IBM has filed yet another quarter of gently declining revenues, down 1.1 per cent to $19.1bn, its 18th consecutive quarter of falling revenues. Net income also fell by a similarly slim margin to $2.85bn.
Sales of hardware, not surprisingly, were down – by 21 per cent to just $1.6bn – following the sale of the company’s System x x86 server business to Lenovo.
But the company also admitted that z Systems mainframe revenues were depressed, attributing this to the “product cycle”, while the decline of IBM’s Power Unix line reflected “the secular decline in Unix”, according to chief financial officer Martin Schroeter.
However, the company was keen to point to rising sales of cloud computing products and other “strategic imperatives” that, according to Schroeter, grew strongly. “Our clients are focused on becoming digital businesses, and our strong growth in cloud, security, mobile, and across our analytics portfolio reflects this,” said Schroeter.
Indeed, the company was keen to highlight sales of its analytics software and services, branded or re-branded under the Watson label, which totalled $4.8bn out of $8bn in revenues the company described as “strategic”. These strategic areas registered growth of 15 per cent in the quarter, according to IBM. 
“This quarter, we introduced and expanded Watson platform offerings, including Watson Conversation Service and Watson Virtual Agent for Customer Service. We are training Watson for CyberSecurity, expanding the amount of security data Watson is ingesting,” said Schroeter.
He continued: “In Watson Health , we launched Watson for Drug Discovery and Watson Health Core. And in Watson IoT, we added new capabilities around blockchain and security to draw insights from billions of sensors embedded in everything from machines to cars to drones to ball bearings to buildings and even to hospitals. ”
In cloud computing, the company reported that revenues increased by 42 per cent to $3.4bn in the quarter, while IBM is “building the industry’s broadest and deepest” cloud platform portfolio. The company now claims to have 49 “cloud centres” and also formed a partnership with Workday during the quarter.
Schroeter attributed the company’s rising costs to the expense of investing in new cloud computing data centres, which will typically be launched with a low level of utilisation, only increasing as the business ramps up.

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