IBM confirmed that it has acquired video conferencing service UStream this morning. With several cloud video acquisitions in tow, the company also announced it was forming a new cloud video services unit.
Fortune first reported the UStream purchase and reports peg the purchase price at $130 million. IBM would not confirm that amount.
The new unit will be comprised of four acquisitions: UStream, ClearLeap video management, which IBM bought in December; Cleversafe, a video storage service IBM bought in October and Aspera, a large-file transfer tool IBM bought at the end of 2013.
Braxton Jarratt, who came to IBM as part of the ClearLeap deal, has been chosen to run this new unit. He says UStream gives the company that missing streaming piece that allows them to form this unit with a full-service enterprise video offering.
A Company With A Plan
The company seems to have had a plan for video for some time and the purchase of these components in quick succession was not something done willy-nilly, says Jarratt.
“IBM doesn’t shoot from the hip. One of the things we were impressed with when we started engaging with IBM [last Fall] was there was a big master plan behind this acquisition. Sometimes companies make purchases in reaction to a move by a competitor. That was clearly not case here. This was a well thought out plan to incorporate video into a [cohesive] cloud unit,” Jarratt told TechCrunch.
As with any purchase by IBM these days, there is the pure service component and there is the ability to expose that service as APIs in Bluemix, the company’s Platform as a Service offering. The new cloud unit is no different. The company hopes third-party developers will take these pieces and create entirely new ways of delivering video, Jarratt said.
What’s more, the company plans to incorporate other pieces like Watson for analytics, something that customers were asking for around video delivery at CES earlier this month. They want to know information like how long people are engaged and what kinds of actions they can take to stop churn. “They instantly get it,” he said.
The Bigger Picture
This move has to be seen in a much broader context than simply creating a cloud video unit. The company released its earnings this week, and even while IBM beat analysts expectations with $22.1 billion in revenue, it could not stop the revenue decline for the fifteenth straight quarter.
Even while the results continue to disappoint, IBM is trying to transform into a more modern company, one that concentrates on cloud, analytics, security and big data.
All of these different pieces are designed as a holistic solution that crosses traditional company silos. As these earnings show, this transition is a slow process, but IBM did report that the cloud piece is beginning to show progress.
“One thing that is a milestone in the cloud unit, we surpassed $10 billion revenue run rate [in last week’s earnings report], which is huge, especially from a unit that didn’t technically exist a little over a year ago,” Jarratt said.
The cloud video unit gives IBM another market in which to compete and opens up a lot of wider market opportunities around mobile, ads, storage and communications. It’s obvious that the company sees a huge opportunity here and it has used its buying power to get in the game.
“The addressable market [for video] is little over $105 billion by 2019, which is not that far away. We now think we have the most compelling set of capabilities to meet that,” Jarratt said.
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