Global Business Services, cloud revenue was $1.7 billion, up 28%;
  • in Global Technology Services, cloud revenue was $2.4 billion, up 2%; and
  • in Systems, cloud revenue was $500 million, up 21%.

I offer some additional analysis of IBM’s Q1 cloud results in today’s episode of our new Cloud Wars Minute news and commentary show. You can find all of our Cloud Wars Minute episodes on our YouTube channel, and the promise of our new daily video show is this: “You give us 3 minutes, and we’ll give you some unique insights into the greatest growth market the world has ever known.”

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Subscribe to the Cloud Wars Newsletter for in-depth analysis of the major cloud vendors from the perspective of business customers. It’s free, it’s exclusive and it’s great!

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Bob Evans

Founder, Cloud Wars
Co-Founder, Acceleration Economy

Areas of Expertise
  • Cloud
  • Digital Business
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Founder of Cloud Wars and Co-Founder of the Acceleration Economy, Bob leads the strategic direction of the global analyst network and actively covers the Cloud and Digital Business categories. Creator of Cloud Wars Top 10, a ranking and ongoing analysis world's most influential tech companies driving digital business and the digital economy. World-class strategic communicator focused on emerging business strategy, disruptive innovation, and forward-looking leadership.

  Contact Bob Evans ...

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