Box and IBM to Team Up on Cloud Offerings

Aaron Levie, CEO of Box and Ginni Rometty, CEO of IBM. IBM and Box to team up on cloud offerings.
Getty Images (L) | CNBC (R)

Cloud collaboration company Box and computing and services giant IBM say they are teaming up in a wide-ranging partnership under which they will jointly offer their products and services.

The move is the latest in a string of strategic partnerships that both companies have struck in recent months. Earlier this month Box reached a deal to allow Microsoft Office users to collaborate on documents via Box's cloud services. And IBM has in the last year reached agreements with Apple to bring mobile devices and software to large companies, and to mine data from Twitter.

The plan also calls for IBM to add Box to the range of products and services it re-sells to its customers and boost Box's reach to the large corporate customers it covets. Box will enhance its collaboration, file-sharing and content management capabilities with IBM's abilities to analyze business data.

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IBM and Box partner up

In an interview, Box CEO Aaron Levie said the two companies have been working on the collaboration for more than six months and that they plan to jointly develop a set of blended products and services that will allow customers of IBM's SoftLayer cloud services and applications to take advantage of Box's APIs in their web applications and services. "We think the pairing of our two platforms will be incredibly important for the industry" Levie said.

"We have a lot of large customers who are also big IBM customers, and we've always tried to play nice together, but we've never been fully aligned," Levie said. "There are banks and health care companies who are using Box for secure file sharing and content management who will turn to IBM for deeper understanding of that data from analytics. We're now going to be able to plug directly into those capabilities."

For Box, the combination could prove to be a significant validation of Levie's long-term strategy to seek out numerous third party sales arrangements in order to enhance its own internal and comparatively small sales force, while also building vertical businesses aimed at specific industries. The 104-year-old IBM has significant sales reach with the world's largest companies and does business in practically every country in the world. It is also a significant reseller of software: SAP is big partner.

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IBM also has a lot of the deep expertise in specific day-to-day business and industrial practices that Box might otherwise have to build on its own. It has built or bought numerous software applications geared toward specific industries like banking, retail and marketing. While Box excels at making documents shareable across a company and between certain employees who may be working on a project together, IBM can unleash its Watson cognitive computing systems to digest the contents of those documents and draw connections and insights that a human might miss.

The deal will also give Box an important way to differentiate itself from the enterprise-oriented intentions of rival Dropbox, which has sought to embrace large corporate customers over the last two years.

"We want to take Box into some spaces where its customers can reach some deeper insights than they've been able to achieve before," Bob Picciano, IBM's senior VP and head of its analytics business, said of the deal. "We're eager to offer Box to our existing customers but also to open it up to some new markets."

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Customers will be able store their data in Box or in IBM's cloud in order to meet country-specific legal requirements — IBM has data centers around the world while Box has only a few. Box will also figure in some of the mobile enterprise applications that IBM is developing for Apple's iOS.

For IBM, the move adds to its still-developing industry cred in cloud computing. Two years ago, it spent $2 billion to acquire SoftLayer, a cloud computing service that was a lesser rival to Amazon Web Services. Now, IBM has a cloud computing and services business that brought in about $7 billion last year. CEO Ginni Rometty considers the cloud among Big Blue's strategic imperatives to propel the company to growth after it has shed several traditional hardware-based business units, including servers and semiconductors.