IBM to invest $3B in building Internet of Things business

IBM on Tuesday said that it will create a new Internet of Things unit and invest $3 billion over four years to build it out.Ibm

The move formalizes IBM’s existing Internet of Things efforts. IBM’s smarter-planet and smarter-cities businesses are connected to the Internet of Things trend. The rough idea behind the Internet of Things is that sensors will be embedded in everything and networked to create data. This flow of data could improve operations.

For IBM, the formation of the Internet of Things unit follows a familiar playbook. IBM targets a high-value growth area, invests at least a $1 billion to get the effort rolling and throws its hardware, software and consultants at the issue. In this respect, the formation of the Internet of Things unit rhymes with what IBM did with e-commerce, analytics, and cloud and cognitive computing.

IBM faces a fierce battle for enterprise Internet of Things (IoT) business. Cisco has targeted IoT, as has almost every tech vendor.

Meanwhile, nontraditional IBM rivals have strong IoT efforts. For instance, General Electric, which happens to make many of the things that will be networked, has an IoT platform called Predix. G

E has invested $1 billion in industrial software development. Although GE calls the Internet of Things the industrial Internet, the concept of networking things and layering analytics on top is the same.

For IBM’s part, the company said it will have more than 2,000 consultants, researchers and developers aimed at IoT and the analytics that go with it. IBM said the unit will include:

  • A cloud platform for industries aimed at verticals. IBM will offer dynamic pricing models and cloud delivery to various verticals.
  • Bluemix IoT platform as a service so developers can create and deploy applications for asset tracking, facilities management and engineering tools.
  • An ecosystem of partners ranging from AT&T to ARM to The Weather Company.

Separately, IBM announced a partnership with the business-to-business division of The Weather Company, owner of The Weather Channel. The partnership will deliver micro weather forecasts using sensors from aircraft, drones, buildings and smartphones.

The Weather Company will also move its data services platform to IBM’s cloud platform and integrate Big Blue’s analytics tools such as Watson Analytics.

To be sure, IBM has a bevy of IoT projects under way with customers. The new unit will hone and focus those efforts while bringing in IBM’s expertise in analytics.

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Microsoft boosts OneDrive for Business capacity to 1TB

The cloud-storage arms race heated up even more on Monday when Microsoft gave its OneDrive for Business service a big capacity boost.

The per-user storage provided by OneDrive for Business is rising from 25 gigabytes to 1 terabyte. That applies to both the standalone version of the product and the versions that come bundled with Office 365.

The standalone version of OneDrive for Business is available as a $5-per-month option with the free Office Online Web-based productivity suite. Microsoft is currently offering the first year’s subscription at half the price. That promotional offer is available through September.

Microsoft also announced that for the first time, it is including OneDrive for Business with Office 365 ProPlus, a full-featured version of the desktop Office suite that is sold via an annual subscription for $12 per user, per month. These subscribers will also get 1 terabyte of storage per user.

OneDrive for Business, previously called SkyDrive Pro, is a service where employees can store, share and sync personal work files.

OneDrive for Business is included with most editions of Office 365, the cloud email and collaboration suite that includes online versions of Exchange, Lync and SharePoint, and with the standalone SharePoint Online service.

These Office 365 editions vary in price depending on their features and components. For example, Office 365 Small Business costs $5 per user, per month, while Office 365 Enterprise E4 goes for $22 per user, per month, to mention just two of the bundles.

The enterprise file sync and share market is crowded with specialty vendors such as Box, Dropbox, Accellion, Watchdox and Egnyte, and with products from larger providers such as Google, IBM, Citrix and EMC.

This type of storage product has become an essential component of modern collaboration systems designed to allow colleagues to jointly edit documents and access files from a variety of devices, including smartphones, tablets and PCs, via different methods including native mobile apps and standard Web browsers.

Dropbox charges $15 per user, per month for an unlimited amount of storage as part of its Business plan.

Meanwhile, Box charges $15 per user, per month for 1 terabyte of storage in its Business plan, and $35 per user, per month for unlimited storage.

Google Apps for Business, which costs $5 per user, per month, includes 30 gigabytes of Gmail and Drive storage. Customers can purchase more storage in various increments, including 1 terabyte for $89 per user, per month.

As part of its free Google account for individual consumers, Google offers each person 15 gigabytes of standard storage for Gmail, Drive and Google+ Photos, 100 gigabytes for $1.99 per month and 1 terabyte for $9.99 per month. Google chopped down those prices from $4.99 and $49.99, respectively, in March.

Lenovo Buying IBM Server Business For $2.3 Billion

Chinese technology company Lenovo and the U.S-based IBM IBM -3.1% are extending their business relationship: Lenovo, which acquired IBM’s ThinkPad line of PCs in 2005, has agreed to buy IBM’s low-end server business for $2.3 billion, the companies announced Thursday morning.

Lenovo will pay $2 billion in cash and $300 million in stock to acquire IBM’s x86 server business, a segment that includes IBM’s System x, iDataPlex servers and other server maintenance operations. As part of the agreement, IBM will continue to develop its Windows and Linux software for the server platform, but Lenovo will assume customer service and maintenance responsibilities for the system once the deal is closed. In the interim, IBM will continue to provide maintenance and customer support and said that customers should see little change in the technical support available to them.

The companies did not say when they expect the deal to close.

“This divestiture allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data and cloud,” Steve Mills, senior vice president of IBM Software and Systems.

One innovation Mills is almost certainly referring to: IBM’s Watson Group, which the company recently announced would receive a $1 billion investment. The goal is to take the supercomputer — which famously competed on Jeopardy! — and apply its intelligence and technical capabilities to better develop cloud computing and business analytics.

Others, like RBC analyst Amit Daryanani, argue that the $1 billion in net gain IBM will receive from the sale of the x86 business is best suited for a share buyback. In a note released Thursday morning, Daryanani called the deal a “net positive for IBM, as it reduces its exposure to commoditized hardware” and said that such an investment would bolster IBM’s earnings per share.
“As part of the transaction, Lenovo will become a global reseller for IBM’s hardware and parts of its software solutions as well. We think this could be a positive for IBM, especially given the challenges it is facing in China currently,” Daryanani added.

For Lenovo’s part, executives said that the deal helps the company’s global PC strategy. “With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long-term,” Yang Yuanqing, Lenovo chairman and CEO, said in a statement Thursday.

Following news of the deal, shares of Lenovo ticked up 3.5% Thursday morning, while shares of IBM were up just 0.4%. Year over year, Lenovo is the clear winner of the two: it’s up 29% since this time in 2013, while IBM is down 11%.

IBM’s BPO business sell-off to affect Indian employees

With global information technology major IBM deciding to sell its low-value customer care services business to Synnex Corp, a major chunk of employees to be transferred to the acquirer are expected to be from India.

Sources say this is primarily because India has been at the forefront of IBM Global Process Services (GPS), the business process outsourcing (BPO) services business of the company. In turn due to the huge presence it got in the country with the acquisition of Daksh eServices in 2004.

“This (the selloff) is expected to affect employees partly in countries such as India, Philippines, China and Australia, and several countries in Latin America,” sources said. “Among all these, India seems to have a greater concentration of IBM’s delivery presence in voice-based BPO and call centre space, followed by Philippines.”

“However, among all these, India seems to have a greater concentration of IBM’s delivery presence in voice-based BPO and call centre space followed by Philippines,” it added.

When Daksh got acquired by IBM, it was predominantly providing voice-based BPO services to global clients, mostly out of centres in India. However, IBM was subsequently not expanding the voice BPO business as it was getting commoditised and the margins were low as compared to platform-driven and process-driven BPO.

While IBM does not give its region-specific employee headcount, analysts estimate it might have around 40,000 employees for its GPS business. Among the Indian cities, Gurgaon is expected to have largest concentration of employees offering voice BPO services followed by Bangalore, according to sources within the company.

Replies to a detailed questionnaire sent to the company seeking details on the impact of the sell-off on its Indian operations, is still awaited.

“Typically in the customer care business, costs keep rising, especially labour cost but customers don’t necessarily pay more. In India the salary in ITeS sector has been rising 7-12% annually; so companies providing customer care services are sort of sandwiched. Hence, the source of profitability is only by moving up the value chain,” Sanjoy Sen, senior director, Deloitte Touche Tohmatsu India said.

IBM India did not give a direct reply to a detailed questionnaires sent to the company seeking the impact of the sell-off of the customer care outsourcing services. “IBM remains committed to India with continued focus on our relationships with our clients locally and globally,” the company spokesperson in India said in an email reply.

IBM on Tuesday had announced that it has agreed to sell its customer-care outsourcing business to Synnex Corp. for $505 million. According to various reports, the company’s plan is to get rid of the low profit margin business to focus on more profitable investments.

The IBM spokesperson said that the scope of the businesses the company is divesting with this sale includes contact centers, as well as specialised end-to-end processing for banks, insurers and healthcare clients. “IBM will retain Global Process Services in Finance and Administration, Supply Chain Management, Human Resources including managed human resources outsourcing services and Mortgage Origination & Servicing services”.

IBM Gets Allies to Chip Away at Intel

Silicon Wag\fer containg IBM Power chips

A technology worker holds a silicon wafer containing IBM Power chips. IBM

International Business Machines Corp. has enlisted Google Inc. and some other high-tech allies for a collective effort to catapult an IBM chip technology out of a shrinking niche.

The alliance the companies plan to announce Tuesday would allow many companies to license IBM microprocessor designs—based on a technology dubbed Power—that are now only found in Big Blue’s own server systems. Licensees could incorporate IBM-designed circuitry in their own chips, with members of the alliance working on related products such as servers, networking and storage devices, participants said.

Other initial members of the group, called the OpenPower Consortium, include Silicon Valley chip maker Nvidia Corp. , the Israel-based networking-technology maker Mellanox Technologies Ltd. and Taiwan-based Tyan Computer Corp., a server supplier that is a unit of MiTAC International Corp.
The effort is the latest aimed at one of Intel Corp.’s key strongholds. The x86 chip design that Intel and rival Advanced Micro Devices Inc. popularized in personal computers thoroughly dominates servers—particularly machines sold for Web-based applications now being purchased in the greatest numbers. Research firm IDC estimates x86 servers in 2012 accounted for 98% of world-wide shipments and 70% of server revenue.

IBM, meanwhile, has faced a variety of pressures in servers. The company said last month that revenue from its Power-based systems declined 25% in the second quarter from a year earlier, without disclosing dollar figures.

Those servers run the Unix operating system and compete with other high-end systems in a market that declined 19% last year to $9.2 billion, says IDC analyst Matthew Eastwood, reflecting factors that include stiffer competition for x86-based machines. IBM has the biggest share of that market, but IDC estimates that Big Blue’s revenue from those systems declined 10% to $5.1 billion in 2012.

By licensing hardware and associated software technology, IBM hopes to get more revenue from its investments in the Power chips and attract new users among “Web 2.0” companies that are buying servers in large volumes, said Bradley McCredie, an IBM vice president who also holds the title of fellow.

“We absolutely want to get into a broader ecosystem,” he said. “That is why we are doing this.”

The effort will start with Power8, a forthcoming member of the chip family that IBM plans to discuss at a technical conference this month.

IBM has shared elements of its Power technology before for different applications than servers. But the alliance’s strategy most resembles tactics pursued in chips for smartphones and tablets by ARM Holdings PLC, which licenses technology to a range of chip suppliers that compete on features and price. ARM backers are now also trying to break into servers, seeking to offer energy-efficient chips that save on space and power consumption.

Attracting users to the third option of Power chips won’t be easy, given Web companies’ massive investments to date in machines and software based on chips sold by Intel and AMD. But an endorsement from Google could help, given its status as a huge buyer of x86-based servers that it designs and assembles itself.

The Internet giant declined to discuss its plans in detail, but suggested that using Power-based systems was a possibility.

“The consortium has the potential to establish Power architecture as a viable option for applications running within Google’s data centers,” a Google spokeswoman said, adding that her company believes in “openness” and looks forward to the innovation the Power group will bring.

Other participants cite additional motivations. Nvidia, for example, hopes IBM will help market its graphics chips for use in accelerating certain jobs in Power-based servers.

“IBM is the company that knows enterprise computing best and has one of the best sales teams out there,” said Sumit Gupta, an Nvidia general manager.

Tyan sells servers to the kind of buyers the consortium is targeting, citing customers that include Amazon.com Inc. and China’s Tencent Holdings Ltd. Albert Mu, Tyan’s general manager, noted that the Power technology has some technical advantages over x86 chips but is costly for IBM to keep improving, given the relatively small number of Power systems sold.

Server buyers “now have no choice—it’s like 100% Intel,” Mr. Mu said. “This has limited innovation that needs to take place for the server market to continue to grow.”

An Intel spokesman declined to comment. But Andrew Feldman, a corporate vice president at AMD, said the Power consortium is emulating the ARM approach of selling chips that are tailored for specific customers—one of the reasons AMD has announced plans to start selling ARM-based chips in addition to the x86 variety.

“IBM is saying the way to attack Intel is by allowing customization,” Mr. Feldman said. “I commend them for it.”

Microsoft boosts OneDrive for Business capacity to 1TB

The cloud-storage arms race heated up even more on Monday when Microsoft gave its OneDrive for Business service a big capacity boost.

The per-user storage provided by OneDrive for Business is rising from 25 gigabytes to 1 terabyte. That applies to both the standalone version of the product and the versions that come bundled with Office 365.

The standalone version of OneDrive for Business is available as a $5-per-month option with the free Office Online Web-based productivity suite. Microsoft is currently offering the first year’s subscription at half the price. That promotional offer is available through September.

Microsoft also announced that for the first time, it is including OneDrive for Business with Office 365 ProPlus, a full-featured version of the desktop Office suite that is sold via an annual subscription for $12 per user, per month. These subscribers will also get 1 terabyte of storage per user.

OneDrive for Business, previously called SkyDrive Pro, is a service where employees can store, share and sync personal work files.

OneDrive for Business is included with most editions of Office 365, the cloud email and collaboration suite that includes online versions of Exchange, Lync and SharePoint, and with the standalone SharePoint Online service.

These Office 365 editions vary in price depending on their features and components. For example, Office 365 Small Business costs $5 per user, per month, while Office 365 Enterprise E4 goes for $22 per user, per month, to mention just two of the bundles.

The enterprise file sync and share market is crowded with specialty vendors such as Box, Dropbox, Accellion, Watchdox and Egnyte, and with products from larger providers such as Google, IBM, Citrix and EMC.

This type of storage product has become an essential component of modern collaboration systems designed to allow colleagues to jointly edit documents and access files from a variety of devices, including smartphones, tablets and PCs, via different methods including native mobile apps and standard Web browsers.
Dropbox charges $15 per user, per month for an unlimited amount of storage as part of its Business plan.

Meanwhile, Box charges $15 per user, per month for 1 terabyte of storage in its Business plan, and $35 per user, per month for unlimited storage.

Google Apps for Business, which costs $5 per user, per month, includes 30 gigabytes of Gmail and Drive storage. Customers can purchase more storage in various increments, including 1 terabyte for $89 per user, per month.

As part of its free Google account for individual consumers, Google offers each person 15 gigabytes of standard storage for Gmail, Drive and Google+ Photos, 100 gigabytes for $1.99 per month and 1 terabyte for $9.99 per month. Google chopped down those prices from $4.99 and $49.99, respectively, in March.