UPDATED 11:00 EST / JUNE 04 2013

NEWS

IBM Snaps Up SoftLayer, Eyes Public Cloud Domination

IBM has just confirmed its intention to buy up cloud computing infrastructure provider SoftLayer in an acquisition said to be worth around $2 billion, according to the Wall Street Journal.

IBM stated that its motivation is to bolster its own cloud computing efforts. The WSJ reports that ‘Big Blue’ is planning to create a new cloud services division within its Global Services unit, with SoftLayer continuing to operate as a separate business entity inside of that. Erich Clementi, senior vice president of IBM’s technology services, said in the statement that the acquisition will help IBM to beef up its ability to integrate public and private clouds for its clients, enabling significant performance and security benefits for SMBs.

“With SoftLayer, IBM will accelerate the build out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovations,” said Clementi in a prepared statement.

In its own analysis of the deal, the New York Times says that the acquisition marks a departure from IBM’s previous cloud strategy, which until now has largely been focused mainly on its private cloud offerings. By taking over SoftLayer, IBM is sharply expanding its capability to deliver cloud computing services to its customers remotely from its data centers – in other words, it’s about to become a big player in the public cloud model.

According to the NYT, IBM plans to add SoftLayer’s 13 data centers, which are spread throughout the US, Holland and Singapore, to the 10 cloud services data centers IBM currently operates worldwide. Clementi stated that doing so “completes our portfolio”, by expanding IBM’s public cloud operations whilst throwing in additional expertise and technology for private and hybrid cloud services.

The goal for IBM is to be able to compete in the public cloud market with services like Amazon, although it’ll do so by playing to its own strengths – i.e., with its marketing, procurement and customer service software delivered through the cloud, and with unique products like its Watson artificial-intelligence software, rather than by trying to match Amazon and Google’s storage and processing capabilities.

The NYT cites yogurt maker Dannon as an example of the type of company IBM is hoping to reach out to. It notes that Dannon utilizes IBM’s public cloud software in order to optimize its pricing and product strategies, and has helped its sales teams to boost the percentage of products sold to 98% – something that’s vital for a company whose foodstuffs have a limited shelf life.

Besides its software, analysts say that IBM has a second big advantage over its rivals in the cloud space – namely, security. According to the NYT, the level of trust associated with the IBM brand means that many corporate customers will automatically feel more comfortable with their data being stored in its public clouds.


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