2 Growth Areas for IBM

IBM's ( IBM ) two most important businesses are middleware software and technology services, in which it competes with firms like Oracle ( ORCL ) and Red Hat. The firm is also among the global leaders in business systems and competes with hardware vendors like HP ( HPQ ) and Dell ( DELL ) in the server market as well as EMC ( EMC ) and NetApp (NTAP) in the storage market.

We have a $185 Trefis price estimate for IBM's stock , which is about 9% above the current market price. Below we look at two key business areas that are likely to shape IBM's business strategy and drive the firm's growth in the future.

1. Business Analytics and Optimization

The research firm IDC predicts that global data volumes will increase by 29 times over the next 10 years-to 35 zettabytes. (A zettabyte is a 1 followed by 21 zeros.) With enterprises needing a way to manage and mine potentially valuable information from this huge source of data, advanced data analytics will witness increased adoption.

IBM has built the world's leading analytics practice, with world's premier nonacademic mathematics function, leading-edge software and offerings integrated by industry. With more than 500 analytics patents and several acquisitions the firm has extended its capabilities beyond any other player in the market. IBM expects analytics solutions to contribute a mammoth $16 billion to its revenue by 2015 - providing significant boost to both its middleware software and service offerings.

2. Smarter Planet Initiative

IBM launched its smarter planet initiative in 2008 to provide new ways of monitoring, connecting, and analyzing the systems allowing business, civic and nongovernmental leaders to develop more efficient ways to manage these systems.

The firm aims to capture new and potentially huge markets (like utlities, e-commerce etc.) by offering solutions that will essentially be integrated with its middleware software platforms. IBM targets Smarter Planet solutions to grow to $10 billion in revenue by 2015.

If IBM manages to successfully extend its software and solution offerings leveraging its Smarter Planet initiative, its middleware software business could witness tremendous growth in the future.

See our full analysis of IBM .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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