When Will IBM Become a Cloud Leader?

By Darryl K. Taft  |  Posted 2015-04-05 Print this article Print
Cloud apps

NEWS ANALYSIS: While IBM reinvented its cloud unit with a reorg and new services, it seems the company, like Rodney Dangerfield, still can't "get no respect" in the cloud.

IBM launched a new cloud unit earlier this year to focus its activities and bring the company's overall cloud strategy under one leader as Big Blue takes aim at more established competitors, such as Amazon Web Services (AWS) and Microsoft.

IBM's claim to fame is its expertise in the enterprise, and the company is hoping to ride its enterprise prowess to a leadership position in the cloud space. However, the company's rivals and some observers say IBM has a way to go before it can claim to be a "leader" of any sort in the cloud.

In a recent Forrester report, analyst John Rymer asked: "Is IBM a cloud leader yet?" His conclusion is that IBM is a "strong contender" but not yet a leader. Rymer added that he believes IBM needs more time to join the ranks of cloud leaders, such as AWS, Microsoft and Salesforce.com.

Meanwhile, IBMers contend that the company deserves to be considered a leader, and they are tired of being portrayed as the Rodney Dangerfield of the cloud.

For instance, in several public appearances over the last year, Scott Guthrie, executive vice president of the Microsoft Cloud and Enterprise group, made it plain that Microsoft is most worried about AWS and Google as cloud computing competitors. No mention of IBM.

"Now, ultimately, we think there's going to be three large hyper-scale providers out there in the world that are going to be able to achieve this type of scale footprint, basically us—Microsoft—Amazon and Google," Guthrie said in a speech at Microsoft's Worldwide Partner Conference 2014 last July in Washington, D.C. "Our plan is to differentiate from the other two by the level of enterprise-grade support we provide you, as well as the unique hybrid capabilities that enable you to deliver integrated customer solutions. And with Azure, we're committed to delivering the best enterprise-grade cloud service out there."

For his part, Rymer credits IBM with being innovative and aggressive in the cloud—rolling out new services and beefing up its SoftLayer data centers. Yet, he notes that there may be risk involved with that innovation, in that some of the newer services—such as Bluemix—may be unstable, particularly at scale. Rymer also contends that enterprises may need to watch for potential integration complexity and other possible risks.

"IBM has a strong strategy based on a realistic appreciation of how cloud and associated technologies can advance large enterprise success," Rymer said in his report. "IBM is also committing substantial resources to customers who need help with their digital/cloud migrations. But check the product details carefully to avoid assumptions you may regret about platform stability and scalability, service maturity, and sustainability and portability of applications written to IBM's APIs. "

Rymer acknowledged IBM's "strong" cloud strategy and noted that the IBM InterConnect 2015 conference in February was a coming-out party for the company's new cloud unit and new technologies and services like Bluemix Local, but he is still waiting for IBM to deliver a leading cloud platform for the enterprise.

However, Charles King, president and principal analyst at Pund-IT, said IBM's rise to the cloud ought to be viewed separately and not in a one-dimensional comparison to companies that have taken significantly different paths to the cloud. For instance, AWS cashed in on its existing IT infrastructure for cloud services, Microsoft built Azure from the ground up as a dedicated cloud/hosting infrastructure, and Salesforce's business has always been based on delivering hosted services, he said.

King argues that, in contrast, prior to acquiring SoftLayer in 2013, IBM had a substantial number of data centers for hosting services to its enterprise customers. That meant the company was able to capture particular synergies with SoftLayer, which also had a substantial number of large business clients. Ever since the deal closed, IBM Cloud has focused largely, though not exclusively, on enterprise-class services and features, he added.

"IBM lags Amazon and Microsoft in customer numbers. A couple of reports I've seen placed estimates that it owns about 9 percent of the market compared to Amazon's 25 percent and Microsoft's 15 percent," King told eWEEK. "But the way the company is evolving IBM Cloud also differs substantially from its chief rivals.

"Amazon is trying to go up-market by claiming its services are now enterprise-ready," he continued. "In other words, they are trying to invade the highly desirable space where IBM already has the high ground. Microsoft offers numerous Azure-based services but primarily uses it as a platform to support Web-based versions of its SharePoint, Exchange and Office platforms and solutions."


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