Is IBM a good long term investment? International Business Machines Corp. (NYSE:IBM) recently announced the investment of $17 million for a new data center in Bogota, Colombia. This comes on top of a previous investment of $8 million, done in 2011. The company seeks to preserve –and increment- its competitive advantage by providing high-tech Cloud Computing and Big Data services to local companies. Amongst its clients, IBM can count 80% of the top 100 Colombian companies, according to a government report.
According to the Colombian firm Vision Growth Consulting, data center outsourcing will increase 15.3% during the current year, and IBM is certainly poised to profit from this. Actually, this investment only strengthens the company's position in the country. Furthermore, IBM sources say that they expect the data center to quadruple in size over the next five years.
However, IBM's bet is more ambitious. As a part of its plans to expand its cloud business, the company has been investing billions all over Latin America. Since 2009, it opened nine service centers located in Brazil, Mexico, Costa Rica, Argentina, Chile, Colombia, Peru and Uruguay. Furthermore, management has set a target of 400 data centers across the region.
The firm also publicized the opening of the new Rapid Solution Center Europe, which will bring Smarter Commerce Software experts together to provide support for customers. The facility will be located in Madrid, Spain, and will offer its services to European and Latin American clients. The center adds up to a couple of preexisting ones, in India and China.
On another note, IBM announced--at the LinuxCon 2013--that “it would invest $1 billion in new technologies and open source Linux for Power Systems servers. The investment aims to help companies leverage big data and cloud computing with modern systems built to handle the new wave of applications that arrive at the data center (…)The announcement follows the recent OpenPower notification, IBM alliance with NVIDIA and Google and others to provide available technology to encourage open source innovation. As part of the OpenPower collaboration, IBM will make IBM Power microprocessor available under license to other companies for collaboration and open development.” (CloudTimes).
However, many investors are worried by the fact that IT spending is looks little lethargic at the time. Nevertheless, most research firms expect it to grow at high rates over the years to come. Competition from some big firms like Microsoft Corporation (NASDAQ:MSFT) and Oracle Corporation (NASDAQ:ORCL) is another source of concern, but IBM seems strong enough to retain its market share (and all these investments should even help it expand its share).
Disclosure: Javier Hasse holds no position in any stocks mentioned