International Business Machines Corporation


IBM

recently unveiled its Power E1080 server, the first in a line of servers built around its 7nm IBM Power10 processor and designed for hybrid cloud environments.

The servers are meant to respond faster to business demands, protect data from core to cloud, streamline insights and automation, and maximize availability and reliability.

The E1080 is the first on-premises system that can support metering by the minute for Red Hat Enterprise Linux and Red hat OpenShift. When configured with a virtual server platform in a hybrid cloud format, the server, which is designed to be installed on-premise, can scale up and down with unused CPU capacity as needed.

For AI capabilities, the E1080 supports IBM Auto-AI and no-code tools and the Open Neural Network Exchange (ONNX).

Power E1080 also delivers performance improvements compared with its predecessor, the Power E980, with four times the number of matrix math accelerators and encryption engines per core.

Alongside E1080, the company is introducing a service program called Power Expert Care, which offers a tiered approach with add-ons like hardware and software system health checks and regular security updates.

Growth Prospects

IBM Cloud’s increasing adoption on the back of the strength in the company’s hosted private cloud offerings bodes well. In second-quarter 2021, IBM’s Cloud & Cognitive Software segment’s revenues-external improved 6.1% year over year (up 2.5% at cc) to $6.1 billion. Further, cloud revenues (external) surged 25% to $2.1 billion.

Moreover, the expanding customer base strengthens this Zacks Rank #3 (Hold) company’s growth prospects in the

digital transformation market

, which per a Mordor Intelligence report, is envisioned to witness a CAGR of 18.5% to $2744.6 billion by 2026 from $998.9 billion in 2020. You can see

the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

.

The continued robust adoption of IBM Cloud is expected to benefit IBM, going forward. The formation of Kyndryl also is 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), which is expected to be completed by the end of 2021.

Given the alluring capabilities offered by IBM’s hybrid cloud infrastructure, the latest Power E1080 offering is likely to bolster the top line, consequently aiding IBM to better compete against peers.

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

Amazon Web Services,

Alphabet

’s

GOOGL

Google Cloud, and

Microsoft

’s

MSFT

Azure platform.

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