IBM makes big move: Acquires Kubecost to overhaul Kubernetes cost management

IBM has announced the acquisition of Kubecost, a leading Kubernetes cost monitoring and optimisation software company, to enhance its FinOps capabilities. The acquisition comes as part of IBM’s strategy to deepen its cloud cost management solutions and strengthen its commitment to the growth of FinOps, a framework that maximises the business value of cloud investments.

Kubernetes usage has seen a rapid increase, with 84% of organisations currently using or evaluating the technology. As datasets become more complex, cloud practitioners face growing challenges in managing costs, optimising resources, and achieving visibility into shared resources deployed via containers. Kubecost provides real-time cost visibility and insights for Kubernetes environments, allowing organisations to better understand infrastructure spending, avoid over-provisioning, and optimise cloud spending.

IBM Strengthens FinOps Suite with Kubecost Acquisition

This acquisition follows IBM’s recent acquisition of Apptio in 2023, further strengthening IBM’s FinOps suite. IBM’s FinOps suite combines the capabilities of IBM Cloudability’s cloud cost management, Turbonomic’s AI-automated cloud performance optimisation, and now Kubecost’s expertise in Kubernetes cost management. These combined solutions provide organisations with a comprehensive approach to inform, optimise, and operate cloud investments regardless of where their workloads are hosted.

IBM Cloudability was recently recognised as a leader in the Q3 2024 Forrester Wave report for Cloud Cost Management and Optimisation. The addition of Kubecost’s container cost management capabilities to IBM’s suite will enable DevOps teams, FinOps teams, and the broader open-source community to gain deeper visibility into Kubernetes workloads and optimise cloud investments more effectively.

IBM’s Stock Performance and Market Sentiment

IBM’s latest share price stands at around $214.13. Analysts have provided mixed forecasts for its future performance, with the consensus being a “Hold” rating. The price targets range from a low of $143 to a high of $240, with an average target of $188.60. This indicates a potential downside of approximately 11.92% from the current price. Recent analyst activity includes BMO Capital raising its price target for IBM to $235, while Evercore ISI Group adjusted its target to $240, maintaining an “Outperform” rating. Conversely, UBS maintains a “Sell” rating but raised its target to $145 from $130, reflecting varied sentiment among analysts.

Overall, IBM’s stock sentiment remains generally neutral, with market participants weighing the potential growth from strategic acquisitions, like Kubecost, against the ongoing challenges in maintaining profitability. For the upcoming year, IBM’s earnings per share (EPS) are projected to increase to $10.80 from $10.27, and its revenue is expected to see modest growth, reaching $66.92 billion.

Strategic Moves to Enhance Cloud Management and Optimisation Capabilities

Kubecost, founded in 2019 and headquartered in San Francisco, California, is led by Co-founder and CEO Webb Brown and Co-founder and CTO Ajay Tripathy. With the integration of Kubecost’s solutions, IBM continues to expand its cloud management capabilities. IBM’s portfolio of recent acquisitions, including Apptio, Turbonomic, Instana, NS1, and Pliant, demonstrates its ongoing commitment to providing robust automation and cloud optimisation tools to reduce complexity and increase control over IT environments.

IBM’s move to acquire Kubecost underscores its dedication to advancing FinOps practices and delivering innovative cloud optimisation solutions for organisations worldwide. With this latest acquisition, IBM is set to enhance its position as a leader in cloud cost management, helping enterprises navigate the complexities of modern cloud environments.