Cloud Applications: IBM Sets New Products, Services For Enterprises

International Business Machines Corp. (NYSE: IBM) announced a series of initiatives for cloud, or Internet-based computing, to lower costs as well as lure more customers.

The move comes seven months after the Armonk, N.Y., computer developer and services provider inaugurated a major push to the cloud, to better compete against rivals headed by the larger Hewlett-Packard Co. (NYSE: HPQ) , Cisco Systems Inc. (Nasdaq: CSCO) and Equinix Inc. (Nasdaq: EQIX).

It's all about optimization, said Craig Sowell, vice president for IBM SmartCloud and Managed Services Marketing, in an interview. It's not a one-size-fits-all solution here.

New offerings for the cloud include continued interoperability with the highly complex enterprise software from Germany's SAP AG (NYSE: SAP) to manage entire factories by Dell Inc. (Nasdaq: DELL), as well as for a small Norwegian services company, Otrum, to handle video services for the hospitality industry.

Rather than develop software applications independently, IBM customers can pick among various cloud offerings, including a Ready for Smart Cloud product, to tailor their businesses.

At the same time, IBM will offer to manage company data centers, tailor applications and sell additional software and services.

In the first quarter, IBM reported revenue from services rose 2 percent, while software revenue increased 5 percent, as revenue from hardware sales fell 7 percent.

Overall net income rose 7.1 percent to $3.1 billion, or $2.61 a share, on flat revenue of $24.7 billion, in part due to the emphasis on services.

Prices for the new cloud offerings are competitive and determined by a company's size and needs, said Tim Kounadis, program director of smart cloud services.

IBM disclosed its internal network is conducting 4.5 million daily client transactions on the cloud and handling commerce valued at around $100 billion annually. A million enterprise users are tapping into cloud applications.

The company also announced some major cloud customers, including Ogilvy & Mather, a unit of WPP PLC (Nasdaq: WPPGY), the world's biggest advertising agency, as well as Japan's Ricoh Co., a supplier of office automation equipment and electronics, and Hindustan Motors of India, a car manufacturer.

The Internet-based service also has benefited good causes. Medical provider, Colleagues in Care, has used the cloud to enable doctors worldwide to help assist patients in Haiti.

IBM shares Thursday fell $1.84 to $187.89. They've gained 7.6 percent in 2012.