IBM Puts Amazon, Google On Notice with Nirvanix OEM Partnership – Cloud Leadership Is About Scale Advantage

UPDATE: A Google engineer posted by mistake an internal note to his public Google + account. He slams Google + and Amazon. – Link is here>

IBM is making their own moves in cloud and they are big moves - see news story here. Yesterday, IBM announced that they are acquiring Platform Computing, a privately held company headquartered in Toronto, Ontario, Canada. Platform Computing is a global leader in cluster and grid management software for distributed computing environments. Now Nirvanix.

IBM’s big secret weapon is their services army and computing arsenal (software stack and computing hardware). Putting the pieces together for cloud is about performance and services. Hello Oracle. Hello Amazon. Hello Google. Hello Microsoft. Oh yeah and HP.

In a move designed to attack the cloud storage market with full force and launch a massive market share assault, IBM and Nirvanix today teamed up to deliver a nuclear blast across the cloud storage landscape with a strategic 5-year OEM pact aimed at leveling the competition. Amazon S3, Google, Microsoft Azure—consider this your official wake up call.

One thing that matters in the cloud business is what I call “the scale advantage”. Once you get it you have a serious differentiators and a big barrier that competition needs to hurdle to get into the market. For Amazon, Microsoft, and Google their size and market traction will no longer go unchallenged by the big IT OEMs.

The innovative cloud storage startup Nirvanix has been making significant market inroads this year. Now they have the biggest IT services company in the world, Now IBM Global Services, with $37B in revenues last year, providing the massive sales engine to deploy Nirvanix powered cloud services to legions of enterprise customers worldwide. This means IBM gets a big piece to the scale puzzle and puts them directly into competition with a viable offering.

Clearly, the big winner here is Nirvanix. It’s big for any company never mind a startup to be out of all the cloud startups and big time players to provide the underlying cloud storage software and services to power IBM’s SmartCloud Enterprise portfolio.

IBM is integrating Nirvanix software IP with IBM software IP. This is a strategic move by IBM Global Services to gain a competitive advantage and get the “scale advantage” now. This is a huge win for Nirvanix and its VCs, and basically puts them in a clear position over other cloud storage startups.

To put this news in perspective, Amazon’s rampant growth in cloud storage has largely gone unanswered by the big Tier 1 OEMs in recent years. While Amazon has steadily been growing its cloud revenues north of $500M, OEMs like NetApp, EMC, Oracle, HP, Hitachi and even IBM SystemStorage have sat by the sidelines for the past few years and watched Amazon snatch up storage business that used to go to them. Add the movement of unstructured data to the mix and the marketplace is even more disrupted.

As my SiliconANGLE.tv #theCUBE cohost Dave Vellante pointed out countless times before, customers today want their storage served with a pay-by-the-drink business model attached to it—not in the form of boxes with the “cloud” label attached to it, not in the form of cloud promises but true cloud services.

The challenge for the hardware-obsessed OEMs is to make that pivot from a box pusher mentality to a services mentality but they are mortified of margin collapse and are fearful of being decimated in the stock market should they change gears. However, the inevitable paradigm shift is here. There is only so long companies can hold out from the inevitable.

A paradigm shift is happening and IBM Global Services is embracing this shift while NetApp, EMC, Oracle, and HP keep trying to hold on to yesterday’s business model. As I have been pointing out to HP and others — unless there is a shift in the fundamental business models, the leaders in the previous paradigm will not be the leaders in the new cloud paradigm.

Future Business Model: Everything as a Service – EaaS

About John Furrier

Founder and CEO of SiliconAngle.com.