Dive Brief:
- IBM is counting on hybrid cloud and AI to power growth, the tech company’s CEO Arvind Krishna said during a Q1 2023 earnings call Wednesday.
- Led by gains in its software and consulting businesses, the company reported revenue growth of 4.5% year-over-year in constant currency and 0.4% in actual dollars, for the three-month period ending March 31. While zSystems mainframe revenue grew by 11%, overall infrastructure revenue was flat for the quarter.
- “We did see some slowing down in consulting projects,” Krishna said. “But that is because consulting is somewhat discretionary. However, we are not seeing people cancel projects. What they are doing is slowing them down.”
Dive Insight:
AI has been integral to IBM’s identity since supercomputer Deep Blue beat grandmaster Garry Kasparov in a legendary 1997 chess match. Hybrid cloud is a newer addition to the tech company’s portfolio.
Together, they represent the path forward for the century-old company.
“Our focus is on hybrid cloud and artificial intelligence, the two most influential technologies for business,” Krishna said during the earnings call. “In tandem, these technologies drive both business outcomes and innovation.”
Hybrid cloud adoption and AI deployments will be prime revenue drivers for the company this year, Krishna said.
“The movement towards hybrid cloud and the ability to take advantage of AI for enterprise productivity is perhaps going to be a tailwind as we enter the second half of the year because I do think that clients are going to do a lot of automation and a lot of cost cutting,” said Krishna.
Krishna also acknowledged that caution is warranted with the latest iterations of the technology.
“AI for business is different than AI for consumers, given their need for more accurate results, trusted data and governance tools,” Krishna said.
IBM is “client zero” for implementation, according to the company’s CFO James Kavanaugh.
“We've been digitally transforming IBM, much in the same way we're helping our clients with their transformation, using both IBM and third-party capabilities,” Kavanaugh said during the earnings call.
Through shifting workloads from legacy data centers to a hybrid cloud environment, the company has decreased the average cost of running an application by 90%, according to Kavanaugh.
IBM also reduced its application portfolio by 35% through standardizing global processes and applying AIOps, said Kavanaugh.
Following a tech sector trend, IBM laid off 3,900 workers in January, a move the company attributed to the spin-off of Kyndryl and the sale of Watson Health over the last two years.
