IBM buys Softlayer, for software defined infrastructures and clouds?

IBM today announced that they are acquiring privately held Dallas Texas-based Softlayer and Infrastructure as a Service (IaaS) provider.

IBM is referring to this as Cloud without Compromise (read more about clouds, conversations and confidence here).

It’s about the management, flexibly, scale up, out and down, agility and valueware.

Is this IBM’s new software defined data center (SDDC) or software defined infrastructure (SDI) or software defined management (SDM), software defined cloud (SDC) or software defined storage (SDS) play?

This is more than a software defined marketing or software defined buzzword announcement.

If your view of software define ties into the theme of leveraging, unleashing resources, enablement, flexibility, agility of hardware, software or services, then you may see Softlayer as part of a software defined infrastructure.

On the other hand, if your views or opinions of what is or is not software defined align with a specific vendor, product, protocol, model or punditry then you may not agree, particular if it is in opposition to anything IBM.

During today’s announcement briefing call with analysts there was a noticeable absence of software defined buzz talk which given its hype and usage lately, was a refreshing welcome relief. So with that, lets set the software defined conversation aside (for now).

Who is Softlayer, why is IBM interested in them?

Softlayer provide software and services to support both SMB, SME and other environments with bare metal (think traditional hosted servers), along with multi-tenant (shared) cloud virtual public and private cloud service offerings.

Softlayer supports various applications, environments from little data processing to big data analytics to little data processing, from social to mobile to legacy. This includes those app’s or environments that were born in the cloud, or legacy environments looking to leverage cloud in a complimentary way.

Some more information about Softlayer includes:

Privately held IaaS firm founded in 2005
Estimated revenue run rate of around $400 million with 21,000 customers
Mix of SMB, SME and Web-based or born in the cloud customers
Over 100,000 devices under management
Provides a common modularized management framework set of tools
Mix of customers from Web startups to global enterprise
Presence in 13 data centers across the US, Asia and Europe
Automation, interoperability, large number of API access and supported
Flexibility, control and agility for physical (bare metal) and cloud or virtual
Public, private and data center to data center
Designed for scale, durability and resiliency without complexity
Part of OpenStack ecosystem both leveraging and supporting it
Ability for customers to use OpenStack, Cloudstack, Citrix, VMware, Microsoft and others
Can be white or private labeled for use as a service by VARs

What IBM is planning for Softlayer

Softlayer will report into IBM Global Technology Services (GTS) complimenting existing capabilities which includes ten cloud computing centers on five continents. IBM has created a new Cloud Services Division and expects cloud revenues could be $7 billion annually by the end of 2015. Amazon Web Services (AWS) is estimated to hit about $3.8 Billion by end of 2013. Note that in 2012 AWS target available market was estimated to be about $11 Billion which should become larger moving forward. Rackspace by comparison had recent earning announcements on May 8 2013 of $362 Million with most that being hosting vs. cloud services. That works out to an annualized estimated run rate of $1.448 Billion (or better depending on growth).

I mention AWS and Rackspace to illustrate the growth potential for IBM and Softlayer to discuss the needs of both cloud services customers such as those who use AWS (among other providers), as well as bare metal or hosting or dedicated servers such as with Rackspace among others.

What is not clear at this time is if IBM is combing traditional hosting, managed services, new offerings, products and services in that $7 billion number. In other words if the $7 billion represents what the revenues of the new Cloud Services Division independent of other GTS or legacy offerings as well as excluding hardware, software products from STG (Systems Technology Group) among others, that would be impressive and a challenge to the likes of AWS.

IBM has indicated that it will leverage its existing Systems Technology Group (STG) portfolio of servers and storage extending the capabilities of Softlayer. While currently x86 based, one could expect IBM to leverage and add support for their Power systems line of processors and servers, Puresystems, as well as storage such as XIV or V7000 among others for tier 1 needs.

Some more notes:

Ties into IBM Smart Cloud initiatives, model and paradigm
This deal is expected to close 3Q 2013, terms or price were not disclosed.
Will enable Softlayer to be leveraged on a larger, broader basis by IBM
Gives IBM increased access to SMB, SME and web customers than in the past
Software and development to stay part of Softlayer
Provides IBM an extra jumpstart play for supporting and leveraging OpenStack
Compatible and supports Cloustack and Citrix who are also IBM partners
Also compatible and supports VMware who is also an IBM partner

Some other thoughts and perspectives

This is a good and big move for IBM to add value and leverage their current portfolios of both services, as well as products and technologies. However it is more than just adding value or finding new routes to markets for those goods and services, it’s also about enablement IBM has long been in the services including managed services, out or in sourcing and hosting business. This can be seen as another incremental evolution of those offerings to both existing IBM enterprise customers, as well to reach new, emerging along with SMB or SME’s that tend to grow up and become larger consumers of information and data infrastructure services.

Further this helps to add some product and meaning around the IBM Smart Cloud initiatives and programs (not that there was not before) giving customers, partners and resellers something tangible to see, feel, look at, touch and gain experience not to mention confidence with clouds.

On the other hand, is IBM signaling that they want more of the growing business that AWS has been realizing, not to mention Microsoft Azure, Rackspace, Centurylink/Savvis, Verizon/Terremark, CSC, HP Cloud, Cloudsigma, Bluehost among many others (if I missed you or your favorite provider, feel free to add it to the comments section). This also gets IBM added Devops exposure something that Softlayer practices, as well as a Openstack play, not to mention cloud, software defined, virtual, big data, little data, analytics and many other buzzword bingo terms.

Congratulations to both IBM and the Softlayer folks, now lets see some execution to watch how this unfolds.

Ok, nuff said.

Cheers gs

Greg Schulz – Author Cloud and Virtual Data Storage Networking (CRC Press), The Green and Virtual Data Center (CRC Press) and Resilient Storage Networks (Elsevier)
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