Since then, the "cloud DNA," as one analyst put it, has taken root at IBM. In January, the company said it was investing $1.2 billion in cloud data centers, with a goal of having 40 cloud-dedicated centers in 15 countries by the end of 2014. In February, IBM announced it planned to invest $1 billion to build cloud software development tools and attract outside programmers, who want to make cloud applications for corporations. The initiative is called BlueMix.
"IBM has made investments and there is a real urgency now in its cloud business," said Frank Gens, chief analyst for IDC, a research firm.
IBM faces plenty of competitors in the cloud market, including Amazon, Microsoft, Google and Salesforce. And analysts say that as the largest supplier to corporate data center technology, IBM has the most to lose when companies move from traditional data-center computing to cloud rivals of IBM.
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Amazon Web Services, analysts say, is the clear leader in so-called public cloud computing, in which services are delivered remotely from Amazon data centers. Public cloud computing, analysts say, is where the growth prospects and developer interest is greatest.
IBM, which reported that its cloud business grew 69 percent last year, to $4.4 billion, still gets most of its sales from "private" clouds, in which companies deliver cloud-style services to their employees from their own data centers.
While IBM is being tested by new competitive threats, it comes to the fray with formidable strengths. Unlike the mid-1990s, when the company had to cope with technology shifts while it was in a tailspin, IBM is highly profitable today, with net income of $16.5 billion last year. Much of the money comes from deep in the digital engine rooms of corporations and government agencies.