IBM Acquiring SoftLayer, Forming New Cloud Services Division

IBM announced an agreement to acquire SoftLayer, a provider of cloud computing infrastructure, and to form a new cloud services division.

ORLANDO, Fla.—IBM announced a definitive agreement to acquire SoftLayer Technologies, a privately held cloud computing infrastructure provider, in a move aimed at making Big Blue more competitive in the cloud space.

The acquisition will strengthen IBM's position in cloud computing and will help speed business adoption of public and private cloud services. Financial terms were not disclosed, although various reports have said the value of the deal is about $2 billion.

"As businesses add public cloud capabilities to their on-premise IT systems, they need enterprise-grade reliability, security and management," said Erich Clementi, senior vice president of IBM Global Technology Services, in a statement. "To address this opportunity, IBM has built a portfolio of high-value private, public and hybrid cloud offerings, as well as software-as-a-service business products. With SoftLayer, IBM will accelerate the build-out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovation."

IBM is acquiring SoftLayer to make it easier and faster for clients around the world to incorporate cloud computing by marrying the speed and simplicity of SoftLayer's public cloud services with the enterprise grade reliability, security and openness of the IBM SmartCloud portfolio. One of the top reasons IBM chose SoftLayer is that it will enable IBM to marry the security, privacy and reliability of private clouds with the economy and speed of a public cloud, Robert LeBlanc, senior vice president of middleware software in IBM Software Group, told eWEEK in a June 4 interview at the IBM Innovate 2013 conference in Orlando, Fla.

"This move brings a set of capabilities to better enable public cloud support," he said. "They have unique capabilities to enable more enterprise apps and more enterprise workloads. We have a broad cloud portfolio, and this move helps to accelerate our position in that space."

Indeed, SoftLayer accelerates IBM's ability to integrate public and private clouds for its clients, with flexibility that provides deployment options that enable a faster, broader transformation for small, medium-size and large businesses with a range of performance and security models.

Based in Dallas, SoftLayer serves approximately 21,000 customers with a global cloud infrastructure platform spanning 13 data centers in the United States, Asia and Europe. Among its many cloud infrastructure services, SoftLayer enables clients to buy enterprise-class cloud services on dedicated or shared servers, offering clients a choice of where to deploy their applications. These clients will benefit greatly as new enterprise grade functionality from IBM emerges for SoftLayer customers, which will then have a unique opportunity to incorporate it as their business grows.

"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."

IBM expects to reach $7 billion annually in cloud revenue by the end of 2015. IBM offers more than 100 SaaS products to help marketing, procurement, e-commerce, customer service, human resources, city management and other professionals make better decisions and better serve their customers. IBM also offers Watson platforms such as Client Engagement Advisor in the cloud, products such as IBM PureSystems and SmartCloud Enterprise+, as well as mission-critical cloud services for SAP.

IBM serves enterprise customers based on its vertical industry expertise delivered from 10 cloud computing centers on five continents. The acquisition of SoftLayer will complement IBM's existing SmartCloud portfolio, providing enterprises with easy access to a broader range of choices that transform their workloads while continuing to innovate with SoftLayer to meet the needs of born-on-the-cloud firms, Big Blue officials said.