Vodafone will pay $550 million to IBM, but the opportunity for IBM could be bigger than that. IBM Corp (IBM) - Get Report is entering into a strategic partnership with British telecom giant Vodafone Group PLC (VOD) - Get Report to provide sophisticated cloud and hosting solutions for business customers in Europe, giving IBM quick access to a new market. IBM shares rose 0.5% to $122.19 at the close of trading on Thursday, as the broader market rose. As part of the deal, IBM will run Vodafone's cloud business, with Vodafone paying IBM a total of $550 million over the next eight years in exchange. The companies will combine IBM's cloud offerings with Vodafone's network and connectivity to provide Vodafone's enterprise customers a more efficient connection between their cloud environments and their actions on devices. The service will be provided to Vodafone customers in the U.K., Ireland and Germany. "IBM has built industry-leading hybrid cloud, AI and security capabilities underpinned by deep industry expertise," said IBM Chairman, President and CEO Ginni Rometty in a statement. "Together, IBM and Vodafone will use the power of the hybrid cloud to securely integrate critical business applications, driving business innovation -- from agriculture to next-generation retail." Vodafone emphasized the objective was to simplify things for its customers. "Through this new venture we'll accelerate our growth and deepen engagement with our customers while driving radical simplification and efficiency in our business," Vodafone CEO Nick Read said. Vodafone needs IBM's technology in order to accomplish this. "It was a decision of like mindedness," Michael Valocchi, the co-leader of Venture, IBM told TheStreet. But for IBM, which has seen its stock decline 28% in the past year, the partnership gives way for an opportunity overseas. Since the joint offering will go through Vodafone's channels and to its customer base, IBM will immediately gain access to Vodafone's sizable cloud customer base in Europe, which would have been harder to achieve had IBM simply decided to spend big marketing dollars on reaching those customers, Valocchi said. IBM wants to offer other cloud products to Vodafone's customer base. Many of those offerings will be combinations of IBM's and Vodafone's technology, which will create premium solutions for customers. IBM will use Vodafone's salesforce, already in place, to accomplish this, and IBM will also put some of its sales force to work with that of Vodafone's. IBM announced in October its decision to acquire cloud provider Red Hat Inc. (RHT) - Get Report for $34 billion, a 60% premium over Red Hat's price before the deal was announced. IBM has been expanding its cloud business as Amazon.com Inc (AMZN) - Get Report and Microsoft (MSFT) - Get Report storm ahead as leaders in the space. "I would predict that RedHat capabilities will be part of this venture," Valocchi said. On Thursday morning, IBM also announced it had signed a $325-million agreement with Juniper Networks (JNPR) - Get Report to help the network technology company manage multiple cloud environments over the next seven years. Amazon and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Members of Cramer's Action Alerts Plus club can watch Cramer's exclusive call on Thursday, Nov. 17.<doc-sep>IBM is one of the world’s biggest system integrators, but to get closer to where enterprises are actually doing their work, it’s been inking partnerships with companies that build devices and run the networks enterprises are using for their IT, and today comes the latest development on that front. IBM is announcing a new venture with mobile carrier Vodafone, in a deal that will comes in two parts. First, IBM will supply Vodafone’s B2B unit Vodafone Business with managed services in the areas of cloud and hosting. And second, the two will together work on building and delivering solutions in areas like AI, cloud, 5G, IoT and software defined networking to enterprise customers. The latter part of the deal appears to be a classic JV that will see both sides bringing something to the table — employees from both companies will be moving into a separate office together very soon that will essentially be “neutral” territory. The former part, meanwhile, will see Vodafone paying IBM some $550 million in an eight-year agreement. That price tag alone is a strong indicator that this deal is a big one for both companies. The agreement follows along the lines of what IBM inked with Apple several years ago, where the two would work together to develop enterprise solutions that would have been more challenging to do on their own. Indeed, while IBM does provide systems integration services, it hasn’t moved as deeply into mobile-specific solutions for businesses, even as its other operational units — doing research and other work in AI, cloud, quantum computing and other areas — are making strong headway on specific projects, some of which involve mobile technology. Now that it’s nearly in full possession of RedHat — which it is in the process of buying for $34 billion, a deal that’s now received the approval of RedHat’s shareholders — it will also have open source cloud computing to add to that. What the Vodafone deal will tap is taking more of those cutting-edge developments that IBM has built and worked on in specific projects, and productise them for a wider audience of businesses and other organisations, which might already be Vodafone customers. “To deliver multi-cloud strategies in the real world, enterprises need to invest at many levels, ranging from cloud connectivity to cloud governance and management. This new venture between Vodafone and IBM addresses the ‘full stack’ of real-world multi-cloud concerns with a powerful combination of capabilities that should enable customers to deliver multi-cloud strategies in all layers of their organizations,” noted Carla Arend, senior program director for European software at IDC. The Apple / IBM deal is more than instructive in this case; it will help fuel this new venture. From what I understand, several fruits of that labor will be making their way into the IBM / Vodafone deal, too, which makes sense, considering Vodafone’s position as a mobile carrier and the iPhone making some strong headway into the business market. “IBM has built industry-leading hybrid cloud, AI and security capabilities underpinned by deep industry expertise,” said IBM Chairman, President and CEO Ginni Rometty in a statement. “Together, IBM and Vodafone will use the power of the hybrid cloud to securely integrate critical business applications, driving business innovation – from agriculture to next- generation retail.” “Vodafone has successfully established its cloud business to help our customers succeed in a digital world,” said Vodafone CEO Nick Read, in the statement. “This strategic venture with IBM allows us to focus on our strengths in fixed and mobile technologies, whilst leveraging IBM’s expertise in multicloud, AI and services. Through this new venture we’ll accelerate our growth and deepen engagement with our customers while driving radical simplification and efficiency in our business.” I’ve been told that the first joint “customer engagements” are already happening with an unnamed energy company. Thinking about what kinds of services Vodafone may be providing to end users today — they will cover mobile data and voice connectivity, mobile broadband, IoT and 5G services — this first deal will involve tapping all four, with an emphasis on 5G and IoT.<doc-sep>IBM and Vodafone will launch a new venture aimed at boosting Europe's 5G, A.I. and cloud capabilities, the companies announced Thursday. The venture will allow Vodafone to access all of IBM's cloud services, while the London-based telecommunications conglomerate will provide mobile infrastructure like 5G to Big Blue. "Bringing together this end-to-end idea from Vodafone and IBM is going to be a game-changer for our customers," Michael Valoochi, general manager at IBM, told CNBC in a phone interview Thursday. The announcement comes as Europe lags behind the U.S. and China in many so-called next-generation technologies like 5G. CCS Insight, a technology research company, estimates Europe will only capture 9 percent of the world's 5G subscribers by 2023. Partnerships between companies like IBM and Vodafone could help accelerate Europe's foothold in new markets like cloud computing and 5G. U.S. companies are currently the biggest players in Europe's cloud market.<doc-sep>
Vodafone Business and IBM are creating a new joint-venture to help drive digital transformation among their customers and to create new services that combine their respective strengths. As part of the agreement, Vodafone Business customers will have access to IBM’s portfolio of cloud services, giving them access to multi-cloud technology and IBM’s cognitive capabilities, while IBM will provide managed services to Vodafone Business’s cloud and hosting unit. The two companies have worked together for more than 20 years but say the expansion of this partnership is a response to the growing complexity of IT. IBM Vodafone They claim that more than two third of organisations use more than 15 cloud environments – something that can prevent the free flow of data and applications. “IBM has built industry-leading hybrid cloud, AI and security capabilities underpinned by deep industry expertise,” said IBM Chairman CEO Ginni Rometty. “Together, IBM and Vodafone will use the power of the hybrid cloud to securely integrate critical business applications, driving business innovation – from agriculture to next-generation retail.” “Vodafone has successfully established its cloud business to help our customers succeed in a digital world,” added Vodafone CEO Nick Read. “This strategic venture with IBM allows us to focus on our strengths in fixed and mobile technologies, whilst leveraging IBM’s expertise in multicloud, AI and services. Through this new venture we’ll accelerate our growth and deepen engagement with our customers while driving radical simplification and efficiency in our business.” The firms will also co-develop new services based on Vodafone’s 5G, Internet of Things (IoT) and edge computing expertise, and IBM’s knowledge of industry and cloud. It is claimed the venture will act as agile as a startup so it can respond to rapidly changing customer demand. The deal strengthens Vodafone’s business proposition as it seeks to arrest falling revenues, while IBM gains another partner in its mobile efforts. Since 2014, IBM has co-developed industry-specific applications with Apple and sold iPads to joint-customers as part of the MobileFirst for iOS programme.