International Business Machines (NYSE:IBM) has built an $18.5 billion cloud business by focusing on the needs of its customers. About 80% of mission-critical workloads and sensitive data still run on on-premises hardware due to performance or regulatory requirements, according to Ovum. IBM's heavy focus on private cloud and hybrid cloud makes sense in that context.
Another statistic driving IBM's cloud strategy: 85% of companies are using more than one cloud environment, according to IBM's Institute for Business Value. While Amazon Web Services and Microsoft Azure dominate the market for public cloud infrastructure, many companies are spreading workloads across multiple public clouds and on-premises hardware, instead of going all in on a single public cloud. Managing those multi-cloud workloads can get complicated fast.
A multi-cloud world
That's where IBM comes in. The company announced on Monday its Multicloud Manager, a solution that allows customers to manage complex multi-cloud workloads. The system provides a dashboard interface for managing container-based applications spread across different cloud environments, even those of IBM's competitors, as well as on-premises hardware.
The solution is optimized for IBM's cloud, but the company specifically mentioned support for Amazon Web Services, Microsoft Azure, and Red Hat's private cloud. "With its open source approach to managing data and apps across multiple clouds, the IBM Multicloud Manager will enable companies to scale their many cloud investments and unleash the full business value of the cloud," said IBM Hybrid Cloud senior vice president Arvind Krishna in the press release announcing the product.
While IBM claims that Multicloud Manager is the "world's first multicloud management technology," that's not entirely accurate. Managing workloads across different clouds is the bread and butter of Nutanix (NASDAQ:NTNX), a company that provides software that "melds private, public and distributed cloud operating environments and provides a single point of control to manage IT infrastructure and applications at any scale."
Nutanix generated $1.16 billion of revenue in fiscal 2018, with most of that coming from software and support, which grew by 47% compared to 2017. There's a big and growing market for multi-cloud management, and IBM's Multicloud Manager is the company's effort to grab a piece of that pie.
IBM's key advantage over Nutanix will be its vast trove of customer relationships. IBM counts as customers large enterprises and governments, some of which have been using IBM solutions for decades. As those organizations tiptoe into the cloud, IBM's Multicloud Manager will be well positioned to help simplify the process.
IBM has its own public cloud, so why is the company supporting Amazon, Microsoft, and other competitors with its Multicloud Manager? Because at its core, IBM is a company that solves problems for its customers. And sometimes an IBM-only solution doesn't cut it.
Back in the 1990s, when outsider CEO Lou Gerstner was brought in to save the company from collapse, one of the pillars of the company's turnaround was brand agnosticism. Gerstner wanted IBM's services business to be a one-stop shop capable of building integrated solutions for its customers. But that required sometimes favoring competitors' products. Gerstner wrote in his book, Who Says Elephants Can't Dance?:
To be truly successful, we would have to do things that would shake the place to its roots. For example, the services unit would need to be able to recommend the products of Microsoft, HP, Sun, and all other major IBM competitors if that, in fact, was the best solution for the customer. Of course, we'd have to maintain and service these products as well.
With Multicloud Manager, that brand-agnostic strategy is very much alive and well at IBM. It won't help IBM win public cloud market share from Amazon and Microsoft, but it will unlock a growing market for multi-cloud management.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Timothy Green owns shares of IBM. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Nutanix. The Motley Fool has a disclosure policy.