IBM inks $550m B2B tech deal with Vodafone

"This could open up huge possibilities for the enterprise."
24 January 2019

The two coleaders of the new venture Michael Valocchi, IBM (left) and Greg Hyttenrauch, Vodafone Business (right). Source: IBM

UK-based telecommunications company Vodafone and computing giant IBM have launched a joint venture to pursue tech solutions for a variety of different business sectors.

As part of the agreement, IBM will provide Vodafone’s business unit with cloud computing power and other managed services, in an eight-year engagement valued at approximately US$550 million.

The partnership will provide clients with the open and flexible technologies they need to integrate multiple clouds and prepare for the next wave of digital transformation enabled by AI (artificial intelligence), 5G, Edge, and Software Defined Networking (SDN).

It’s speculated that the deal could trigger other wide-scale collaborations between tech leaders and telecoms companies looking to capitalize on the rollout of 5G. Vodafone has networks in 25 countries— armed with IBM’s AI and cloud experience, the two will be in good stead to create 5G, AI and IoT solutions in the coming years.

But IBM will also support Vodafone’s managed services through its IBM Cloud infrastructure, allowing the carrier to enhance the quality of its B2B products and solutions, which will reap the benefits of the pair’s joint research ventures in due course.

“IBM has built industry-leading hybrid cloud, AI and security capabilities underpinned by deep industry expertise,” said its Chairman, President, and CEO, Ginni Rometty. “Together, IBM and Vodafone will use the power of the hybrid cloud to securely integrate critical business applications, driving business innovation– from agriculture to next-generation retail,” he added.

“Vodafone has successfully established its cloud business to help our customers succeed in a digital world,” said Vodafone CEO Nick Read. “This strategic venture with IBM allows us to focus on our strengths in fixed and mobile technologies, whilst leveraging IBM’s expertise in multi-cloud, AI and services.”

Read believes that through the new venture the company will be able to accelerate its growth and deepen engagement with its customers while driving radical simplification and efficiency in its business. The convergence of multi-cloud and connectivity promises to speed up decision-making, enhance automation and personalize experiences for end users in any location – even some of the most remote.

Carla Arend, Senior Program Director for IDC’s European Software division, thinks that combining the capabilities of two industry leaders is designed to act like a start-up and be responsive to rapidly changing market and customer demands.

“We estimate the global cloud market (hardware, software, services) to be worth US$420 billion in 2019. If you add to that the global cloud connectivity market which is worth $2 billion, the combined market opportunity here is huge,” she said.

“IBM and Vodafone are getting ahead of the game and are striving to make it easier for businesses to use any cloud, any data, any workload in any location— this could open up huge possibilities for the enterprise,” said Roy Illsley, an analyst from the Infrastructure Solutions team at Ovum.

It is believed that new digital solutions and services will be built using the latest agile methodologies. The new venture will be operational in the first half of 2019.