Editor’s note: IBM is moving in a big way to further embrace the Internet of Things in its partnership deal with ARM. The deal combines IT (information technology) with OT (operations technology), says Ezra Gottheil of Technology Business Research.

HAMPTON, N.H. – IBM (NYSE: IBM) extended its leadership position in creating complete Internet of Things (IoT) solutions by allying with ARM in a deal announced last week.

This extends the reach of IBM/ARM systems from the things (devices with smart sensors) to cloud-based storage and analysis. The announcement termed this scope “from chip to cloud.” TBR believes this alliance will increase IBM’s attractiveness to potential customers and developers exploring opportunities in IoT, and thereby increase IBM’s IoT business.

IoT can be described as the intersection of IT and OT (Operations Technology). OT comprises the world of “things,” devices that interact with the physical world. These devices incorporate sensors and processors that generate data necessary for operations, but from which additional value can be derived by consolidation and analysis.

ARM processors are common. ARM has created an IoT platform called “mbed,” incorporating device operating systems, servers that act as gateways and security platforms, and development tools. With the addition of IBM’s cloud infrastructure and development platform, IBM and ARM claim that complete IoT systems can be implemented.

However, reality is more complicated. IoT systems will almost always be integrated into existing IT systems, so there are issues of compatibility and integration. The ARM mbed system is still a work in progress. In most IoT solutions, there will be a tier of processing between the devices gateway and the cloud, if only to prevent a flood of data from overwhelming the system. The ARM server will often not be mature enough for that tier.

Despite these limitations, the IBM/ARM alliance will prove beneficial to both companies. At this point in the rapid evolution of IoT, vendors such as IBM and competitors such as Cisco and GE are looking to begin the conversation. They want to work with customers as they consider and evaluate potential IoT solutions, moving toward definition to design. With the first nominal end-to-end set of IoT tools and IBM’s strengths in working with business management, IBM reinforces its position at or near the top of the list of vendors most companies will consider.