What Are IBM’s Key Revenue Drivers And Highest-Growth Revenue Streams?
The key revenue drivers for IBM (NYSE:IBM) are global IT spending, demand for technological integration in business and cloud adoption. The company maps its industry expertise and technology across five business divisions: Cognitive Solutions, Global Business Services, Technology Services & Cloud Platforms, Systems and Global Financing. We expect Cognitive Solutions to be the company’s fastest growing business unit over the next few years.
We have created an interactive dashboard analysis on IBM’s Key Revenue Streams. You can modify any of the key drivers to visualize the impact of changes on the company’s revenue estimates, and see all of our Technology company data here.
- Cognitive Solutions: This segment houses solutions software and transaction processing software, and is aimed at helping organizations identify actionable insights for decision making. The solutions software offerings include enterprise grade AI solutions, IoT solutions, cloud data services, data processing and analytics solutions and the Watson Platform. The transaction processing software provides mission-critical systems for industries such as banking, airlines and retail. Cognitive Solutions contributed 22% to IBM’s 2018 revenue. We expect the segment to grow at a CAGR of 12% over 2018-2020 to reach $23 billion in revenue in 2020 from $18.5 billion in 2018
- Global Business Services (GBS): This division houses IBM’s consulting, application management and business process services businesses. IBM has been leveraging GBS to help clients deploy the company’s Cognitive Solutions. Global Business Services contributed 20% of IBM’s 2018 revenue. We expect the segment to grow at a CAGR of 1% over 2018-2020 to reach $17.2 billion in revenue in 2020, from $16.8 billion in 2018
- Technology Services & Cloud Platforms (TS&CP): Segment offerings include IT infrastructure and platform services, technical services and integration software to help transform clients’ business requirements. Technology Services & Cloud Platforms contributed 46% of IBM’s 2018 revenue. We expect the segment to decline at a compounded rate of around 1% over 2018-2020 to reach $38.1 billion in revenue in 2020, from $38.9 billion in 2018
- Systems Hardware: This division sells IBM’s servers, storage systems and operating systems software. Systems Hardware contributed 10% of IBM’s 2018 revenue. We expect the segment to grow at a CAGR of 1% over 2018-2020 to reach $8.2 billion in revenue in 2020, from $8 billion in 2018
- Global Financing: This division offers credit to clients to help consume IT assets, short-term working capital financing to IBM’s partners and refurbishing of used or surplus IT assets to be resold. Global Financing contributed 2% to IBM’s 2018 revenue. We expect the segment to decline at a compounded rate of 3% over 2018-2020 to reach $1.7 billion in revenue in 2020, from $1.8 billion in 2018.
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