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IBM acquires SoftLayer

Jun 06, 2013 by Mike Small

On June 24th, IBM announced that it is to acquire SoftLayer Technologies Inc. and at the same time announced the formation of a new Cloud Services division. Following the close of this acquisition the new division will combine SoftLayer with IBM SmartCloud into a global platform.

So what is special about SoftLayer, why is this important and what does it mean?

SoftLayer Technologies Inc., which was founded in 2005, has over 100,000 devices under management which makes it one of the largest privately held computing infrastructure providers in the world.  SoftLayer has redefined the delivery of cloud computing through its IMS (Infrastructure Management System).  Most cloud providers deliver their compute services using virtualization which keeps the customer one step removed from the underlying hardware.  The CloudLayer IMS, which is around 3 million lines of code, makes it possible to offer raw hardware on demand as a pay per use cloud service.  This has been very attractive for certain kinds to certain kinds of applications, for example gaming, that require very intensive compute or I/O performance.  In effect this system makes it possible to offer anything now available in a data centre as a cloud service.

IBM already is one of the world’s leading cloud service providers—with cloud revenue expected to reach $7 billion annually by the end of 2015.  The acquisition is intended to strengthen IBM’s existing SmartCloud portfolio, by providing a broader range of choices to enterprises moving their workloads to the cloud and is better able to meet the needs those organizations that were founded on or in the cloud.

This acquisition extends the IBM SmartCloud beyond server and storage virtualization by making “bare metal” computing hardware available as a cloud service.  It extends the way in which IBM will be able to deliver the kinds of services that it always delivered through its GTS organization.  It confirms that the cloud is now a mainstream way of delivering IT services.

A word of caution concerns the proprietary nature of SoftLayer’s home grown IMS.  IBM has announced that it intends to expand SoftLayer’s cloud offerings to be OpenStack compliant consistent with its SmartCloud portfolio and historic commitment to open standards.  KuppingerCole believes that organizations using the cloud need to take care to avoid lock-in, and standards provide an important way to ensure this.  It is important that IBM delivers on this commitment.


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Mike Small
Fellow Analyst
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