IBM has agreed to acquire SoftLayer for an undisclosed amount

IBM Acquires Cloud Host SoftLayer

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IBM has acquired SoftLayer for an undisclosed amount, according to an announcement on Tuesday morning.

The news puts months of rumors to rest that speculated technology giants IBM and EMC were sniffing around SoftLayer, reportedly interested in acquiring the hosting provider for around $2 billion, a price tag that makes this deal one of the largest acquisitions to happen in the hosting space since Go Daddy.

Founded in 2005 and headquartered in Dallas, Texas, SoftLayer has grown internationally in recent years in Europe and Asia, with a total global infrastructure of 100,000 servers in 13 data centers. With more than 21,000 customers worldwide, its focus on innovation and technology has helped it compete with market giants AWS and Rackspace. IBM expects to reach $7 billion annually in cloud revenue by the end of 2015.

IBM says SoftLayer will complement its existing SmartCloud portfolio, and IBM is announcing the formation of a new Cloud Services division once the acquisition closes in Q3 2013.

The new division will combine SoftLayer with IBM SmartCloud into a global cloud platform, according to the announcement. IBM says the new division will provide a range of choices to both IBM and SoftLayer clients, ISVs, channel partners and technology partners. The division will report to Erich Clementi, Senior Vice President, IBM Global Technology Services.

“IBM chose to buy rather than build an entry into the SMB/mid-tier infrastructure services market – relatively uncharged territory for an enterprise-focused organization like IBM,” Philbert Shih, managing director, Structure Research, says in an email to the WHIR. “SoftLayer was the right fit because of the maturity of its platform and its ability to help IBM scale efficiently and quickly without investing heavily in human resources or new technologies. This will allow IBM to cut down time to market and ensure that it gets the job done right.”

“The deal is perhaps one of the stronger statements that the future of IT services is not necessarily about pureplay cloud. IBM clearly valued SoftLayer’s hybrid approach to infrastructure service delivery and its ability to procure, provision and manage multiple infrastructure flavour from a single integrated platform in a highly automated self-serve fashion,” Shih says. “The deal is also a recognition by IBM that the IT market is changing. Workloads are going to be provisioned more quickly and used by smaller and more agile teams and smaller organizations in general, while outsourcing will continue to increase. Toolsets and automated processes are more common than ever before. The business is also going global. SoftLayer helps IBM address all these developments in the market.”

IBM also plans to expand SoftLayer cloud offerings to include OpenStack capabilities, as it is with its entire SmartCloud portfolio and historic commitment to open standards such as Linux.

In 2010, after GI Partners acquired a majority stake in SoftLayer, the latter revealed to the WHIR that it was in discussions for a merger with GI’s property The Planet. The merger was completed in November 2010 to make SoftLayer one of the largest privately-held hosting companies in the world.

“SoftLayer has a strong track record with born-on-the-cloud companies, and our move today with IBM will rapidly expand that footprint globally as well as allow us to go deep into the large enterprise market,” Lance Crosby, CEO of SoftLayer said in a statement. “The compelling opportunity is connecting IBM’s geographic reach, industry expertise and IBM’s SmartCloud breadth with our innovative technology. Together SoftLayer and IBM expand their reach to new clients – both born-on-the-cloud and born-in-the-enterprise.”

What do you think of IBM’s acquisition of SoftLayer? Do you think it will help IBM compete against cloud giants AWS or Rackspace? Let us know in a comment.

 

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One Comment

  1. It will be interesting to see if either, a tech giant can actually break into hosting whilst maintaing service levels or will it change how Softlayer works and they just get eaten up within IBM. Looking forward to following this :)

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