Vodafone Business and IBM are creating a new venture to target the connectivity, multi-cloud and data needs of enterprises as they more broadly utilize the internet of things.

The “eight-year engagement,” as the deal was described, is valued at about $550 million.

The new venture, which will launch in the second quarter, has been in the works for more than a year, according to a press call with company executives. The partnership will not be a standalone, named entity, according to company officials, although it is “designed to act like a start-up and be responsive to rapidly changing market and customer demands.” Each company has a team co-located in London to develop joint solutions.

The partnership will draw IBM and Vodafone’s portfolios closer together to serve business users through a combination of leveraging Vodafone Business’ wired and wireless networks and IBM’s multi-cloud, artificial intelligence and professional services offerings.

Under the agreement between the two companies, Vodafone Business customers will have access to IBM’s cloud offerings, and IBM will also provide managed services to Vodafone Business’ cloud and hosting unit. Giving examples of the type of use cases or services that the new venture might support, IBM and Vodafone cited personalized retail; energy field engineering; and agricultural insights, through leveraging a variety of environmental sensors connected to Vodafone’s networks, and aggregation and storage of that data in IBM’s multi-cloud solutions, and analysis potentially being powered by IBM’s Watson AI.

The two companies said that more than 70% of enterprises today are using up to 15 cloud environments as they strive for digital transformation and to take advantage of new services — and IBM and Vodafone see that complexity as an opportunity to make things simpler and more effective by bringing their respective offerings together.

“This new venture between Vodafone and IBM addresses the ‘full stack’ of real-world multi-cloud concerns with a powerful combination of capabilities that should enable customers to deliver multi-cloud strategies in all layers of their organizations,” said Carla Arend, senior program director, European software, at IDC, in a statement on the venture. “IBM’s acquisition of Red Hat and Vodafone’s emerging 5G technologies have the potential to amplify the value further, and help enterprises ready themselves for the innovations of tomorrow. We estimate the global cloud market (hardware, software, services) to be worth $420 billion in 2019. If you add to that the global cloud connectivity market which is worth $2 billion, the combined market opportunity here is huge.”


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