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Data Sheet—Wednesday, January 21, 2015

Good morning, Data Sheet readers. No one is surprised by IBM’s less-than-stellar 2014 financial results, but its claim of $7 billion in cloud revenue last year has people talking.

If you find this newsletter useful, forward it to colleagues and business partners, and tell them to sign up! Did you miss one? Here’s an archive of past editions.

TRENDING

Google’s new orbit. The search giant has made good on reports that it will invest $1 billion in Elon Musk’s SpaceX venture—with the goal of spreading Internet access around the earth, using satellites. Its partner in this planetary ploy: Fidelity. The deal also complements its investments in satellite imagery. New York Times

AMD disappoints, pretty much as expected. Its revenue fell 22% for the fourth quarter, in line with estimates. The chipmaker predicts another decline for the current period: about 15%. Its next big thing is the second-quarter launch of “Carrizo,” a next-generation microprocessor for convertible notebook-tablet computers. Reuters, eWeek

CA records 11th consecutive revenue decline. Apparently the software company has something in common with IBM, which also just posted its 11th straight slip. (More on that in a moment.) The good news is profits for the full year (the one that ends in March) are looking better than anticipated: they’ll be down 14% to 17% instead of up to 17%, as previously predicted. Wall Street Journal

POLICY & STRATEGY

IBM saves face with cloud sermon. The fact that the company’s sales and earnings for 2014 declined compared with one year ago isn’t news. Consider this three-year-trend: annual revenue for the past 12 months slipped about 6% to $93 billion, compared with $107 billion in 2011.

But naturally, IBM is talking up every positive figure it can uncover to get past a big transition year when it expected to disappoint shareholders. Indeed, there are several that it should really be happy about.

“In 2014, we repositioned our hardware portfolio for higher value, maintained a services backlog of $128 billion, and achieved strong revenue growth across cloud, analytics, mobile, social and security,” said IBM CEO Ginni Rometty. “Together, these strategic imperatives grew 16% in 2014 and now represent $25 billion and 27% of our revenue.”

For example, its sales related to business analytics were up 7% to nearly $17 billion. Security product revenue grew 19%, and those attributed to IBM’s mobile portfolio nearly tripled.

The one figure really raising eyebrows is this one: IBM claims total “cloud revenue” has reached $7 billion, up 60%. It was hoping to reach that goal by the end of 2015.

IBM is ready with all sorts of supporting statistics about why it’s the biggest, best thing in cloud services: there were $4 billion worth of multi-year hybrid cloud contracts disclosed over the past several months alone. (I can only imagine the pressure to get those contract signed before the end of the year.) Word it that it has two more in the pipeline that it will announce this week.

So far, IBM says its cloud offerings support “24 of the top 25” Fortune 500 companies. I wonder if those customers would describe their arrangements in the same way? Many of those deals build on the company’s legacy services and outsourcing businesses—which is probably why IBM often describes these relationships as “hybrid cloud” arrangements.

The hybrid cloud is nothing to sneeze at: it’s a market opportunity that research firm Gartner projects at $80 billion by 2018. And if IBM’s “cloud” business keeps growing at the same pace, it could reach $11 billion annually in very short order. But the proof will lie in the IBM sales team’s ability to sign contracts with significant new customers rather than renegotiating legacy relationships.

RESEARCH & PREDICTIONS

Don’t forget those hardware upgrades. “End of life” concerns could influence up to two-thirds of information technology investments in 2015, with lots of money going towards aging desktops, notebook computers, and servers. This projection comes to you from Spiceworks, a community of IT professionals representing both midsize and large businesses. The average budget of survey respondents: $291,062.

STARTUPS & DISRUPTORS

Facebook, Intel alumni raise $20 million for business analytics startup

When it comes to answers about basic business developments, most people are pretty impatient. Why should it take two or three days to gather analysis on sales over a specific timeframe, marketing campaigns, or other key business metrics? Seriously, who can afford to run a company that way?

Facebook-spawned Interana is one of several companies developing software to generate this sort of “event-based” or “time-based” perspective far more quickly. The two-year-old startup has scored early customers such as software company Asana and the Silicon Valley division of telecommunications operator Orange.

To that end, today it disclosed $20 million in Series B financing, led by Index Ventures, along with several other new investors, including Cloudera’s chief strategy officer, Mike Olson. The round bring total backing behind the company to slightly less than $30 million, said Interana CEO Ann Johnson.

Index Ventures general partner Mike Volpi is joining the company’s board as a result of the investment. He joins several other notable advisors, including Veritas Software founder Mark Leslie and Facebook’s vice president of engineering, Jeff Rothschild.

“What really sets Interana apart is that their solution combines pieces of a product that usually gets separated into different silos,” wrote Volpi in a blog post about the investment. “The current standard for big data analysis is for companies to pair a large data warehouse with some kind of graphical technology, and then manually run a long set of scripted queries to get the desired results. Interana has fundamentally gone against the grain of how people think about this system.”

Volpi was intrigued by the trio of entrepreneurs behind Interana: husband-and-wife team Bobby and Ann Johnson, who met at CalTech in the 1990s and most recently were with Facebook and Intel, respectively. The third founder is Lior Abraham, another Facebook alumnus, who developed the company’s internal analytics technology, called SCUBA. “That team really democratized the use of these tools more than others have,” he said.

“We want to eliminate long hallway discussions, and make it easier for people to get things done,” added CEO Ann Johnson.

The new money will be primarily dedicated to building Interana’s sales and marketing organization, expanding its product development resources, and developing more proof-of-concept installations, she said.

MORE STARTUP NEWS

Dropbox buys Israeli mobile developer CloudOn. Terms weren’t disclosed, but the company makes software used by more than 9 million people to edit Microsoft Office documents on tablets and other mobile devices. It raised $26 million from private investors before the acquisitions. WSJ

Here’s where to hire the best software developers. New York-based Stack Exchange is connected with more than 26 million programmers, helping companies like Amazon and Microsoft with recruiting. It just raised $40 million in Series D funding led by Andreessen Horowitz. Fortune 

Trend watch tool for marketers. Marketing software startup Taykey sells technology that monitors what potential prospects are talking about and then places—or pulls—advertisements according to the sentiment. It just another $15 million in a round led by Innovation Endeavors. Fortune

Microsoft snaps up document management company. The software giant paid an undisclosed amount for Equivio, which makes text analysis technology that can scan files for certain key words and group them according to compliance rules or subjects. The software gets smarter as it goes.

MY FORTUNE.COM BOOKMARKS

6 business issues that could shape the political debate in 2015 By Ben Geier

Private equity’s largest U.S. investor is changing up its strategy By Dan Primack

Netflix shares surge as subscribe growth picks up By Tom Huddleston, Jr.

How many iPads did Apple sell last quarter? By Philip Elmer-DeWitt

Orbitz is on the hunt for a buyer and drawing interest By Laura Lorenzetti

At Davos, expect talk of oil, terrorism and sex scandals By Stephen Gandel

Wal-Mart hopes to spur sales by offering in-store tax refunds By Phil Wahba

Why Europe has bigger problems than the Euro By Nin-Hai Tseng

What Davos is like for a female CEO By Caroline Fairchild

10 surprising jobs you can do from home By Anne Fisher

ONE MORE THING

Drat, why didn’t I wait to buy that new notebook computer! New 13-inch models from Dell and Lenovo can last close to two days on a single battery charge. Apple’s competitive offering? Not so much. WSJ

MARK YOUR CALENDAR

IBM ConnectED: Collaboration and digital experience. (Jan. 25 – 28; Orlando, Florida)

IBM Interconnect: Cloud and mobile strategy. (Feb. 22 – 26; Las Vegas)

Gartner CIO Leadership Forum: Digital business strategy. (March 1 – 3; Phoenix)

Microsoft Convergence: Dynamics solutions. (March 16 – 19; Atlanta)

IDC Directions 2015: Innovation in the 3rd Platform era. (March 18; Boston)

Cisco Leadership Council: CIO-CEO thought leadership. (March 18 – 20; Kiawah Island, South Carolina)

Gartner Business Intelligence & Analytics Summit: Crossing the divide. (March 30 – April 1; Las Vegas)

Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)

RSA Conference: The world talks security. (April 20 – 24; San Francisco)

Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 – 28; Orlando, Fla.)

MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)

NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)

EMC World: Data strategy. (May 4 – 7; Las Vegas)

SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)

Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)

Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)

HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)