Blog Post

It’s official: IBM to buy SoftLayer

In one of the industry’s worst-kept secrets, IBM(s ibm) is buying SoftLayer, a respected cloud services provider.

This news, evidence that IBM CEO Ginny Rometty is continuing IBM’s M&A legacy, has been some time in coming. In March, Reuters reported that both IBM and EMC were interested in SoftLayer. GigaOM subsequently reported that while EMC was not going for SoftLayer, IBM most probably was. When the stories surfaced, folks estimated that this would be $2 billion deal but, of course, terms were not disclosed.

Dallas-based SoftLayer will become a foundation for a new IBM Cloud Service division, along with IBM’s SmartCloud franchise. The goal is to combine the two sets of IP and services into a “global platform,” IBM said in a statement.

The division will report to Erich Clementi, SVP of IBM Global Technology Services.

SoftLayer brings some key — and very satisfied — customers into IBM.  They include Kixeye, the big gaming company, Cloudant and others. Many of these customers cite the company’s support and ability to run both dedicated hardware resources and shared virtualized infrastructure.

IBM has been an ardent supporter of the OpenStack open-source cloud project but it also fields an array of older — and by one former executive’s account — extremely messy legacy code underneath all that SmartCloud labeling. SoftLayer — which also backs OpenStack — could help bring order to all of that.

Stay tuned for updates.

6 Responses to “It’s official: IBM to buy SoftLayer”

  1. simon36

    Congratulations to Lance Crosby and the entire Softlayer team. They’re smart, automation-focused, and with well-regarded support. This is a big win for hosting and cloud companies generally – a recognition of the value that’s built when you serve many thousands of customers with varied requirements, and have to do it lean and with great engineering.

  2. Geoff Arnold

    Missed opportunity here Barb. You write: “SoftLayer — which also backs OpenStack — could help bring order to all of that.” But SoftLayer’s current cloud offering is based on the (ex-Citrix) Apache CloudStack, NOT on OpenStack.

    My reading of the IBM press release is that SoftLayer will move to support multiple flavors of cloud, which won’t really do much to “bring order” to anything.

    • Kelly Hair

      Other outlets that do not have a vested interest in OpenStack are reporting that IBM will maintain the CloudStack offerings. Obviously they will add in the OpenStack offerings into the mix. SoftLayer looks like it will be a micro free market where the two Open Source offerings will compete head to head.

      There is no doubt that OpenStack has excellent mindshare. The reality is CloudStack has more production users period. Over time, OpenStack may catch up but it’s far more hyped (by vendors & vested interests), far more complicated & far less mature. Even Dell pointed to the immaturity in their recent announcement.

      CloudStack’s community is growing & more vendors are jumping on board. Admittedly, the communities are very different. OpenStack is vendor focused; CloudStack is user focused.

      It would be nice to see a true side by side comparison on GigaOM at some point. It seems like GigaOM is nothing more than an OpenStack PR agency.

  3. Server Density has been with Softlayer for over a year now and the key thing for us is the ability to have such a flexible hybrid cloud/dedicated environment, with cloud deploys in minutes and hardware deploys within 4 hours. This means we can mix and match performance and cost/instant deployment, and is the big area where Amazon fails. Softlayer pricing is also very competitive for their high end dedicated servers.

    Perhaps the interesting aspect is that it’s IBM who have acquired SL, because they’re considered a very Enterprise led company. No doubt SL have “enterprise” customers but they also cater will to smaller businesses. Is IBM moving into this market too?

    What I think is more likely is IBM want to be “the” choice for enterprise cloud adoption and they’re buying in the talent and infrastructure of a well established company to do that. They recently got much more invested in OpenStack to help towards that (side note: SL use Citrix).

    So I think there are 2 questions out of this:

    1. What will the new cloud services division do next? Will they start building/acquiring new services to increase lockin like AWS does with it’s compute/storage + database, dns, mail, queues, etc?

    2. Will SL’s target change to be much more enterprise focused and how will that affect new and existing customers. The e-mail to customers says there will be no changes in the foreseeable future but that’s what they always say!