The IBM/Tencent China Partnership: The New Dance Of The Elephants
On October 31, IBM and Tencent announced that they will work together to extend Tencent’s public cloud platform to the enterprise by building and marketing an industry-oriented public cloud.
Don’t be fooled into looking at this move in isolation. With this partnership, IBM is turning to a new page of its transformation in China, responding to the challenges of a stricter regulatory environment, an increasingly consumerized technology landscape, and newly empowered customers. The move is a crucial milestone in IBM’s strategy to localize its vision for cloud, analytics, mobile, and social (CAMS). IBM has had a strategic focus on CAMS solutions and is systematically building an ecosystem on four pillars:
- Cloud and social. This is where IBM and Tencent are a perfect match. IBM’s cloud managed service, operated by its partner 21ViaNet, officially went live on September 23. It can support mission-critical applications like ERP and CRM solutions from SAP and Oracle from both the IaaS and SaaS perspective. This could help Tencent target large enterprise customers beyond its traditional base of small and medium-size businesses (SMBs) and startups by adding social value to ERP, CRM, and EAM applications.
Tencent not only has experience in operating a large-scale cloud-based social platform, but it also understands consumer behavior. Tencent could enable IBM to take its social CRM delivery and integration capabilities in the cloud to the next level. In addition, Tencent’s rich resources and experience with eCommerce across B2B (via a joint venture with Makepolo.com), B2C (via collaboration with JD.com), and C2C (via Paipai.com and a strategic investment in JD.com to WeChat Weidian) will help both parties penetrate the SMB and consumer markets in verticals like retail and CPG.
- Analytics.A previous post noted that IBM first worked with Inspur to sell its DB2 and WebSphere Application Server software through Inspur’s TS K1 systems and then announced a strategic cooperation with Yonyou to optimize DB2 with BLU Acceleration for various Yonyou products. IBM further set up a joint venture with GBase, a local database provider, to deliver Informix-based database solutions.
I believe that IBM’s partnership with Tencent will allow both companies to combine their advantages around analytics. IBM has vertical insights and commercial analytics capability; Tencent has massive amounts of consumer data via its popular social platform WeChat and the social analytics strength of its distributed data warehouse, based on emerging technologies such as Hadoop and Hive.
- Mobile.While the announcement didn’t touch on mobile, Tencent has WeChat, one of the most popular social mobile apps, and the leading mobile product design team in China, and IBM has comprehensive mobile solutions around MobileFirst. So I believe that the partnership will leverage the strengths of both to build the system of engagement.
Both companies still face great challenges if they want to compete with the Alibaba empire and other competitors. They have very different cultures, histories, technologies, professional skills, and processes — and the devil is always in the details of the execution. Do you think they will succeed with this collaboration or do you believe that the elephant will eventually fall? I’m betting on success.