IBM Pumps 12B into the Cloud With SoftLayer at the Core

When IBM called the SoftLayer acquisition a really big deal last year, it wasn’t talking about the price tag. But until now, it was unclear how all the pieces would fit.

Today, IBM answered many of those questions. It's pumping $1.2 billion into its cloud computing business — and putting SoftLayer at its core. It even brought out IBM SoftLayer CEO Lance Crosby, shown left, to "examine servers" at the IBM SoftLayer data center in Dallas today.

Spotlight on SoftLayer

What about IBM's SmartCloud, you ask? Well that’s a little bit unclear at the moment, and IBM didn’t even address it today.

Instead, it announced that it will be establishing SoftLayer as the basis of its entire cloud portfolio and that the infrastructure it bought with SoftLayer will provide a scalable base for the secure delivery of cloud services spanning IBM’s middleware and SaaS solutions.

Big Blue is also betting on SoftLayer to enable faster development, deployment and delivery of its mobile, analytic and social solutions. Again, where’s SmartCloud here? And again, no mention of it.

However, the SoftLayer news was offered almost as an aside to the announcement that it is investing $1.2 billion in its cloud business over the coming year. Agreed that is quite a lot of money, but the SoftLayer news deserves more than an after-thought.

That said, with $1.2 billion you could buy ... well another company, if you wanted, and IBM has shown itself to have a huge appetite for accusations over the past few years.

Network of Data Centers

IBM is betting big on the cloud: It plans to build a network of local cloud hubs worldwide. It expects to open another 15 cloud centers in the coming year, on top of the 12 centers it has already and the 13 it got with the SoftLayer deal (the $2 billion price tag doesn’t look that expensive now, in light of all this!).

This brings the total to 40, with key centers planned for Washington, D.C., Hong Kong, London, Japan, India, China, Canada, Mexico and Dallas. Next year, it is planning a big push in the Middle East and Africa.

All this, IBM executives said, will offer clients greater flexibility, transparency and control over the way they manage their data. This looks set to be one of the big considerations in expanding cloud businesses as tighter, and tighter regulatory regimes are demanding that enterprises keep data within specific geographies. But that’s a story for another day.

And we’re back to SoftLayer. One of the things that SoftLayer brought with it was this very ability — that is the ability to place data in whatever center, in whatever location an enterprise wants that data to inhabit.

It also offers them the choice of the cloud environment and location that best suits their business needs, as well as transparency into what is being stored and used, which is particularly interesting for enterprises with large compliance burdens.

Growth of Cloud Computing

By some estimates, the global cloud market is set to grow to $200 billion by 2020 driven largely by businesses and government agencies deploying cloud services to market, sell, develop products, manage their supply chain and transform their business practices. Erich Clementi, vice president of IBM Global Technology Services, said:

Last year, IBM made a big investment adding the $2 billion acquisition of SoftLayer to its existing high value cloud portfolio. Today's announcement is another major step in driving a global expansion of IBM’s cloud footprint and helping clients drive transformation."

It’s no real surprise that IBM is making this move now. Cloud computing has well and truly become mainstream and vendors that don’t react, or respond to that reality are going to get left behind.
In this respect, IBM is posing a direct challenge to the likes of Amazon Web Services, for example, whose strategy is to introduce a range of services into a new geography before it brings the rest of its portfolio in.

IBM, however, is throwing everything in at once so that once these data centers open users will be able to benefit from all the different services that IBM is offering on the cloud.

It also building on a cloud strategy that it has been developing since 2007. Since then, it has bought 15 companies in the cloud space to build up its business. By 2015, it wants to be turning $7 billion from cloud computing.

But this is only cloud computing per se, and it other areas of development will be feeding into this in the coming years, not least of which will be the Watson Group, which IBM launched last week and which will develop and commercialize cloud-delivered cognitive and big data innovation on SoftLayer.

(Title image by Ron Jenkins/Feature Photo Service for IBM.)