IBM Ad Campaign Attacks Amazon

November 4, 2013 Leave a comment

Nov 3, 2013

IBM Ad Campaign Attacks Amazon

SPENCER E. ANTE

The IBMIBM +0.01% logo is seen at their booth prior to the opening of the CeBIT IT fair on March 5, 2012 in Hanover, Germany. IBM is stepping up its fight againstAmazon.comAMZN -1.38% around cloud computing. In an unusual move, IBM is launching a marketing campaign Monday that names Amazon as a rival and implicitly claims that IBM is the leader in the estimated $40 billion-a-year cloud-computing market. IBM rarely mentions competitors in any of its advertisements.“Whose cloud powers 270,000 more websites than Amazon?” asks one print advertisement that will run in some major newspapers and business magazines. “If your answer is IBM, you’re among the well informed. The IBM cloud offerings also support 30% more of the most popular websites than anyone else in the world.”

The campaign, which will run in print, online and outdoors, highlights the growing stakes in the battle for the cloud as companies shift more of their technology purchasing dollars to renting computing over the Internet rather than buying and maintaining their own hardware and software. IBM would not disclose how much it is spending on the campaign.

The trend is a challenge to IBM, which has made billions of dollars installing, maintaining and upgrading computer systems for clients.

IBM recently lost a high-profile fight with Amazon for a $600 million contract to set up a cloud-computing system for the Central Intelligence Agency. The CIA surprised IBM when it picked Amazon, a win that could help unlock doors for Amazon with security-sensitive government agencies and commercial clients that have long been IBM’s turf.

An Amazon spokesperson declined to comment on the IBM campaign.

IBM vice president of cloud services Ric Telford said IBM is launching the campaign largely because it recently completed its $2 billion acquisition of SoftLayer Technologies Inc.

SoftLayer rents space to clients on computers the clients don’t own, an area dominated by Amazon. A client, for example, might put its database or website on computer servers operated by SoftLayer rather than buy its own.

Telford downplayed the loss of the CIA contract, claiming it was just one deal of many. “IBM wins more than it loses,” said Telford, citing a 10-year, $1 billion cloud computing contract it announced this August with the Department of the Interior.

In the most recent quarter, IBM disappointed investors by falling short of Wall Street revenue estimates, but named cloud computing as a bright spot. IBM it generated more than $1 billion in cloud revenue, up 70% from a year earlier, and the first time IBM disclosed its cloud revenues.

In July, IBM said in a securities filing that the Securities and Exchange Commission was conducting an investigation into how the company reports cloud revenue. IBM said it is cooperating with the agency and follows accepted accounting rules.

Filed under TMT Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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