Editor's note: As part of our special editorial partnership, CRN is publishing this recent article from Channelnomics in the US.
IBM is buying big in cloud computing through the multi-billion-dollar acquisition of SoftLayer Technologies, a provider of hosted infrastructure and cloud-based managed services with extensive delivery capacity.
While the terms of the deal are undisclosed, the Wall Street Journal estimates IBM is paying approximately $2bn.
IBM has been sniffing around hosting and cloud companies for nearly a year. SoftLayer and Rackspace were among the companies on the short list, but no movement in 2012 led many to believe IBM lost interest.
For the last two years, IBM has taken a multipronged approach to cloud computing, developing platforms, management systems and applications specifically for cloud service providers and business consumers. To facilitate cloud adoption, IBM is offering solution provider partners resources for developing and maturing cloud practices.
Additionally, IBM is melding the concepts of managed and cloud services, positioning service providers as the management and facilitation layer of cloud services delivered to end consumers.
IBM is among the tier-1 vendors looking to expand their cloud capacities to deliver more services and transform revenue streams from transactional product to recurring fees. Microsoft recently noted that Azure is now a $1bn business and Google is looking to expand its hosting and application services.
Traditional IT vendors have chosen to develop cloud capacities rather than buy into the space. Whereas traditional telecommunications and capable companies have been buying cloud capacities. Verizon bought Terremark; Time Warner bought NaviSite and CenturyLink bought Savvis.
IT vendors are making big strides in developing cloud services for direct and indirect sales. However, the transition from traditional sales to recurring revenues is happening at a pace more slowly than many vendors would like. IBM buying SoftLayer, which provides managed and cloud services to solution providers and OEM partners, could reflect how vendors are becoming inpatient on cloud transitions. Buying rather than building could be the means to accelerate cloud revenues.
Unclear is how buying SoftLayer will affect the businesses of IBM and its partners. While it provides Big Blue with substantial cloud assets, it also means IBM will compete against the companies that wants to buy its cloud management software and applications.
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