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Facebook Reportedly Mulling to Shift WhatsApp from IBM Cloud
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Per media reports, Facebook Inc is planning to shift WhatsApp from International Business Machines Corporation’s (IBM - Free Report) public cloud to its own data centers.
The move has been long anticipated as Facebook generally has a habit of integrating the companies it acquires into its own data centers. CNBC observes that Facebook let WhatsApp run on IBM’s SoftLayer as it was then involved in the migration of Instagram into its own cloud from Amazon’s (AMZN - Free Report) cloud service — AWS. In addition, a few months after the WhatsApp buyout, Facebook was shifting Messenger away from its “core” app. Citing a source, CNBC pointed out that CEO Mark Zuckerberg didn’t want WhatsApp to “get integrated with its own apps too soon” and let it run on IBM’s cloud as a result.
The WhatsApp acquisition (2014) not only expanded the company’s mobile product lineup but also added a user base that is predominantly young. At the same time, the acquisition eliminated Facebook’s fastest-growing competitor in terms of user additions. With an estimated user base of over 1.2 billion, it remains one of the most important businesses.
Moving WhatsApp in-house will help Facebook save a lot of money, considering that it spends $2 million a month to maintain the IBM cloud, says CNBC citing a source familiar with the matter.
Facebook continues to keep a tab on expenses. For some time now, Facebook has maintained that costs will continue to escalate as the company goes on building more data centers and ramping up other investments. Facebook plans to go on a hiring spree this year and especially recruit engineers, which will further add to its costs.
Facebook has been building its own data centers since 2010. Its first data center came up at Prineville, OR in 2011. Following this, Facebook has established a host of data centers not only in the U.S but across the globe, including Forest City, NC, Altoona, IA and Lulea, Sweden. In 2017, Facebook announced that it will build its new data center in Odense, Denmark. This would be the third international data center for Facebook and is expected to create about 150 jobs.
The announcement is in sync with Facebook’s initiative of building energy-efficient and environmental-friendly facilities. Back in 2015, Facebook built the first $1 million data center to use clean wind energy to run in Ft. Worth, TX. Reportedly, the Danish project is expected to be completed and ready for functioning by the end of 2020.
As for IBM, the move may apparently cost it a big client. Earlier in the day, some media reports that remarked that WhatsApp was one of IBM’s top five customers which was promptly shot down by the company. A representative was quoted by InvestorPlace saying “Contrary to what some of the stories are saying, WhatsApp is not a “top 5” cloud client at IBM — not even close. We have many multi-million and even some billion dollar cloud clients, including US Army, Wal-mart, BMW, American Airlines, Lufthansa, Emirates, Workday, Chubb, AT&T, Wanda, Etihad, Maersk and many more.”
The spokesperson also said that "WhatsApp has been a great client of IBM Cloud as they used our global footprint and capabilities to scale their business. We are proud of the role of IBM Cloud in their success. It is completely natural for Facebook to seek synergies across their business."
IBM is heavily reliant on its Strategic Imperatives that include its Cloud service to post a turnaround. However, stiff competition from the likes of AWS and Microsoft’s (MSFT - Free Report) Azure remains a big concern.
In the past one year, Facebook has vastly outperformed the broader market. Shares of Facebook have grown over 29.33% compared with the Zacks categorized Internet Service Industry’s gain of 23.60%.
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Facebook Reportedly Mulling to Shift WhatsApp from IBM Cloud
Per media reports, Facebook Inc is planning to shift WhatsApp from International Business Machines Corporation’s (IBM - Free Report) public cloud to its own data centers.
The move has been long anticipated as Facebook generally has a habit of integrating the companies it acquires into its own data centers. CNBC observes that Facebook let WhatsApp run on IBM’s SoftLayer as it was then involved in the migration of Instagram into its own cloud from Amazon’s (AMZN - Free Report) cloud service — AWS. In addition, a few months after the WhatsApp buyout, Facebook was shifting Messenger away from its “core” app. Citing a source, CNBC pointed out that CEO Mark Zuckerberg didn’t want WhatsApp to “get integrated with its own apps too soon” and let it run on IBM’s cloud as a result.
The WhatsApp acquisition (2014) not only expanded the company’s mobile product lineup but also added a user base that is predominantly young. At the same time, the acquisition eliminated Facebook’s fastest-growing competitor in terms of user additions. With an estimated user base of over 1.2 billion, it remains one of the most important businesses.
Moving WhatsApp in-house will help Facebook save a lot of money, considering that it spends $2 million a month to maintain the IBM cloud, says CNBC citing a source familiar with the matter.
Facebook continues to keep a tab on expenses. For some time now, Facebook has maintained that costs will continue to escalate as the company goes on building more data centers and ramping up other investments. Facebook plans to go on a hiring spree this year and especially recruit engineers, which will further add to its costs.
Facebook has been building its own data centers since 2010. Its first data center came up at Prineville, OR in 2011. Following this, Facebook has established a host of data centers not only in the U.S but across the globe, including Forest City, NC, Altoona, IA and Lulea, Sweden. In 2017, Facebook announced that it will build its new data center in Odense, Denmark. This would be the third international data center for Facebook and is expected to create about 150 jobs.
The announcement is in sync with Facebook’s initiative of building energy-efficient and environmental-friendly facilities. Back in 2015, Facebook built the first $1 million data center to use clean wind energy to run in Ft. Worth, TX. Reportedly, the Danish project is expected to be completed and ready for functioning by the end of 2020.
Facebook, Inc. Price
Facebook, Inc. Price | Facebook, Inc. Quote
As for IBM, the move may apparently cost it a big client. Earlier in the day, some media reports that remarked that WhatsApp was one of IBM’s top five customers which was promptly shot down by the company. A representative was quoted by InvestorPlace saying “Contrary to what some of the stories are saying, WhatsApp is not a “top 5” cloud client at IBM — not even close. We have many multi-million and even some billion dollar cloud clients, including US Army, Wal-mart, BMW, American Airlines, Lufthansa, Emirates, Workday, Chubb, AT&T, Wanda, Etihad, Maersk and many more.”
The spokesperson also said that "WhatsApp has been a great client of IBM Cloud as they used our global footprint and capabilities to scale their business. We are proud of the role of IBM Cloud in their success. It is completely natural for Facebook to seek synergies across their business."
IBM is heavily reliant on its Strategic Imperatives that include its Cloud service to post a turnaround. However, stiff competition from the likes of AWS and Microsoft’s (MSFT - Free Report) Azure remains a big concern.
Zacks Rank & Stock Price Movement
At present, Facebook carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past one year, Facebook has vastly outperformed the broader market. Shares of Facebook have grown over 29.33% compared with the Zacks categorized Internet Service Industry’s gain of 23.60%.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>