UPDATED 12:07 EDT / APRIL 28 2014

IBM Impact promises insight into IBM cloud progress | #IBM Impact | #CIOangle

10_Reasons_to_Attend_Impact_2014If IBM Pulse in February was about IBM’s strategic realignment around a cloud services strategy built around SoftLayer, Impact promises insights on IBM’s progress in building presence in the cloud market dominated by Amazon Web Services (AWS). And while it is not yet matching AWS in growth, IBM will show evidence that it is building momentum and will be a major business server provider.

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If Wikibon CTO David Floyer is correct in his analysis of the market in “Mega-datacenters Are the Future” this is a bet-the-business effort. And if Gartner’s analysis that by the end of 2014 80 percent of enterprises will be using cloud services is correct, IBM’s entry into the market is just in time.

Reasons for optimism

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Overall IBM has reason to be optimistic. It just reported 50 percent quarter-to-quarter growth in revenues from cloud services in 1Q14, after setting an internal record of $4.4 billion in cloud revenue in 2013. Steve Robinson, GM of IBM Cloud Platform Services, reports a major increase in interest among IBM clients in cloud services. Many of those customers are planning their cloud strategies now, implying that IBM’s market will continue to see accelerated growth in cloud services. More telling, independent market players such as SolidFire VP of Market Jay Pressl are starting to mention IBM in the same breath as AWS and Google Compute Engine, indicating that it is gaining mindshare.

Clearly this is IBM’s growth market, and the company has responded with $10 billion in investments, including $7 billion in acquisitions including Cloudant, Silverpop and Apera and commitment to expand its SoftLayer network, the core of its cloud service infrastructure, with the addition of 15 additional data centers worldwide. Growth of IBM overall has been sluggish, putting CEO Virginia M. Rometty under pressure, and obviously the company is looking to cloud services to fix that.

Power8 and Watson

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photo credit: IBM

photo credit: IBM

It also has announced the port of Power8 to SoftLayer, which will provide the infrastructure to add Watson to SoftLayer. This is particularly important because Watson is IBM’s trump card. It is the first of a new generation of cognitive computing platforms, and its eventual impact may be as great as the impact of the IBM 360 mainframe family, the first of the generation of programmable computers. Fifty years ago when IBM introduced the second generation of computing, the programmable computer, in the form of the IBM 360s, it totally revolutionized IT. Within a decade IBM had become the dominant industry player, replacing the Univac, which had been the most popular mainframe of the 1950s, and approximately 90 percent of IT department heads had been replaced.

One major question for IBM is whether it keep Watson to itself or license it to other cloud players. Google’s participation as a founding member of the OpenPower Foundation created by IBM around its Power8 Reduced Instruction Set Computing (RISC) processor, strongly implies that the Google Compute Engine will be adding Power-based servers to its infrastructure. Watson runs only on Power processors, not x86, because of the tighter threading in Power. For IBM the question of licensing Watson may come to a calculation of whether it will make more money licensing Power and Watson to competitors or by keeping Watson to itself and using that to attract more companies that can get competitive advantage from cognitive computing to SoftLayer.

The impact of Watson and cognitive computing is still unclear. However, IBM’s announcement last week of a partnership with Fluid Inc. to develop a personal shopping service on Watson gives some feeling for its potential. If it performs as promised, this service will become a competitive advantage for early retail adopters. Their competitors will then have little choice but to get their own personal shoppers, possibly driving entire sections of the retail industry to SoftLayer.

Philosophical differences

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IBM_Business_PartnersIBM’s core philosophy in the market is different from that of AWS and Google. While the two Web giants provide “plain vanilla” services and constantly slash prices, depending on their partners to supply add-on services such as SaaS, IBM is focused more on more advanced services such as its high-speed SoftLayer network, the choice of System z and, soon, Power8 hardware as well as more generic x86 and middleware to support integration of SaaS services to each other and corporate systems. These, of course, do come at an extra cost, but IBM also offers a “bare metal” option through SoftLayer to compete with AWS directly. Which kind of service, and which service provider, to use is not an either-or choice and should depend on the requirements of the applications. Choosing is an important strategic issue for CIOs, and IBM is counting on its advanced services and high-speed network to attract business away from the competition.

Insight 2014 will provide users and service providers with a window into IBM’s strategy and progress that can help them start their business strategies in the cloud.

Graphics courtesy IBM Corp.

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