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Morgan Stanley: IBM is lagging in the hybrid cloud vs Dell, Nutanix, HPE

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  • While hybrid cloud is a hot trend in enterprise tech, traditional IT hardware companies like IBM are having a hard time winning over customers, Morgan Stanley analyst Katy Huberty said in a note on Thursday. 
  • The Morgan Stanley analysis was based on a survey of chief information officers who play key roles in IT spending decisions and who are drawn to the hybrid offerings of Amazon, Microsoft and VMware, instead.
  • IBM is making a big push to dominate the hybrid cloud market, but its efforts have yet to pay off, Huberty said.
  • However, Dell — which owns VMware — and Nutanix, appear to be gaining some traction, while Hewlett Packard Enterprise could potentially gain more customers with its pay-per-use business model, the note said.
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Hybrid cloud is a hot trend in enterprise tech, but Morgan Stanley says customers aren’t that impressed with what traditional IT hardware giants like IBM have to offer.

The Morgan Stanley analysis, which it sent in a note to clients this week, was based on a survey of chief information officers, executives who play key roles in IT spending decisions. The growing important of the cloud — which lets businesses run networks on web-based platforms, making it possible to scale back or even abandon private, on-premise data centers — has hurt traditional tech companies that sell hardware and software used to run those data centers. But companies like IBM, Dell, Hewlett Packard Enterprise and Nutanix are betting on a new trend — hybrid cloud — in which businesses set up networks on web-based platforms while also maintaining huge chunks of their data and applications in private data centers.

But Morgan Stanley analyst Katy Huberty said there’s been “little interest” among CIOs in the hybrid cloud offerings of the traditional tech hardware companies.

“Despite increasing investment and marketing around hybrid cloud solutions, CIO interest remains muted which fuels the bear case legacy on legacy hardware vendors,” she told clients in a note.

She cited IBM, which is making an aggressive push to dominate the hybrid cloud market, which new CEO Arvind Krishna has said will be worth $1.2 trillion. IBM has also been touting its $34 billion merger with Red Hat, an important software player in the hybrid cloud market.

“We are still looking for signs that the company’s cloud strategy is paying off after the $34 billion acquisition of Red Hat, given the low percentage of CIOs that expect to use either IBM or Red Hat to manage their hybrid cloud environment,” Huberty wrote.

Morgan Stanely found that companies are more interested in the hybrid offerings of two of the most dominant companies in the cloud, Amazon and Microsoft, as well as VMware, the infrastructure software company owned by Dell. Nutanix, which has products that make it easier for businesses to manage networks both in the cloud and private data centers, has also been gaining the attention of enterprises.

Another company, Hewlett Packard Enterprise, has been pushing hard into the hybrid cloud market with its Green Lake strategy, which offers businesses a pay-per-use model for all its products. Huberty said the offering could potentially attract clients looking to reduce IT costs.

Got a tip about Dell, HPE, Nutanix, IBM or another tech company? Contact this reporter via email at [email protected], message him on Twitter @benpimentel or send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.

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