International Business Machines Corp. (NYSE:IBM) $1B Cloud Investment

Stifel Analystss Aaron C. Rakers, Joseph Quatrochi and  Andrew Shinn highlight International Business Machines Corp. (NYSE:IBM)’s $1.2B Cloud Investment in a new report.

IBM plans to open 15 new data centers worldwide

As data points continue to highlight positive trends in cloud infrastructure build-outs (e.g., Intel reporting +35% yr/yr growth in its Cloud data center revenue in C4Q13 vs. +40% yr/yr in the prior quarter), from which we continue to highlight the HDD names as presenting the cleanest way to play these trends within our coverage universe, we thought we would also highlight International Business Machines Corp. (NYSE:IBM)’s announcement this morning. International Business Machines Corp. (NYSE:IBM) $1B Cloud Investment (Buy, $188.76, covered by our colleague David Grossman) has announced that it plans to invest $1.2 billion to expand its cloud data centers. The company noted that it plans to deliver cloud services from 40 data centers in 15 countries. International Business Machines Corp. (NYSE:IBM) plans to open 15 new data centers worldwide adding to its footprint of 13 global data centers from SoftLayer and 12 from International Business Machines Corp. (NYSE:IBM). New data centers builds were noted as including China, Washington D.C., Hong Kong, London, Japan, India, Canada, Mexico City and Dallas. The company expects to have data centers in all major geographies and financial centers with plans to expand in the Middle East and Africa in 2015.

International Business Machines Corp. (NYSE:IBM) $1B Cloud Investment New eXFLash offering

Separate Note – International Business Machines Corp. (NYSE:IBM) $1B Cloud Investment First to Integrate / Leverage DIMM-based Flash. In addition to this morning’s announcement, we would also highlight IBM’s product introductions earlier this week, in particular the company’s refreshed FlashSystem 840 arrays and the company’s new X6 server architecture (System X and PureSystem servers) that leverage the company’s eXFLash memory-channel storage. This represents the first major server vendor to integrate DIMM-based Flash, from which we believe investors will question IBM’s possible usage of SanDisk / Smart solutions. The new eXFLash offering provides 12.8TB of Flash capacity with a noted latency benefit relative to the incorporation of PCIe SSDs (e.g., Fusion-io). For the same data set, International Business Machines Corp. (NYSE:IBM) notes that the eXFLash solution provides write latency in the 5-10 microsecond range versus a PCIe SSD deployments at 15-19 microseconds.

Price as of market close on 1/16/14.

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