IBM Cloud Authors: Elizabeth White, Dalibor Siroky, William Schmarzo, John Worthington, Liz McMillan

Related Topics: @CloudExpo, Java IoT, Microservices Expo, IBM Cloud, Containers Expo Blog, @DXWorldExpo, SDN Journal

@CloudExpo: Article

IBM Reportedly Peels Off $2 Billion or More for SoftLayer

SoftLayer was considering an IPO last year & even met w/ bankers according to All Things Digital but opted to be bought instead

IBM Tuesday said it's going to acquire SoftLayer Technologies, the Dallas-based outfit that's supposed to be the largest privately held Infrastructure-as-a-Service provider in the world.

Terms were not disclosed but the good ole rumor mill, touched off by a Reuters report in March about how both IBM and EMC were interested in buying SoftLayer, pegged the deal at around $2 billion. Others venture that it could be worth as much as $2.5 billion.

Either amount makes it the largest acquisition of IBM CEO Ginni Rometty's new reign.

Since mid-2010, when the then five-year-old public cloud company was expected to clear $125 million in revenues, SoftLayer has been majority-owned by GI Partners, described as a private trans-Atlantic investment firm. GI got the position in a deal that reportedly left SoftLayer's founding management with enough equity to discourage their leaving.

GI evidently made a smart bet.

SoftLayer was considering an IPO last year and even met with bankers according to All Things Digital but opted to be bought instead. It's easier.

The acquisition is supposed to pit Big Blue against Amazon Web Services, the biggest of the public clouds, believed to have done $2 billion in business last year and expected to do $5 billion or better in 2014 - or close to what IBM has spent since 2007 building up a cloud armory.

IBM means to form a new Cloud Services Division around a free-standing SoftLayer and its 13 data centers in the US, Asia and Europe.

The new division will combine SoftLayer with IBM's SmartCloud portfolio of a hundred cloud-based line-of-business solutions and create a global platform for clients, ISVs, channel partners and technology partners.

The SmartCloud widgetry includes the chi-chi new Watson Engagement Advisor; hybrid solutions such as IBM PureSystems; mission-critical cloud services for SAP on IBM's SmartCloud Enterprise+; and IBM's private cloud solutions.

The unit will report to Erich Clementi, senior vice-president of IBM Global Technology Services, who was previously charged with spotting major growth opportunities and running IBM's cloud computing strategy.

The idea is to strengthen IBM's leadership position in cloud computing, which till now has largely focused on private clouds running in customers' own data centers. IBM is clever about getting the market to follow its lead. Look at what its blessing did for Linux.

In a statement Clementi said, "Our clients are telling us they want to realize the transformative benefits of cloud today - not just for individual applications, but across their entire enterprise. SoftLayer is a perfect fit for IBM. It will help us smooth the transition of our global clients to the cloud faster, while enabling IBM to more efficiently offer them its broad portfolio of open IT infrastructure and software services."

IBM intends to expand SoftLayer cloud offerings to include OpenStack capabilities, a move it pictures as "consistent with its entire SmartCloud portfolio and historic commitment to open standards such as Linux. Given that most companies will mix public and private cloud services, clouds need to interoperate. In that way, firms can better leverage cloud to run their social, mobile and Big Data applications."

IBM says it will support and enrich the SoftLayer cloud-centric partners and ecosystem and its performance capabilities for Big Data and analytics. IBM will provide go-to-market and customizable resources for its expanding cloud ecosystem.

SoftLayer claims to have 21,000 customers and 100,000 servers under management. It offers both dedicated and shared servers. It's those dedicated servers that matter to IBM, which says they're one of the top reasons it chose SoftLayer.

SoftLayer's widgetry provides an easy ‘on ramp' especially for the Fortune 500 to adopt the cloud. It lets cloud services be quickly created on dedicated servers - rather than a virtual ones, which is the norm in the public cloud.

"By building out a cloud on a dedicated server," it says, "a client no longer has to worry about sharing computing resources with other companies - thereby radically improving privacy, security and overall computing performance. By using dedicated servers, software that was built for on-premise use can be ported more easily to the cloud. It doesn't have to go though as much heavy configuration as it does with a virtual server, which it was not developed to work with."

IBM figures that will let it deliver an industry first: "marrying the security, privacy and reliability of private clouds with the economy and speed of a public cloud."

Ah, but there's still more. IBM says the SoftLayer acquisition maps to its larger strategy of transformation and shift to higher value.

"With a strong cloud infrastructure from SoftLayer under our belt that marries the best of private cloud with public, IBM can focus on delivering to clients the higher-level cloud value - business transformation. As such, IBM sees this acquisition as a milestone in changing the cloud discussion from one of reducing ‘IT cost' to impacting the business value by leveraging social, mobile and Big Data for competitive advantage."

And that, children, along with the fact that IBM opens a new market into the enterprise for SoftLayer's so-called born-on-the-cloud customers, is why Big Blue is buying the joint.

It says the vast majority of the Fortune 500, its favorite playmates, "have concerns about how cloud will work with the IT investments they have already made, and many have been waiting for a cloud that is better than ‘good enough.'

"In fact, we know that although cloud is growing quickly, it's still only a small part of the total IT spend. There's a lot of opportunity here for IBM to capitalize on. Industry watchers" - it means Gartner - "tell us that public cloud services will reach $131 billion in 2013. By comparison this year enterprise IT spending will reach $3.7 trillion.

SoftLayer provides infrastructure for cloud-centric, performance-intensive applications in the areas of mobile, social media, gaming and analytics.

IBM said the growing number of businesses incorporating mobile computing is helping drive SoftLayer growth. In the last two quarters, more than 60 new gaming companies have moved to the SoftLayer global platform, frequently migrating from commodity cloud platforms because of problems with cost, latency, availability and raw performance.

SoftLayer's architecture provides technical capabilities such as a software-definable environment critical to a cloud infrastructure, programmable interfaces, and hundreds of hardware and network configurations. It's designed to deliver a higher level of flexibility - mixing virtual and dedicated servers to fit a variety of workloads - interface automation and hybrid deployment options.

SoftLayer's automated networking infrastructure supports public, private and data center-to-data center architectures. Its IT infrastructure connectivity enables connections with leading global network providers and Internet access networks.

IBM will redirect SoftLayer to service more of the enterprise.

Its CEO Lance Crosby said, "SoftLayer has a strong track record with born-on-the-cloud companies, and our move today with IBM will rapidly expand that footprint globally as well as allow us to go deep into the large enterprise market. The compelling opportunity is connecting IBM's geographic reach, industry expertise and IBM's SmartCloud breadth with our innovative technology. Together SoftLayer and IBM expand their reach to new clients - both born-on-the-cloud and born-in-the-enterprise."

IBM expects annual cloud revenue from its SmartCloud portfolio to hit $7 billion by the end of 2014. It currently has 5,000 so-called engagements in its private cloud business.

IBM SaaS solutions for Smarter Cities, Smarter Commerce and other applications will be made available via SoftLayer over time, providing line-of-business clients with improved time-to-value and an increasingly integrated portfolio of solutions that accelerates business process innovation, provides analytics at the point of impact, and connects collaborative business networks within and across organizations.

IBM's got 10 of its own cloud computing centers on five continents.

The acquisition should close in Q3.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.

@ThingsExpo Stories
"MobiDev is a software development company and we do complex, custom software development for everybody from entrepreneurs to large enterprises," explained Alan Winters, U.S. Head of Business Development at MobiDev, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Telecom Reseller has been named “Media Sponsor” of SYS-CON's 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, introduced two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a multip...
Gemini is Yahoo’s native and search advertising platform. To ensure the quality of a complex distributed system that spans multiple products and components and across various desktop websites and mobile app and web experiences – both Yahoo owned and operated and third-party syndication (supply), with complex interaction with more than a billion users and numerous advertisers globally (demand) – it becomes imperative to automate a set of end-to-end tests 24x7 to detect bugs and regression. In th...
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
"Cloud Academy is an enterprise training platform for the cloud, specifically public clouds. We offer guided learning experiences on AWS, Azure, Google Cloud and all the surrounding methodologies and technologies that you need to know and your teams need to know in order to leverage the full benefits of the cloud," explained Alex Brower, VP of Marketing at Cloud Academy, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clar...
It is of utmost importance for the future success of WebRTC to ensure that interoperability is operational between web browsers and any WebRTC-compliant client. To be guaranteed as operational and effective, interoperability must be tested extensively by establishing WebRTC data and media connections between different web browsers running on different devices and operating systems. In his session at WebRTC Summit at @ThingsExpo, Dr. Alex Gouaillard, CEO and Founder of CoSMo Software, presented ...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
In his session at 21st Cloud Expo, Carl J. Levine, Senior Technical Evangelist for NS1, will objectively discuss how DNS is used to solve Digital Transformation challenges in large SaaS applications, CDNs, AdTech platforms, and other demanding use cases. Carl J. Levine is the Senior Technical Evangelist for NS1. A veteran of the Internet Infrastructure space, he has over a decade of experience with startups, networking protocols and Internet infrastructure, combined with the unique ability to it...
SYS-CON Events announced today that CrowdReviews.com has been named “Media Sponsor” of SYS-CON's 22nd International Cloud Expo, which will take place on June 5–7, 2018, at the Javits Center in New York City, NY. CrowdReviews.com is a transparent online platform for determining which products and services are the best based on the opinion of the crowd. The crowd consists of Internet users that have experienced products and services first-hand and have an interest in letting other potential buye...
"There's plenty of bandwidth out there but it's never in the right place. So what Cedexis does is uses data to work out the best pathways to get data from the origin to the person who wants to get it," explained Simon Jones, Evangelist and Head of Marketing at Cedexis, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Evatronix will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Evatronix SA offers comprehensive solutions in the design and implementation of electronic systems, in CAD / CAM deployment, and also is a designer and manufacturer of advanced 3D scanners for professional applications.
Leading companies, from the Global Fortune 500 to the smallest companies, are adopting hybrid cloud as the path to business advantage. Hybrid cloud depends on cloud services and on-premises infrastructure working in unison. Successful implementations require new levels of data mobility, enabled by an automated and seamless flow across on-premises and cloud resources. In his general session at 21st Cloud Expo, Greg Tevis, an IBM Storage Software Technical Strategist and Customer Solution Architec...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
An increasing number of companies are creating products that combine data with analytical capabilities. Running interactive queries on Big Data requires complex architectures to store and query data effectively, typically involving data streams, an choosing efficient file format/database and multiple independent systems that are tied together through custom-engineered pipelines. In his session at @BigDataExpo at @ThingsExpo, Tomer Levi, a senior software engineer at Intel’s Advanced Analytics gr...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things’). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing? IoT is not about the devices, it’s about the data consumed and generated. The devices are tools, mechanisms, conduits. In his session at Internet of Things at Cloud Expo | DXWor...
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution. In his session at @ThingsExpo, Akvelon expert and IoT industry leader Sergey Grebnov provided an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...