In the ever-changing world of cloud technologies and related analytics, trying to be all things to all people is a pretty tough nut to crack. Big name players like Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) offer a slew of cloud solutions, but each are particularly successful in their respective areas of strength: Microsoft with its cloud Software-as-a-Service (SaaS) product suite and Amazon.com's industry-leading data storage services.
Like the aforementioned cloud providers, IBM (NYSE:IBM) isn't likely the first name that comes to mind in a discussion of cloud data storage leaders, and that's fine because when it comes to the analysis of the reams of cloud-related information, IBM's Watson super-computer and business intelligence solutions (BI) are near the top of any list.
In an effort to continue IBM's cloud growth, it's taken the path of least resistance: in this case, developing strategic partnerships. You may recall the news that IBM expanded its partnership with Apple recently and announced its "Health Cloud" utilizing iOS apps and Watson's cognitive computing capabilities to analyze health data. Though not quite in the same ballpark as the king of smartphones, IBM's latest partnership is yet another sign of the times for Big Blue.
The latest in a long line
IBM's most recent strategic alignment is with cloud-based, enterprise content collaboration software provider Box (NYSE:BOX). The deal calls for IBM and Box to partner in several ways. First, the two will integrate Box's content management and collaboration solutions into IBM's suite of data analytics services: including using Watson cognitive computing capabilities.
Second, the new partners will jointly develop mobile solutions for use in IBM's MobileFirst iOS apps, as well as integrate Box Application Developer Interfaces (APIs) into Developer Cloud to build custom apps unique to each customer.
Finally, going forward the two partners will market their existing and newly developed cloud services around the globe thanks to IBM's cloud data centers. IBM's plans are to build and manage 46 cloud data centers worldwide by year-end, and just recently opened another in Italy. The cloud data center in Milan, Italy, brings the total to over 40 worldwide, and now Box -- with IBM's able assistance -- can spread its own, international cloud wings for the benefit of both.
What's the big deal?
At about $2.35 billion in market capitalization -- a drop in the bucket compared to IBM's $164 billion-a strategic alignment with Box isn't exactly in the same league as Apple and the many other partnerships it's inked recently. However, working with Box does bring with it a host of possibilities, and perhaps more importantly demonstrates CEO Ginni Rometty's on-going commitment to pursue any and all cloud and data analytics growth opportunities.
Though relatively small, Box boasts 37 million registered users, all of whom can now benefit from IBM Cloud storage and analytics solutions. As it relates to the future of the cloud market, Watson and its associated solutions, along with BI are the aces up IBM's sleeve.
By 2018, it's estimated that nearly 60% of the world's cloud workload -- and the revenues that go along with it -- will come from Software-as-a-Service. As the data storage price wars rage on, it's become apparent that software and analytics is where the real cloud growth will come from -- and IBM's Watson and business intelligence suite of services is ideally positioned to take full advantage.
For investors, it will be interesting to note if IBM is able to maintain its rapid cloud and BI improvements on July 20. Last quarter, cloud delivered as a service -- a key component of Rometty's "strategic imperatives" initiative -- jumped more than 60%. Cloud sales improved over 75% after adjusting for currency exchange rates and IBM's related, divested businesses. At nearly $4 billion in revenue annually, IBM has quickly become a big-time player in the cloud.
IBM's alliance with Box doesn't make the same "splash" as Apple and some others, but it's yet another step in the right direction for Rometty and team. And if cloud and analytics growth -- via partnerships or organically --aren't enough to light a fire under IBM investors, maybe its 3.13% dividend yield will do the trick.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and 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.