IBM Ups Cloud Game via SoftLayer Acquisition

As part of an effort to ensure it can generate some $7 billion in cloud revenue by 2015, IBM today announced it has acquired SoftLayer Technologies, a provider of cloud computing and hosting services.

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Although IBM declined to put a value on the acquisition, Wall Street speculation pegged the value of the deal in the range of $2 billion.

According to Erich Clementi, senior vice president for IBM Global Technology Services, SoftLayer represents an IBM effort to bring the reliability, security and privacy of a private cloud at the economies of scale associated with a public cloud service. IBM offers a similar range of IBM SmartCloud services, which will now be combined under a new division headed by Clementi, to operate within IBM Global Services.

One thing that distinguishes SoftLayer is the range of highly elastic cloud options it provides, which span everything from a shared public cloud service based on virtual machines, to bare metal physical servers, to dedicated hosting services. Right now, the SoftLayer cloud consists of over 100,000 servers located in 13 data centers, all accessible via a standard set of application programming interfaces to about 21,000 existing customers.

While IBM isn’t planning any immediate changes to the SoftLayer lineup, it did say that customers should expect to see some additional services based on iBM Tier 1 storage technologies, IBM Power Series servers and IBM Big Data analytic applications added to the SoftLayer portfolio.

In addition, IBM plans to make a range of additional OpenStack technologies available on the SoftLayer cloud, which already supports instances of Xen, VMware and Microsoft Hyper-V virtual machines.

Beyond reducing IT costs, Clementi says that cloud computing is having a major impact on business because of the more agile model it creates for deploying and delivering those services. SoftLayer is an attempt to accelerate that transition by offering services that appeal to both applications born of the cloud and existing enterprise applications that need to be transitioned to the cloud.

The end result, says Clementi, is nothing less than the elimination of the barrier to cloud computing adoption in the enterprise by providing a truly elastic set of cloud services without compromise.

As competition in the cloud computing space gets fiercer, it’s only natural that there would be a wave of mergers and acquisitions. The challenge facing IT organizations now is betting on which cloud service providers will remain standing versus ones that get folded into some other entity. That, depending on your perspective, may or may not be the most desirable of outcomes.