Home Why IBM Paid Big Bucks To Expand In The Cloud With SoftLayer

Why IBM Paid Big Bucks To Expand In The Cloud With SoftLayer

IBM is undeniably eager to get its cloud mission off the ground, which is why it just dropped some serious coin to pick up the cloud computing company SoftLayer today.

No one is sure what the price tag for SoftLayer will be when the deal is finalized sometime in the third quarter, but the Wall Street Journal cites sources that peg the buy somewhere in the $2 billion range. When the dust settles, SoftLayer will be part of a new cloud services division in IBM, combined with Big Blue’s existing SmartCloud operations.

On the surface, this is very much a “those who can’t do, buy” scenario. IBM will boost its own cloud roster by a reported 21,000 paying customers with the acquisition. Predictably, many observers are going to see this move as IBM’s play against Amazon Web Services’ dominant position in the public cloud computing sector.

But enough with the obvious insights. Here are a few additional ramifications to today’s acquisition announcement you may not have come across elsewhere.

IBM Sells More Servers, OpenStack Wins More Converts

First, there’s the nature of SoftLayer’s cloud infrastructure, which uses its own home-grown cloud controller and application programming interface (API) and hardware exclusively from Supermicro. IBM has its own servers that seem likely to displace those from Supermicro.

The cloud controller software that SoftLayer uses now will be a little harder to parse out. The cloud controller and APIs are how administrators and developers connect to the cloud servers and get them to deliver the performance and storage that an application needs. SoftLayer’s customers connect and control their cloud instances via this very software.

But IBM has, in recent months, made a big push for the controllers and APIs offered by the open source OpenStack project. Moving forward, it seems likely that IBM will want its customers to connect to their combined cloud services using OpenStack APIs. Where this will leave SoftLayer’s existing customers, though, is anyone’s guess.

So while Supermicro may lose a customer, OpenStack stands to gain some new code and quite a bit more standing in the cloud sector — especially if IBM opts to donate SoftLayer code to the OpenStack project. Even if IBM doesn’t donate SoftLayer’s code, IBM’s stewardship is likely to use a whole new set of OpenStack-based cloud services into the sector.

All of which is pretty interesting for cloud developers and CIOs considering the cloud. Whether the acquisition will pay off for IBM, of course, remains unclear. But you can’t fault Big Blue for not aiming high; its goal is to generate $7 billion in cloud-based revenue by 2015, and SoftLayer looks to be a big part of that effort.

Image courtesy of Shutterstock

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