AT&T, IBM Share Network to Lure More Customers to Cloud

AT&T Inc. (T) and International Business Machines Corp. (IBM) are combining their resources in a joint offering to seek a bigger slice of the $14 billion market for cloud services.

IBM, the world’s biggest computer services provider, will provide the data-storage facilities and services, and AT&T, the largest U.S. phone carrier, will offer the global network that clients will use to retrieve the data, the companies said today in a statement. They’ll split revenue from the deal. “Cloud services” refer to storing information and software in off-site data centers.

To improve its cloud offering, IBM is forging the closest relationship it’s ever had with a phone carrier. The Armonk, New York-based company will be the first to get direct access to the technology that controls AT&T’s network for business customers, and the two companies’ sales forces will coordinate on work with clients.

Giving AT&T’s customers the option of adding cloud services from IBM on a network they already use will be “huge,” said Andy Geisse, head of the phone company’s unit for business clients. “With our customers, we see cloud computing as a key part of their network infrastructure and of their compute environment going forward,” he said in a phone interview.

Working Together

As competitors from Verizon Communications Inc. (VZ) to Oracle Corp. (ORCL) and SAP AG (SAP) expand their cloud offerings, AT&T and IBM concluded that working together would help them seize a greater portion of the market. The computer industry will reap $14 billion this year from cloud services, up 24 percent from 2011, according to research firm IDC in Framingham, Massachusetts.

IBM is pursuing a target of $7 billion in cloud revenue by 2015 after such sales more than tripled last year. It hasn’t disclosed how much it currently makes from cloud computing.

“This is a major component of how we get to that $7 billion,” said Erich Clementi, senior vice president of IBM’s global technology services division.

With its access to the controls of Dallas-based AT&T’s network, IBM will be able to shift capacity on the network so it can push the flow of data to where it’s most needed, like to a client’s supply-chain management systems during a holiday season, Clementi said.

More Control

Customers will be able to decide how to store information in IBM’s data centers and access it through AT&T’s network. AT&T has been increasing the control it gives businesses through products that let employers block certain applications or websites from employees and run anti-virus software. IBM markets its cloud products to larger businesses that need tailored services, like ways to run a supply chain or manage health data.

IBM fell less than 1 percent to $207.99 at the close in New York. The shares have gained 13 percent this year. AT&T, up 23 percent this year, dropped 1.4 percent to $37.14 today.

Separately, IBM expanded its PureSystems lineup of computing, storage and networking technology to include three new products -- one for rapid transactions and two for analyzing data to help companies make faster decisions.

The products, which can be used within hours of setup, will help contribute toward the $16 billion the company expects to make from analytics by 2015, said Arvind Krishna, general manager of IBM’s information management software unit. IBM hasn’t disclosed how much revenue it now gets from analytics.

“We’re going after Oracle in a large way with these systems,” Krishna said in an interview, referring to the world’s largest supplier of database software. “We are seeing a tremendous amount of increase in the data needs from our customers.”

Deborah Hellinger, an Oracle spokeswoman, didn’t return a call for comment before normal business hours.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.