International Business Machines Corp. (IBM) announced the opening of its first IBM Innovation Center in Mexico, marking IBM’s centennial anniversary and its prolonged presence in the country for 84 years. Further, IBM is set to launch its Global Entrepreneur program, which enables the local entrepreneurs to access IBM’s resources and expertise without any costs for rolling out their respective products in the market.
The innovation center in Mexico is an addition to IBM’s global network of 39 innovation centers in 32 countries and was the seventh innovation center for IBM in its identified growth markets such as Brazil, Vietnam, Philippines, Poland, South Africa and Romania.
IBM, through its innovation center network, enables local companies and entrepreneurs to connect with leading technical and industry experts worldwide and sustain growth with innovations in the new market.
Industry analyst firm BMI expects IT spending for 2011 in Mexico to increase 11.0% to $1.36 billion, primarily driven by new services in the government sector, projects related to infrastructure support and emergent growing interest in cloud computing.
IBM’s initiative in Mexico is cashing in on this demand-based growth opportunity. It is noteworthy that the Mexican software market is expected to flourish in the coming years, with 80% of the $2.5 billion to be spent coming from outside the country.
Moreover, IBM, through its innovation program is supporting the Mexican technical community to develop a course and provide free of cost access to the company’s software, hardware and industry experts for higher education institutions such as Tecnologico de Monterrey, Universidad Nacional Autonoma de México and Instituto Politecnico Nacional.
Mexico’s IT professionals were helped immensely by IBM’s developerWorks, the largest and most-visited global site to gain technology skills. In 2010, more than 26,000 Mexican IT professionals visited the site to gain knowledge regarding IT standards and practices, attaining skills training on various technologies, including Linux, Java, XML and cloud computing.
Since the beginning of 2009, IBM’s Smarter Planet strategy had a profound impact on the Mexican community, which grew 30.0% and in the past couple of years, IBM was chosen as a business partner by more than 200 new Mexican companies along with a total of 800 Mexican independent software vendors, solution integrators and resellers
Last year, 24,000 business partners were assisted by IBM innovation centers in the organization of workshops, seminars and consultations to innovate and develop skills through cloud computing, mobile computing, business analytics and industry-focused solutions.
IBM’s recent endeavors include a $38 million investment to build a new IBM Asia-Pacific Cloud Computing Data Center in Singapore to exploit the potential of cloud computing and strengthen its position in the Asia- Pacific zone.
IBM is experiencing strong revenue growth across all geographical regions, coupled with robust growth in emerging markets worldwide. IBM expects these growing markets to drive revenues and increase growth in 2011 and beyond.
IBM generates more than 50.0% of its revenue outside the U.S. from countries such as South Africa Malaysia, Poland, Ecuador, Singapore, Peru, Romania, Czech Republic, the Middle East, Vietnam and Australia, thereby enabling the company to maintain stability despite fluctuating economic conditions.
All these positives notwithstanding, we have a Neutral recommendation on IBM due to currency fluctuations, European weaknesses, decreased service contract signings, slower-than-expected IT spending growth and increasing competition from Microsoft Corp. (MSFT), Hewlett Packard Co. (HPQ) and EMC Corp (EMC).
We currently have a Zacks #3 Rank for IBM, which translates into a Hold rating over the short term.
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