What: Shares of enterprise cloud storage company Box (NYSE:BOX) surged on Wednesday after the company announced an extensive partnership with IBM (NYSE:IBM). After rising as much as 10.6% at market open, the stock had settled a bit by noon, up about 8.5% at that time.
So what: While IBM does offer cloud storage services, it doesn't offer the type of cloud storage platform that Box has built its business around. Box will integrate IBM's enterprise content management products into its service, while IBM's Watson analytics will be used to bring insights to content stored in Box. Box's capabilities will also be integrated into IBM Verse and IBM Connections, the company's enterprise email product and social collaboration platform.
In addition to these integrations, Box will allow joint customers to store their content on the IBM Cloud. IBM will have 46 data centers in total by the end of this year, with 25 of them outside of the United States, providing a global footprint for joint customers. IBM's security technology will also be used by Box to expand its own security offerings, and the Box API will be available to developers using IBM's Bluemix cloud platform.
Now what: For IBM, which doesn't offer a cloud storage platform like Box, this deal strengthens its own cloud platform, giving Box customers a reason to use IBM's cloud over the competition. It also expands the presence of IBM's machine-learning Watson analytics system, which IBM hopes to turn into a $10 billion business over the next decade.
For Box, the deal should not only add legitimacy to its platform, but through IBM's global sales force working with Box to market products and services jointly, it should also help expand Box's presence internationally. Box has been spending heavily in order to add new customers, and any help from IBM will likely go a long way toward growing Box's paying user base.
Timothy Green owns shares of International Business Machines. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.