IBM came out with guns blazing at Amazon on Friday. The morning after Amazon announced its 4th quarter earnings IBM claimed that it is on top of the cloud, not Amazon Web Services.
An IBM representative gave this statement about how Amazon’s full-year “other” revenue, which includes AWS, was $3.9 billion comparable to IBM’s $4.4 billion.
“By definition, even if EVERY penny of ‘other’ revenue was in Amazon Web Services — and it obviously isn’t — IBM sold at least $0.5 billion more in cloud than AMZ in 2014, and IBM also grew at a faster rate (69 percent for FY 2013). That’s on $4.4 billion in cloud revenue for the year with $1.7 billion in cloud/SaaS services for IBM.”
AWS is in the public cloud exclusively while IBM’s portfolio includes the private, public and hybrid cloud (everything but the kitchen sink). With that, IBM is lumping all of these cloud platforms together into their totals.
IBM’s revenue breakdown goes like this, $1.7 billion from SaaS and $2.7 billion from software, hardware and services. Many Saas apps run on AWS but are managed from third party vendors so AWS doesn’t see a lot of direct revenue from this.
IBM’s revenue from software, hardware and services is a rather large number but the category is also outrageously vague much like Amazon’s “other” category. This draws up the question of how to properly define cloud, because now it seems like companies are just lumping various components to boost the numbers. The SEC wants more clarity on how IBM as well as other IT companies define cloud, and until then the numbers we see may be telling a different story from the truth.
Written by: Sam Watkinson