“I view this move as accretive for IBM," said Lydia Leong, a Gartner analyst and vice president of research. "SoftLayer will provide some new capabilities to IBM, but it's a bit unusual in some respect because the focus is so SMB-centric. In the long term they will move up market. So there is still a gap in the portfolio. However, this provides a developer-oriented option. SoftLayer is more closely aligned with Amazon in terms of the way they see the world."
To meet 2015 revenue and profit goals, IBM will need to "jump-start" top-line growth outside its core markets, said Matthew Casey, a software analyst at Technology Business Research.
"The acquisition of SoftLayer fits well into this approach of expanding into new markets, bringing increased exposure in two strategic growth initiatives, cloud technologies and the SMB customer segment," Casey said.
SoftLayer has shown accelerated growth in the enterprise market, but for IBM, the value is SoftLayer's foothold in the SMB space, he said.
"IBM has built its own significant cloud business, but one largely composed of large enterprise customers," Casey added. "With the addition of SoftLayer's 21,000 customers—the majority of which lie in the SMB space—IBM gains access to a global network of customers in the segment in which to sell cloud solutions."
Meanwhile, recognizing the importance of cloud to global clients, IBM today is announcing the formation of a new Cloud Services division. Following the close of the acquisition of SoftLayer, which is expected in the third quarter of 2013, this new division will combine SoftLayer with IBM SmartCloud into a global platform. The new division will provide a broad range of choices to both IBM and SoftLayer clients, ISVs, channel partners and technology partners. SoftLayer’s services will complement the existing portfolio with its focus, simplicity and speed. The division will report to Erich Clementi, senior vice president of IBM Global Technology Services.
"Our clients are telling us they want to realize the transformative benefits of cloud today—not just for individual applications, but across their entire enterprise," Clementi said. "SoftLayer is a perfect fit for IBM. It will help us smooth the transition of our global clients to the cloud faster, while enabling IBM to more efficiently offer them its broad portfolio of open IT infrastructure and software services.”
IBM intends to expand SoftLayer cloud offerings to include OpenStack capabilities, consistent with its entire SmartCloud portfolio and historic commitment to open standards such as Linux. Given that most companies will mix public and private cloud services, clouds need to interoperate. In that way, firms can better leverage the cloud to run their social, mobile and big data applications.
IBM will also support and enrich the SoftLayer cloud-centric partners and ecosystem as well as its performance capabilities for big data and analytics. IBM will provide go-to-market and customizable resources for its expanding cloud ecosystem.
SoftLayer enables clients to buy enterprise-class cloud services on dedicated or shared servers, offering clients a choice of where to deploy their applications. By building out a cloud with IBM and SoftLayer, a client can choose the work that belongs on a dedicated or a shared computing resource, thereby tailoring the privacy, data security and overall computing performance to the client's needs.
In the last two quarters, more than 60 new gaming companies have moved to the SoftLayer global platform, frequently migrating from commodity cloud platforms because of problems with cost, latency, availability and raw performance. SoftLayer's architecture provides technical capabilities such as a software-definable environment critical to a cloud infrastructure, programmable interfaces, and hundreds of hardware and network configurations. This architecture is designed to deliver a higher level of flexibility—mixing virtual and dedicated servers to fit a variety of workloads— and provide automation of interfaces and hybrid deployment options.
In addition, SoftLayer's automated networking infrastructure supports public, private and data center-to-data center architectures, and is designed to provide maximum flexibility and control for clients. The SoftLayer IT infrastructure connectivity enables connections with leading global network providers and Internet access networks.
IBM officials said that the company's SaaS products Smarter City, Smarter Commerce and other applications will be made available via SoftLayer over time, providing line-of-business clients improved time to value and new innovation across an increasingly integrated portfolio of products that accelerate business process innovation, provide analytics at the point of impact, and connect collaborative business networks within and across organizations.