UPDATED 11:25 EDT / OCTOBER 12 2011

NEWS

The New Services Paradox – How IBM is Winning the Race to the Middle

The new services paradox goes something like this:

The new services companies want to grow and get big. Companies like Box.net dream of being as big as Microsoft. Salesforce.com dreams of slaying the Oracle beast.

The technology giants want to be young again. They want that magic back. Their dream is to be as nimble and as innovative as the fast, young tech startups.

The winners will fall somewhere in the middle.

Only a few seem to be getting what it takes to be part of that wide middle space, where reliability and innovation are in perfect balance to meet the demand for big data, mobility and the social enterprise.

IBM is the most logical first entrant to the middle space. Today’s news about its acquisition of Platform Computing and strategic deal with Nirvanix illustrates this clearly.

IBM Services is driving this one. Traditional services run deep in IBM. They are perhaps best organized to help customers develop initiatives that will give them an innovative edge yet keep stability in the infrastructure.

Customers need that help. How many companies have actually built out a cloud infrastructure? Not many. It’s not easy. At least right now it’s not. Companies need services to get the infrastructure in place. This trend will go on for a while. It’s why OpenStack will be so powerful. Open, federated clouds will become the standard. Rackspace, Dell and companies like Canonical are making their bets. They have a chance of being part of that big middle. But that will take a while as OpenStack is still quite immature.

In the meantime, IBM will be soaking up market share.

Here’s a breakdown of IBM’s news:

  • Companies already have well established systems of record. It’s these transaction systems that keep the business running. IBM has ported these systems to its smart cloud platform.
  • A portfolio of products that can be integrated into an initial cloud offering.
  • New partner offerings– IBM’s first enterprise Cloud offering is now open to more than 130,000 software vendors, business partners and value-added resellers — building and selling key applications in supply chain, healthcare and smarter commerce.
  • A new platform as a service play.

The announcements today are numerous. They include a smart cloud application services offering; a cloud foundation and a smart cloud ecosystem for ISVs and partners.The Platform Computing deal points to the new frontier of big data in the life sciences, financial services and other fields such as transportation. But for me, the the deal with Nirvanix is the striking one.

From what I am seeing, new lightweight services like Nirvanix are serving as a proxy to the cloud. The services provide value to the user and the IT administrator. The user gets the liberty of using a service to store and access files without having to ask for a VPN. And IT does not have to spend a huge amount of time, manually setting people up.

That to me represents how IBM is winning the race to the middle. Nirvanix is part of that new generation of service providers that people find so attractive. It fits with the Web and its flow. By integrating the technology, IBM can provide a Web oriented experience while giving clients the assurance that its enterprise is optimized and at the same time taking advantage of new innovative technologies.

For example, IBM is a partner with Sugar CRM. SugarCRM CEO Larry Augustin said in a press release today that IBM’s analytics and collaboration technologies will allow them to provide more advanced offerings to its customers.

IBM is keying on big data, the Internet of Things, analytics and the combination of these intelligent technologies with Watson.

Oracle has to be looking over its shoulder. IBM is abstracting the software stack while also keeping people comfortable with its tempered approach to innovation.That’s a potent combination for the big, wide middle.

Services Angle

Who is moving to the big, wide middle besides IBM? A few show a clear path. Salesforce.com is rapidly moving to the middle. HP seems like they want to get there but their internal struggles are still hampering them. EMC and VMware have a clear strategy to move into the middle with its platform play and private cloud offerings.

And then there is OpenStack. And that’s the one to watch. IBM will keep winning big but in the long run the power and openness of OpenStack will be a big challenge to IBM and help more companies enter that big, wide middle space.


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