IBM bets on cloud computing

June 5, 2013 8:58 am

IBM and Salesforce have been acquiring cloud computing companies, signaling a big shift in strategy in technology sector as a whole. The purchases of the two technology giants amounts to $4.5 billion. IBM who is relying vastly on cloud computing in the core of its business, has paid $2 billion for SoftLayer – a private Dallas company according to Financial Times. Salesforce, one of the new leaders of cloud services, ranked most innovative company by Forbes, paid $2.5 billion for ExactTarget – Indianapolis based provider of interactive marketing and social media services.

IBM have changed direction from selling computers and components to offering information technology services to big companies and governments. The company estimates $7 billion of annual cloud revenue by the end of 2015. Last year IBM reported $105 billion of revenue.

Both private companies acquired by the two giants are generating almost no profit with yearly revenues of $300 -$400 million. Their 5 to 9 times pricier buyouts are triggered by the potential of those companies of future integration to the market as forecasts for the sector are highly favorable due to the innovation services offered.

IBM shares have recovered from middle April’s fall looking stable at the moment at $206.19 share price.

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