IBM Corporation IBM recently announced that it has succeeded in storing data on a single atom – the world’s smallest magnet.
We note that present day hard disk drives utilize about 100,000 atoms to store one bit of data. With IBM’s success in this experiment, there could be a shift in the way we perceive storage devices that keep pushing the limits of Newtonian physics every now and then.
IBM’s technology could pave the way for the development of more compact storage devices in the future, which can probably store an entire iTunes library comprising 35 million songs in a device of the size of a credit card.
International Business Machines Corporation Price and Consensus
International Business Machines Corporation Price and Consensus | International Business Machines Corporation Quote
What Does this Mean for IBM?
As per a report by statista.com worldwide unit shipments of hard drives is expected to decline to 333 million by 2020. However, per a Markets and Markets report, worldwide spending on cloud storage is projected to shoot up to $74.94 billion by 2021.
One of the reasons behind this declining trend could be the emergence of cloud storage as a strong contender to physical storage devices.
Notably, there is strong competition in the hard-disk drive storage space with the presence of some major players such as Western Digital WDC, Seagate STX and Toshiba. On the other hand, competition in the cloud-based storage space is also intensifying. Some of the major players in this particular segment are Amazon’s AMZN AWS and Microsoft’s Azure.
IBM remains focused on its strategic growth initiatives including cognitive solutions, cloud computing, mobile and social business. Moreover, the company is taking proactive steps in the fields of quantum computing to commercialize it via its cloud platform IBM Cloud. (Read More: IBM to Commercialize Quantum Computing Using Cloud Platform).
We note that no matter how much traction cloud storage gains, people will still require a device to access the cloud. IBM looks poised to revolutionize the storage market with these “atomic drives.”
Stock Performance Overview
Shares of IBM have underperformed the Zacks Computer Integrated Systems industry over the last year. While the industry gained 34.1%, shares of IBM appreciated 27.9%.
The underperformance of the stock could be due to the time consuming transition to the cloud and weakness in traditional businesses.
Zacks Rank and Key Pick
At present, IBM carries a Zacks Rank #3 (Hold).
Western Digital is a better-ranked stock in the broader technology space, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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