1 Cloud Business Models

Service Models We've identified 2 Cloud Platforms used for IT operations (developer,

infrastructure, in black) and 4 Web Platforms used for business operations (martech,

office, product, payment, in yellow). There are 14 products (in brackets) equally split between

both platform families. They can be in turn grouped into 3 service models with the following

functions: i) operating function to run the applications, on an Infrastructure IaaS platform,

ii) development function to build the user, data and web applications on a Developer

PaaS platform, iii) consumption function to consume the applications on a User  SaaS

platform. We showcase Microsoft's and IBM's product lineups for all 3 service models

Deployment Models A firm can choose to operate all 3 of the above service models according

to 3 infrastructure deployment models: Private Cloud, Public Cloud, or Hybrid Cloud. It used

to be that a firm had to have, at extra cost, physically on its premises or "on-site", a room and

staff to operate a computer (i.e. an IBM AS400 minicomputer), which it also had to pay for,

generally in the form of a lease. Operating and business software also had to be leased

But today, all computers are in the Cloud, that is, they are physically located "off-site"at the

data center of a Cloud Service Provider (i.e. AWS), miles away but still as easily and as

instantly accessible and usable as when they were in the firm's office building. The very same

staffing, computer room, the computer hardware and software costs have become computer

resources on demand, that one still leases, in the form of a lump-sum monthly subscription fee.

To the extent that usage time is more or less the same every month, the cost of time-based pricing

which the Cloud now offers, is more or less the same as what a firm incurred previously with the

fixed monthly lease (leasing cost on the capitalizable goods and rental cost on the services)

The Cloud being a remote solution, what does one mean by a remote Private Cloud as opposed

to a remote Public Cloud. It simply reflects the Cloud's 2-tier security system. The first tier

is the security system of the Public Cloud's data center facility, where the computers are now

located. The second tier is that of the Private Cloud, where there is an extra level of protection,

generally of a firm's most sensitive data, over which it wants to have sole control

Revenue Models (Monetization) The 3 most popular revenue models are transactional (Amazon, consumer, NFTs), advertising (Facebook, social), and subscription (Microsoft, business, gaming)

We now turn to a short description of each of the 4 Web platforms (Martech, Office,

Product, Payment) and of the 2  Cloud Platforms (Infrastructure and Developer)

2 Martech Platforms (Web platforms)

Because it is the most important Web platform, we've devoted an entire page

to describe in detail the Martech or Marketing Technologies Platforms

3 Office Platforms (Web platforms)

These are workplace relationship platforms, virtual and physical. Regarding virtual workplace platforms in the Cloud, vendors have put together a market offering which combines and seamlessly interconnects the latest communications, call center, document management, productivity tools and the direct interfaces to the ERP into what they call a Workflow or Collaboration platform (MS Office 365, Slack), providing for improved communications and interactions, internally between employees and externally with the customer. One is also beginning to see the emergence of "vertical" workflow platforms, developed for very specific markets, notably in education with Digital Education platforms (Hivebrite, Drupal site builders and Coursera platform). Regarding physical workplace platforms, this pandemic has reshaped our market adoption of the Shared Workspace platforms and Homeworking

4 Product Platforms (Web Platforms)

These are industrial or manufacturing platforms tasked with making the"smart" and connected physical products. They build tomorrow's home appliances, houses, buildings, cities, utility grids, transport vehicles, machinery and factories. These products are generally embedded with a semiconductor chip, hence the name they adopted. They are "co-engineered", requiring engineers from numerous other fields to work hand in hand with the software and hardware engineers from ITC. Industrial IoT (or Industry 4.0) and Robotics platforms drive growth in the industrial market. At the beginning of the value chain is the electronics industry led by semiconductors. See Robert Bosch IoT, Zongshan Industrial IoT Open, Alibaba/Siemens Mindsphere, Tesla

5 Payment Platforms (Web Platforms)

Mobile apps such as Google Pay, Apple Pay, and more recent upstarts such as Block have been around for some time. However, they are still dependent on our age-old credit card value chain comprised of the credit card issuers (the big banks) who take home at least 50% to 60% of the revenue stream, followed by the credit card merchant processors such as Visa and Mastercard and lastly the giant credit card data processors such as First Data. As we know, mobile payments come at the very end of this chain, as a barcode reader, replacing the POS machine. On the heels of eCommerce, Search, and Social Media, the next revolution for the consumer will be in ePayments, in the form of Central Bank Fiat Digital Currencies. Cryptocurrencies do not qualify

6 Infrastructure Platforms (Cloud Platforms)

AI Platforms provide the application software. Programs are generally coded in the same object programming languages derived from C, Python and Java being the most popular. With most programs, the computer executes only those tasks it is instructed by the program to do. With the more recent AI software programs, such as Facial and Voice Recognition, the computer is able to learn by itself (hence the term machine learning), performing tasks without being explicitly instructed by the program. By contrast, Cloud Platforms provide the underlying infrastructure hardware and software, data centers and mobile devices being prime examples. Cybersecurity is a top strategic consideration

7 Developer Platforms (Cloud Platforms)

To develop their customers' user applications, developers have access to the technologies and tools they need on their own developer platforms. As shown in more detail on our Internet page, these developer platforms are generally either developer, data analyst, or designer platforms

8 Market Size and Growth

As shown below, the 14  Platform products described above are regrouped into the 6 product families of our investment scope

They account for nearly $13T of market cap on the NASDAQ and NYSE with the top 100 firms out of some 900 taking 80% of total sales. They generate $4.5T of annual sales and $750B of operating income, and employ 2.5M employees. The sector is expected to grow at a compounded annual growth rate of 15%

Each one represents a standalone strategic business unit (SBU) or strategic group along

the entire value chain, as described on the Strategy page

Infrastructure

Platforms

1. AI & Data Analytics

2. Security/Blockchain/APIs

3. Internet Infrastructure

4. Mobility

Martech

platforms

8. Customer Platform (marketing tech)

9. ERP Platform

(enterprise tech)

Office platforms

10. Workflow

11. Digital Education

12. Shared Workspace

Product platforms

13. Industrial Internet of Things

Developer

Platforms

5. Developer

6. Data Analyst

7. Designer

Infrastructure (hardware)

AI, Mobile & Cloud (software)

The Web (services)

Digital

currencies

(fiat not crypto)

Smart objects

Collaboration

Applications

Payment

Platforms

Product

platforms

Office

platforms

Martech

platforms

Cloud Platforms

3. Internet

Infrastructure

4. Mobility

AI Platforms

1. AI/Data Analytics

2. Security/

Blockchain/APIs

Developer

Platforms

5. Developer

6. Data Analyst

7. Designer

BUSINESS SIMPLIFICATION

IBM now markets itself under one brand, Hybrid Cloud, and around 2 businesses, Cloud Platform (IBM Software) which helps firms move their IT operations to the Cloud and Web Platform (IBM Consulting) which helps them digitize their business operations. Beginning 2021, it released on one platform, the IBM Cloud Paks,  a full line of tools to develop, deploy, and run applications over the Cloud. It is spinning off its 3rd business in Cloud Operations, renamed Kyndryl, in spite of its size ($19B sales), possibly because it is a low margin business

Its  New Business Model is the same one that has made the company it acquired, Red Hat, so successful in growing its own Cloud business. It is based on 3 rules, now generic throughout the industry: self-service (the customer does it himself, so that he can react speedily to changes in the marketplace), modular (he works on any module, at his own pace), pay-as-you-go (he only pays for the time he spends on the platform)

IBM has two true Hidden Gems: i) its Supercomputer and Chip businesses and ii) its IBM Fellows program. It is through them that it has been able to maintain its technological lead over its rivals in such cutting-edge areas as AI, quantum computing, and chips

IBM's Strategic Realignment

Infrastructure Platforms

AI Platforms (AI/Analytics, Security/Blockchain/APIs)                                  Cloud Platforms (Infrastructure, Mobility)

Payment

Platforms

(Digitlal

Currencies,

fiat not cypto)

Product

Platforms

(Industrial IoT)

Office

Platforms

(Workflow,

Digital Education, Shared Workspace)

Martech

Platforms

(Customer,

ERP)

Developer

Platforms

(Developer,

Data Analyst, Designer)

Cloud Service Models

(the business decision)

Payment

Platforms

14. Digital Currencies

Central Bank Fiat

Digital Currencies

(not crypto)

Fintech

Cloud Platforms

Web Platforms

Cloud Platforms

Metaverse Platforms

Dynamics (Connected Space)

Linkedin

Bing

Activision

Office 365 (Copilot)

Teams (Mesh)

Skype

Power BI

365 Guides

Azure IoT & Cognitive

Power Platform

Hololens

Microsoft Pay

Microsoft's Offering

Network Services (5G, Edge, IoT), Security

Technology Services  (middleware,...) IT Infrastructure Services

BUSINESS SERVICES

Apps Portfolio Management, Intelligent Workflows, RPA

Application Operations Technology Consulting

MARKETING SERVICES

Customer Experience (IBM iX), Talent Management (HR, Change Mgmt) Smart Contract Blockchain

Cloud Infrastructure Operations

Appendix - The 14 Cloud Platforms

WEB PLATFORMS

(SaaS)

Martech Platforms

8. Customer (marketing tech)

9. ERP (enterprise tech)

Office Platforms

10. Workflow

11. Digital Education

12. Shared Workspace

Product Platforms

13. Industrial IoT

Payment Platforms

14. Central Bank Fiat Digital Currencies (not crypto)

THE PRODUCTS

The Technologies

AI, Data, Cloud, Security

(Product Innovation)

The Market  Offering

The Brand: IBM Hybrid Cloud

The Products: Cloud Platforms

IBM Cloud Paks

The Technologies

AI, Data, Cloud, Security

(Product Innovation)

The Solutions & Services

Automation,  Operations

The Products (any app)

1500 customizable products

IBM Cloud Paks, Watson, Red Hat OpenShift

The Market Offering

The Brand: IBM Hybrid Cloud

The Products: Digital Transformation

IBM Cloud Paks

Cloud Platforms

to move IT operations to the Cloud

Web Platforms

to digitize business operations

Industry Standards &

IBM Differentiation

Industry Standards &

IBM Differentiation

Spin-Off

CLOUD SERVICES

The Technologies

The Business Model

The Products

AI

Data

Cloud

Security

Self-Service

Modular

Pay-As-You-Go

Microsoft Azure (security stack at 5 device, Cloud, data, network and app levels: Azure Sentinel, MS Defender, End-Point Manger, Active Directory)

Payment

Platforms

(Digital

Currencies,

fiat not

crypto)

Product

Platforms

(Industrial IoT)

Office

Platforms

(Workflow,

Digital Education, Shared Workspace)

Martech

Platforms

(Customer,

ERP)

Developer

Platforms

(Developer,

Data Analyst, Designer)

Web Platforms (user)

IBM

Cloud Paks

IBM Watson

IBM Consulting & Services

IBM RPA

(robotic

process automation)

IBM Products

& Solutions

IBM FIntech

IBM Hybrid Cloud & Kyndryl

Web

Platforms

PaaS

SaaS

IaaS

IaaS: Public, Private or Hybrid Cloud

Cloud

Platforms

3. Internet Infrastructure

4. Mobility

AI Platforms

1. AI/Data Analytics

2. Security/

Blockchain/APIs

IBM's Offering

Infrastructure Platforms

AI Platforms (AI/Analytics, Security/Blockchain/APIs)                                  Cloud Platforms (Infrastructure, Mobility)

Click on above picture for pdf

The Technologies

CUSTOMER  ENGAGEMENT

IBM offers an all-in-one AI, Data, Cloud, Security portfolio of its own products, solutions and services to meet a firm's needs. Where it has a competitive advantage over its competitors is in research with IBM Research, in execution with Red Hat and in AI with Watson. It engages the customer across the entire portfolio. Cash Flow IBM's Q4 2021 earnings presentation shows double digit revenue growth in Cloud Platforms (Red Hat+21%, Transaction Automation +19%) and in Metaverse platforms (both end-user and developer markets at +20%). To finance its growth, its cash flow is expected to double to about $7B-$8B a quarter, after its $19B of bond debt for the Red Hat acquisition will be gradually paid off. The spinoff of Kyndryl has also freed up cash flow

INFRASTRUCTURE PLATFORMS (IaaS)

AI Platforms

1. AI/Data Analytics

2. Security, Blockchain, APIs

Cloud Platforms

3. Internet Infrastructure

4. Mobility

DEVELOPER PLATFORMS (PaaS)

Developer Platforms

5. Developer

6. Data Analyst

7. Designer

Cloud Platforms (system)

Web Platforms (user)

Cloud Platforms (system)

Web Platforms (user)

Cloud Platforms (system)

Web Platforms (user)

Cloud Platforms (system)

Web Platforms (user)

Cloud Platforms (system)

IBM Cloud Paks

(Installation)

Cloud Deployment Models

(the economic decision)

Secured AI

ChatGPT

/Codex

ChatGPT/Codex

ChatGPT/Codex

ChatGPT/Codex

ChatGPT/Codex

Microsoft AI

Secured AI

IBM Watson

The Cloud

Computer Resources On Demand

Copilot is a ChatGPT add-on in Office 365