IBM and Vodafone launch new European venture to catch up with China and the US in 5G race

  • IBM and Vodafone will launch a new venture aimed at boosting Europe's 5G, A.I. and cloud capabilities.
  • The announcement comes as Europe lags behind the U.S. and China in many so-called next-generation technologies like 5G.
  • Working out of London, the new business will begin operations in the first half of 2019.

IBM and Vodafone will launch a new venture aimed at boosting Europe's 5G, A.I. and cloud capabilities, the companies announced Thursday.

The venture will allow Vodafone to access all of IBM's cloud services, while the London-based telecommunications conglomerate will provide mobile infrastructure like 5G to Big Blue.

"Bringing together this end-to-end idea from Vodafone and IBM is going to be a game-changer for our customers," Michael Valoochi, general manager at IBM, told CNBC in a phone interview Thursday.

The announcement comes as Europe lags behind the U.S. and China in many so-called next-generation technologies like 5G. CCS Insight, a technology research company, estimates Europe will only capture 9 percent of the world's 5G subscribers by 2023.

Partnerships between companies like IBM and Vodafone could help accelerate Europe's foothold in new markets like cloud computing and 5G. U.S. companies are currently the biggest players in Europe's cloud market.

The International Data Corporation (IDC) estimates the global cloud market, which includes hardware, software and services, will be worth $420 billion this year, with the cloud connectivity market worth an additional $2 billion.

IBM and Vodafone said in a press release they will co-develop digital solutions around cloud and connectivity. Under the 8-year agreement, IBM will manage Vodafone's cloud systems, valued at $550 million. The new venture will operate independently out of London but will not list as a separate company. It will be co-led by Valoochi and Greg Hyttenrauch, director of cloud and security services at Vodafone Business, and will be operational in the first half of 2019.