International Business Machines (
is pushing deep into flash technology in order to gain a
stronghold over the Big Data market. In a recently announced
strategic initiative, IBM stated that it will spend $1.0 billion
on research & development of new flash solutions. IBM will
integrate the new solutions within its expanding portfolio of
servers, storage systems and middleware.
In its raw form, Big Data refers to the unstructured data, which
is collected and stored for further processing and analysis. As
per IBM estimates, 2.5 quintillion bytes of data are created
every day from a variety of sources around the world, making it
difficult for enterprises to analyze the data and navigate
through it, which in turn impacts their competitiveness,
efficiency and profitability.
Hence, enterprises are always on the lookout for efficient ways
to manage the vast amount of data that is generated during a
business process. IBM believes that flash is the appropriate
technology to solve the challenges posed by the tremendous growth
of Big Data. This is due to the fact that flash technology is
faster compared to traditional hard drives as its response time
to queries is in microseconds.
Flash lowers transaction time for banking, trading, and
telecommunications applications up to 90%. For enterprise
resource planning and business analytics applications,
transaction time reduces up to 80%. Moreover, the technology is
reliable, durable, energy efficient (reduces energy consumption
by 80%) and hence cost effective, a desirable feature for the
IBM is also opening 12 centers of competence around the world to
promote the technology going forward. The centers in China,
France, Germany, India, Japan, Singapore, South America, U.K.,
and the U.S are expected to be operational by the end of this
According to Transparency market research, the global Big Data
market was worth $6.3 billion in 2012 and is expected to reach
$48.3 billion by 2018. We believe that Big Data management
provides significant growth opportunity for IBM over the long
We believe that IBM's strong product portfolio will drive growth
going forward. IBM recently launched FlashSystem storage
products, which are based on technology acquired from Texas
Memory Systems (Aug 2012). The products have generated
significant demand from customers such as
Sprint Nextel Corp. (
, which recently inked a deal to install 150 terabyte of
additional storage in its data center.
However, we expect IBM to face significant competition from
traditional flash system developers such as
going forward. Moreover, declining outsourcing signings is
another major headwind for IBM in the near term.
Currently, IBM has a Zacks Rank #3 (Hold).
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