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IBM to Aid Pitney Bowes (PBI) In Deployment of Hybrid Cloud

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International Business Machines (IBM - Free Report) recently announced that it will work with Pitney Bowes (PBI - Free Report) to help the latter implement hybrid cloud computing across its operations and drive business growth. Both the companies had signed the agreement in the first quarter of 2021.

Pitney Bowes is one of the biggest providers of mail processing equipment and integrated mail solutions across the globe.

IBM added that it will manage Pitney Bowes main infrastructure domains (like servers, networking, end-user computing and storage systems). The company further noted that its Global Technology Services division will assist Pitney Bowes to implement Artificial Intelligence (AI), automation, advanced analytics and hybrid cloud capabilities to build a robust IT infrastructure. This will help Pitney Bowes in driving maximum output from its multi-cloud as well as on-premises and computing workloads.


Abundant Opportunities in Hybrid Cloud Space

Hybrid cloud market is anticipated to witness a CAGR of 18.73% between 2021 and 2026 and touch a value of $145 billion, per a Mordor Intelligence report.

Migration to cloud offers enterprises improved scalability, speedier deployment, cost efficiency, higher security and agile disaster recovery management. Though, business enterprises were promptly shifting their workloads to cloud, the pandemic only accelerated this shift.

With vaccine rollout being a tedious affair and the second wave of infections gripping several countries, the work from home and online learning trends are unlikely to dissipate soon. This underlines massive revenue growth opportunity for cloud service providers like IBM.

For the first quarter of 2021, IBM’s total Cloud revenues were $6.5 billion, up 21% year over year. The company witnessed healthy adoption of its cloud-based solutions and digital transformation offerings, driven by synergies from the Red Hat acquisition. This acquisition remains IBM’s largest cloud-based acquisition till date.

In the first quarter, Red Hat revenues increased 17% (up 15% at cc) on a normalized basis. Currently, more than 3,000 clients are utilizing Red Hat and IBM’s hybrid cloud platform.

Apart from Red Hat, the company continues to acquire relatively smaller but intensely cloud-focused enterprises to meet its hybrid cloud vision. Some of its recent notable acquisitions include Nordcloud and Instana.

A few days back, the tech giant announced its intent to acquire Boston-based software provider, Turbonomic. The acquisition of Turbonomic, which specializes in Application Resource Management (ARM) and Network Performance Management (NPM) services will add to IBM’s earlier buy out of Instana.

The transaction subject to regulatory and customary approvals is likely to close in the second quarter of 2021.

The formation of Kyndryl also is a part of IBM’s hybrid cloud strategy. Last year, the tech giant had announced the spin off (tax free) of its Managed Infrastructure Services, a unit of its Global Technology Services segment into a new company (now called Kyndryl) by end of 2021.

However, increasing expenses and higher debt levels amid extensive restructuring are persistent concerns for IBM. Also, IBM needs to watch out for increasing competition in the cloud space from dominant players like Amazon’s (AMZN - Free Report) Amazon Web Services and Microsoft’s (MSFT - Free Report) Azure platform.

Currently, IBM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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