SoftLayer Technologies is a Dallas-based cloud hosting and public cloud start-up company founded in 2005. Since then it has grown rapidly into a $400 million business with 20,000 customers and more than 700 employees. It has 13 data centers in the US, Europe and Asia to add to IBM’s own ten centers. The deal is believed to be worth around $2 billion.
It brings a new dimension to IBM’s existing cloud offerings. “Among its many innovative cloud infrastructure services,” said IBM in its announcement, “SoftLayer allows clients to buy enterprise-class cloud services on dedicated or shared servers, offering clients a choice of where to deploy their applications.” The result will be the ability for IBM to offer hybrid public and private clouds – for example, European companies that either wish or are obligated to keep data within Europe will be able to do so within a private European cloud, while simultaneously taking advantage of public cloud options for less sensitive data.
The acquisition will also help both companies move into new markets. IBM’s customer base tends to be large and conservative and hands-on. From the beginning, however, SoftLayer has taken an automated approach, making it particularly attractive to mid-sized customers. "Under the covers," comments Forrester's James Staten, "IBM has been learning just how automated a cloud platform really needs to be, whereas SoftLayer started from the philosophy of 'automate everything possible'."
Alan Shimel, CEO at The CISO Group, thinks that SoftLayer isn't just any old cloud provider, but specifically a secure cloud provider. "Security has been built into the DNA of the SoftLayer cloud and infrastructure. While they also offered security as a service offerings from several third parties, there was substantial security technology in the SoftLayer plumbing itself," he blogged yesterday.
The acquisition is the largest made by IBM since Virginia M. Rometty became chief executive in January 2012. It seems to be a key element in the company's stated intention to generate $7 billion annually in cloud revenue by the end of 2015.
Holger Mueller at Constellation Research thinks it's a good fit. "Other vendors recently claimed to be fully on the cloud," she blogged yesterday. "Well IBM made clear they are in the game for real and mean to make this a multi-billion business... We will know the cloud has completely arrived at IBM, when the company will announce a cloud division."
So far, IBM has simply announced a new Cloud Services division to take advantage of the acquisition. But once SoftLayer is fully integrated and completely bluewashed, it will effectively become IBM's Cloud Division.