International Business Machines Corp. (IBM) has teamed up with Cable and Wireless Worldwide to bid for the next generation cloud-based data and communication solution, UK Smart Energy Cloud, which supports the Smart Meter Implementation Programme in the United Kingdom.
The purpose of the Smart Meter Implementation Programme is to deliver 50 million smart energy meters in British homes by 2020, including design requirements, central communications and data management. The programme is expected to reduce energy consumption and costs across domestic as well as small non-domestic sectors.
Smart energy meters offer instant usage measurements, which allow more precise electricity bills and pricing policy for the consumers. The method involves data storage, processing and communication of the processed data from the smart meters to the energy companies, where the UK Smart Energy Cloud comes into play.
The Smart Energy Cloud platform will gather data from smart meters several times in a day in and around UK and store it in a UK-based cloud hosted environment. The data would then be sent to power utility companies for analysis and ascertainment of the pattern of usage by consumers. This would enable power utility companies to accurately charge its consumers according to their usage.
The partnership between IBM and Cable and Wireless Worldwide will be pitted against the likes of BT, Vodafone and Telefonica 02 UK. All these companies have lined up for the UK government contract worth $13 billion for the installation of smart meters in UK homes as part of a wider plan to reduce carbon emissions by at least 80% through 2050.
IBM though has the experience and expertise to implement smart grid projects and is working in Malta to build a nation-wide smart grid as well as in Denmark in collaboration with DONG Energy to install remote monitoring and control equipment to gather information about the status of the grid.
IBM remains a heavyweight in the cloud computing market and is set to drive further growth in the upcoming quarters. We have a long-term Neutral recommendation on IBM due to currency fluctuations, European weakness, increasing competition, decreased service contract signings and slower-than-expected increase in IT spending.
IBM faces stiff competition from Oracle Corp. (ORCL), Hewlett Packard Co. (HPQ), Microsoft Corp (MSFT) and EMC Corp (EMC) in the cloud computing market.
We currently have a Zacks #2 Rank on IBM, which translates into a Buy rating over the short term.
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