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Summary:

EMC is not in the race for SoftLayer, the cloud services provider, but IBM is on the prowl for cloud expertise and has looked at both SoftLayer and Rackspace, sources say.

When word surfaced Thursday that EMC and IBM were kicking the tires of SoftLayer as a potential acquisition target, there were plenty of raised eyebrows. Now sources close to the matter say that EMC is not really in this hunt at all; but IBM may well be.

Reuters broke the news of a potential SoftLayer acquisition the day after EMC protege VMware announced plans for its Amazon Web Services competitor that would, in theory, give EMC a horse in that race without having to buy anything. So when a source close to the matter says EMC is not party to this competition, I’m inclined to believe it.

ibmlogoIBM, on the other hand, is (or at least was) very interested in SoftLayer, according to one former IBM exec who spoke on the condition of anonymity. This source, however, said as of a month or so ago, IBM was also looking at Rackspace. Both IBM and Rackspace are full-fledged Platinum members of the OpenStack Foundation; SoftLayer is a lower-level supporting organization.  IBM joined the OpenStack Foundation a year ago and announced its first OpenStack-based products last week.

That IBM insider said IBM has lots of cash but struggles when it tries to develop products internally.

EMC logo“Realizing this, IBM’s become a holding company of sorts, buying assets, integrating them and reselling them as an IBM brand,” said this source, who remains close to IBM. That growth-by-acquisition pattern may well continue in cloud.

“IBM does not want to fund its own development because past history shows we’re not very good at it. The internal OpenStack work may suffer from that tendency so there was an effort underway to just buy an OpenStack company,” he said. When prompted, he confirmed that Rackspace was on the short list of the OpenStack companies under consideration.

SoftLayer and EMC declined comment on this story. IBM and Rackspace officials said they do not comment on rumors.

This report was updated at 8:09 p.m. PDT Sunday March 17 to reflect that SoftLayer is, in fact, an OpenStack supporting organization.

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  1. Kazuya Mishima Saturday, March 16, 2013

    EMC is not in the race for SoftLayer, the cloud services provider, but IBM is on the prowl for cloud expertise and has looked at both SoftLayer and Rackspace, sohttp://bit.ly/10Ro1MKurces say….

  2. Robbie Wright Sunday, March 17, 2013

    SoftLayer actually is an OpenStack member (http://www.openstack.org/foundation/companies/). It seems they’ve at least implemented OpenStack Swift (Object Storage), so they could be more aligned with IBM than you think. Rackspace is a great company, but is probably to expensive for IBM. My money is on an IBM acquisition of SoftLayer.

    1. you are correct– SoftLayer is a supporting organization in the foundation… IBM and Rackspace are higher level Platinum members. Will correct the mention. thanks for your note. You’re right, as the story says, Rackspace would be a lot more expensive. Look forward to seeing what if anything happens.

  3. Why can’t IBM just build its’ own?

    HP built their own public cloud in just one year and on a feature basis it seems to have parity with RackSpace.

    HP did a really great job catching up so quickly. Pretty amazing when you think about it.

    You can take a look at it here: http://www.hpcloud.com

    I don’t buy it when the anonymous insider says that IBM can’t create their own stuff. How about Watson (AI computer that beat the best people in the world at Jeopardy)? That seems like a pretty incredible invention to me.

  4. VMware’s new cloud needs DC, The new Pivotal Initiative’s cloud needs DC, so why not EMC just buy it and lease some resource to VMware & PI?
    I think VMware’s IaaS announcement doesn’t mean it automatically has the DC resource.

  5. Softlayer is technically not a cloud provider in the least. Their model is not pure cloud but self-managed virtualized infrastructure. There is a reason that they have been independent for nearly 10 years…………….

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