IBM’s cloud computing revenues are smaller and no more “cloud-intensive” than customers and Wall Street analysts might think. That is the claim of a former IBM employee who backed up a number of of his/her critical assessments of the vendor’s cloud prowess with various confidential internal documents shared with InformationWeek.

The documents put IBM’s 2012 cloud-related revenue at $2.26 billion, a figure the corporate has declined to reveal publicly. In 2011, IBM did issue a roadmap that set forth the goal of reaching $7 billion in annual cloud revenue by 2015, so the much lower figure raises doubts about whether the corporate is not off course.

IBM also said in 2011 that only $3 billion of that total would come from net-new business, suggesting that $4 billion can be tied to cloud-based ways of delivering its current hardware, software and services.

Noteworthy is data that shows that roughly half current IBM cloud revenues are tied to hardware, in lots of cases systems used to run customers’ private clouds or partner clouds. “This isn’t what your readers would reflect on as cloud,” said the previous IBM employee, who reached out to InformationWeek after reading a column I wrote challenging IBM to be more transparent about its cloud revenue. “They’re going to consider Amazon EC2, Salesforce.com and IBM SmartCloud as real cloud. Not stuff sitting on their data center floor.”

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It’s unclear whether IBM’s re-characterization of certain hardware sales is an element in a current Securities and Exchange Commission investigation of the company’s cloud revenue, as divulged in IBM’s second-quarter financial filings.

IBM declined to touch upon the continued SEC investigation, but speaking on background, an IBM executive said the corporate “established the entire category of non-public cloud five years ago. We told the marketplace, and Gartner and IDC came to agree, that plenty of very large companies have gigantic data centers and many stuff they need to govern from a privacy or security perspective. Therefore, the primary major opportunity from our client base was going to be us helping them build cloud delivery.”

Where cloud compute capacity is anxious, the embrace of x86-based systems and standards is cannibalizing IBM’s higher-margin mainframe and tool server businesses, says Kulbinder Garcha, an analyst with Credit Suisse, which downgraded its rating on IBM’s stock on Aug. 6.

Meantime, emerging platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) offerings are “obviating the will for IBM’s traditional middleware stack,” Garcha wrote in a research report. “The shift to cloud continues to offer risks given IBM’s technology positioning.”

As for IBM’s ability to compete with its own IaaS offerings, internal documents supplied by the previous employee detail the formidable competition IBM’s SmartCloud Enterprise (SCE) faces from Amazon Web Services. One document shows SCE to be generally cheaper than AWS offerings at low levels of service and capacity utilization, however the cost advantages shift to AWS at higher service and utilization levels.

To illustrate, IBM’s 32-bit Copper-, Bronze-, Silver- and Gold-level services are all lower priced than Amazon AWS at 25% utilization levels of 1-year and 3-year reserved capacity, in keeping with this internal assessment. But move as much as 64-bit services and 75% or higher utilization and the tables turn, with IBM’s prices becoming 20% to 40% higher than AWS’s and greater than 40% higher in relation to 64-bit Platinum services.

These comparisons might be outdated, because the document is from March 2013, however the competitive pattern described is in line with the reputations of both vendors, in line with InformationWeek cloud computing expert Charles Babcock. “IBM is inclined to get higher margins once it has you hooked, while Amazon rather artfully has made it cheaper to become an enormous user, with the speed per hour taking place the more you’re committed to long-term use,” Babcock says, noting that no cloud competitor has claimed to conquer Amazon’s three-year, Reserved Instance price.