IBM Adds 4 Data Centers in U.K., Focusing on AI Cloud Services

By Pino Vallejo

IBM is tripling the number of data centers it has in the U.K., bolstering one of the businesses it’s counting on for growth and giving the British economy a vote of confidence after the country elected to leave the European Union.

IBM currently operates two U.K. data centers. The four announced Tuesday come on top of a previous commitment from 2014 in which the company said it would spend $1.2 billion on 15 such facilities around the world. That would peg each center at an average cost of $80 million. IBM declined to disclose how much it’s spending in the U.K., or how many additional people it will need to hire to run these new facilities.

The announcement “shows Britain is open for business,” said Matt Hancock, Minister of State for Digital and Culture, in a statement. “These new cloud data centers will help our firms work smarter and quicker to become the world-leading businesses of tomorrow.”

IBM’s project also coincides with the U.K. government’s autumn budget statement and a raft of initiatives aimed at encouraging technology investment. Other U.S. technology companies have also continued to invest in the U.K. even after the Brexit vote in June. On Monday, Facebook Inc. said it was hiring 500 more people in the U.K., expanding its headcount in the country by a third. And earlier this month, Google said it was committed to completing a 1 billion pound ($1.25 billion) new office complex in London and hiring thousands more employees in the U.K.

Armonk, New York-based International Business Machines Corp. said the new data centers will particularly help it handle work for U.K. government clients and others in highly regulated industries like banking and defense contractors — which are increasingly looking to move data to the cloud, but are often required to store it locally.

The centers also are equipped with IBM’s Watson artificial intelligence technology, “to meet growing demand,” the company said.

Thomson, the U.K.’s largest travel operator and a unit of German-based TUI AG, is testing a chatbot powered by Watson delivered through IBM’s cloud computing facilities. The bot will enable customers to ask for suggestions for places to visit and things to do in a particular destination.

IBM has bet heavily that it can reshape its business model around its Watson AI product, part of a “cognitive solutions” business line that now accounts for 22 percent of the company’s $80 billion in revenue, at a time when profits from its traditional technology consulting and services business have been slowing. The company sold $12.7 billion in cloud computing services in the past 12 months.

The first two new U.K. data centers will be built in the English towns of Fareham and Farnborough, with the location of the other two to be unveiled next year. The Fareham facility is scheduled to open next month and all four new centers will be operating by the end of 2017, IBM said. Once the new data centers open, IBM will have 16 such facilities in Europe and 50 worldwide.