IBM has declared an annual revenue target for new service markets such as cloud computing - $40 billion by 2018, reports Reuters.

As IBM has divested itself of unprofitable hardware manufacturing units such as low-end servers, semiconductors and cash registers, revenue has shrunk in the last three years, IBM executives said at the company’s annual investor meeting in New York on February 26^th.

The cloud, big data, security and other growth areas (such as the Internet of Things) were proposed as the new revenue generators.

The cloud was highlighted as one of the major emerging, high-margin business alternatives from IBM’s traditional reliance on its hardware and server making business.

Changing focus

IBM described its “strategic imperatives” as cloud computing, analytics, mobile, social and security software. The target revenue of $40 billion would contribute 44 percent of the total revenue of $90 billion that analysts expect IBM to make in 2018. IBM said it will invest $4 billion into these “strategic imperative” market areas in 2015.

The last reported revenue figures for cloud computing, analytics, mobile, social and security were $25 billion, in 2014. They currently make up 27 percent of IBM’s total annual revenue of $93 billion (according to 2014 sales figures).

The dumping of servers, semi conductors and cash registers would be like losing “empty calories”, said IBM chief executive Virginia Rometty.

While the company’s revenue has fallen in the last 11 quarters, earnings growth has been sporadic. IBM says its long-term plan is to hit “low single-digit” revenue growth and “high single-digit” growth in operating earnings per share.

According to IBM, the strong US dollar has dampened sales by six percent this January.

After the investor meeting IBM shares went up 0.6 percent to reach $163.80 on the New York Stock Exchange.