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IBM acquires Ustream, launches cloud video unit

Mike Snider
USA TODAY
This March 20, 2009 file photo shows a sign at the entrance to IBM Corporate Headquarters in Armonk, New York.

IBM's latest acquisition, live video provider Ustream, is also part of a new Big Blue enterprise: the cloud video services unit.

Ustream, in operation since 2007, delivers live and on-demand video for customers such as The Discovery Channel, Facebook, NASA, Nike and Samsung. The San Francisco-based Ustream and other recent IBM acquisitions including cloud-video company Clearleap will make up the new cloud video unit.

Shares in IBM (IBM) ended up 0.8%, outperforming a nearly flat close for the Nasdaq Composite.

IBM estimates the demand in cloud-based video services at $105 billion in 2016. The new cloud video services unit will provide improved analysis and access to its business clients' growing databases of video. Video  "requires accelerated performance and powerful analytics that allows clients to extract meaningful insights,” said IBM Cloud Senior Vice President Robert LeBlanc in a statement.

IBM sales extend drop, buffered by cloud unit gains

IBM, which reported its 15th straight quarterly revenue drop on Monday, is in the midst of a strategic turnaround designed to wean it from legacy, slow-growing server, microprocessor and software businesses. CEO Virginia Rometty has said it wants to increase sales from new strategic imperatives — cloud, analytics, mobile, social and security — to more than 40% of total sales by 2018, up from 35% last year.

Investors are skeptical the turn will occur fast enough. While cloud revenue surged 43% last year, IBM shares were hit hard after software unit revenue tumbled and its outlook fell short of Wall Street expectations.

The new cloud video unit will be led by Braxton Jarratt, the former CEO of Clearleap, which IBM acquired last month. In addition to Ustream and Clearleap, also folded into the unit are IBM R&D assets that include more than 1,000 patents in the cloud video space and two other acquisitions: storage company Cleversafe, acquired in October, and cloud data transfer company Aspera, acquired in 2013.

Fortune magazine reported Wednesday that IBM might buy UStream for about $130 million in the deal. Financial terms of the acquisitions were not disclosed.

A graphic showing recent IBM acquisitions that make up its new Cloud Video Services Unit.

IBM aims to offer solutions to help corporations and companies make better use of their growing video data stockpiles. Storing video isn't the problem, but much of video today is "dark data," that is unstructured and unable to be managed effectively, Rometty said recently during a keynote delivered at the Consumer Electronics Show in Las Vegas. IBM's goal is to make video data as searchable and manageable as other data, she said.

“Through this latest acquisition and the creation of a new cloud business unit, IBM will provide an end-to-end suite of digital video solutions for the first time under one roof,” Jarrat said in a statement.

Follow Mike Snider on Twitter: @MikeSnider

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