IBM-Box tie up over data storage

Corporate partnerships, like human ones, depend on what each side brings to the relationship and what each side needs.

So, using that give-and-take formula, an alliance announced on Wednesday would seem to be a good match. IBM, the technology giant, and Box, a Silicon Valley online file-storage company, are combining their products, technology and marketing to try to smarten and streamline the work done by teams in business.

IBM brings its global reach, expertise in security, and data analysis and Watson artificial-intelligence software. Box brings a service used by millions of people in corporations and organizations who store all manner of data-rich content such as business documents and X-rays in the company's computing cloud. Together, the two companies say they will develop new applications that will enable teams of workers to collaborate more easily and efficiently. For IBM, the agreement with Box is the latest in series of partnerships with other companies including Apple, Facebook, Twitter and the Weather Company, which owns Weather.com and the Weather Channel.

In these alliances, IBM is applying its technology to large pools of digital data to create new services for corporate customers. In the Apple and Box partnerships, the goal is to help increasingly mobile workers become more versatile and productive.

"This deal is largely about using IBM's artificial intelligence on the corporate content in the Box service," said Frank Gens, chief analyst for the market research firm IDC. "And it fits the pattern of the recent partnerships for IBM."

For Box, the IBM alliance promises to be a cost-effective path to further growth. Box has more than 37 million registered users, though most do not pay for the service. In its most recent quarter, reported this month, the company said it had 3.7 million paying customers, a 70 percent increase from the same quarter a year ago.

But while Box is growing, it remains unprofitable. It lost $47.3 million on revenue of $65.6 million in the quarter.

As part of the partnership, IBM's global sales force will work with Box to market products and services jointly. That should help accelerate Box's international expansion. IBM says it will enable the online service's international customers to store their content on IBM's fast-expanding network of cloud data centers. By the end of this year, IBM plans to have 46 data centers dedicated to its cloud business, with 25 of them outside the United States in 17 other countries.

Many foreign countries are now pushing to have the data of their citizens kept in centers in their home countries. So the IBM partnership could help Box avoid big investments to build its own data centers abroad.

"For us, this is massive," said Aaron Levie, who is a co-founder and the chief executive of Box.

Box has partnerships with other technology companies, including one with Microsoft for gaining access to its popular Office applications online. But the IBM alliance, Mr. Levie said, is "our most substantial partnership in the enterprise market."

The strategy at Box these days is to sharply increase its roster of paying customers, especially in corporate deals with large companies including Eli Lilly and Company, General Electric and Toyota Motor. "Our future customer list will look more and more like IBM's," Mr. Levie said.

Mr. Levie pointed to health care as an example of the kind of application the collaboration with IBM will make possible. Today, when people ask for complete patient records, he said, they are often handed a compact disc containing digital copies of documents and medical images like X-rays. In the future, Mr. Levie said, Box's expertise in digital-content handling will make it possible to present all that information online and IBM's analysis software could be used to suggest the most relevant information to patients and doctors.

The Box partnership, said Robert Picciano, senior vice president for data analytics at IBM, is another step in "the transformational journey we're on."

That journey involves aggressively expanding the company's business in new technology fields - data analytics, cloud computing, security, social media and mobile. Data analytics is the largest of the group, with revenue of $17 billion a year, growing at a 20 percent clip in the first quarter. In all, the growth businesses generated revenue of $25 billion in 2014. By 2018, IBM hopes those businesses will contribute $40 billion in revenue.

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