Vodafone Enters Cloud Agreement With IBM, Keeping 5G in Mind

By Sara Castellanos 

Vodafone Group PLC's business services division will offer clients access to more cloud services this year, through a deal with International Business Machines Corp.

The goal is to enable clients to get faster speeds when they deploy technologies that combine artificial intelligence, 5G and the Internet of Things.

"Businesses are finding there's quite a bit of complexity in knitting (technologies) all together," said Greg Hyttenrauch, security and cloud-services director of Vodafone Business and co-leader of the venture. "This is an opportunity to combine what we're both good at, in cloud and connectivity."

Vodafone Business, the services unit of the telecom company, expects that its deal with IBM will benefit its existing enterprise customers in industries such as agriculture and energy. Some farms already are using the telecom company's cloud services and connected sensors to aggregate and analyze data, Mr. Hyttenrauch said.

The deal shows how telecommunications companies with existing cloud-service units are taking advantage of companies with greater resources to benefit their existing customers.

"For a while, the telecom carriers were looking at diversifying into the cloud business...but when you start to compete against the Amazons, Microsofts and Googles of the world, the amount of financial resources required is just enormous," said Mark Hung, research vice president at Gartner Inc., who focuses on AI and IOT.

As companies struggled to keep up with multiple technologies, such as 5G, cloud and AI, many of them opted to seek out partnerships.

"There's a lot of crossbreeding that's going to happen between different technologies," Mr. Hung said. "No one company can do it all."

Under the new venture, Vodafone Business customers will have access to IBM's cloud offerings, including automation, optimization and artificial intelligence.

Farmers are expected to gain access to IBM Watson's AI services, which will allow them to get insights on when to harvest crops, apply pesticides and reduce waste, Mr. Hyttenrauch said.

When fifth-generation wireless technology, known as 5G rolls out, Vodafone Business's customers will be able to transmit data faster with lower latency connection speeds.

The Wall Street Journal has previously reported on one aspect of 5G's impact on agriculture: The increased use of sensors on livestock to gauge their health.

Energy companies also stand to benefit from IBM's various cloud services, along with 5G connectivity, said Michael Valocchi, general manager for IBM Services and co-leader of the venture. New insights could help those in the energy industry better predict power outages, he said.

The U.K. telecommunications business, which has enterprise clients in areas across the U.K., Germany and Ireland, has said it aims to make the 5G experience seamless for customers by 2020. But the transformation that will come from widespread commercial 5G deployments in areas ranging from manufacturing to energy is still a decade away, the WSJ has previously reported.

As part of the new venture, Vodafone Business will pay IBM $550 million over eight years to manage IT services related to its cloud and hosting unit. Vodafone's existing IT team won't shrink, Mr. Hyttenrauch said. The two companies also will open a London-based facility this year that will employ sales and technology staff from both.

Vodafone's clients aren't limited to IBM's cloud services. They also will gain access to IBM's cloud-service partners -- Microsoft Corp., Amazon.com Inc. and Alphabet Inc.'s Google.

Write to Sara Castellanos at [e-mail]

(END) Dow Jones Newswires

January 18, 2019 11:58 ET (16:58 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.