IBM Pivots into Neocloud Market with $240M Together AI Deal

IBM has entered the neocloud market through its $240 million deal with Together AI. The partnership provides IBM with dedicated AI-computing capacity on its Cloud using Nvidia's next-generation HGX B300 systems.

The move positions IBM as a significant player in the neocloud market, but it also carries risks. The company is shifting from its core business of software provision and enterprise technology to a highly competitive and capital-intensive sector.

IBM will provide Together AI with high-end graphics-processing-unit clusters on its Cloud, which the private company will then resell under its brand. This approach allows IBM to earn revenue through wholesale leasing as well as cybersecurity-services integration and related software sales.