|By Carlo Velten||
|March 24, 2014 11:00 AM EDT||
What typically happens to smaller firms when they are being eaten up by mega-companies like IBM seems pretty obvious - they go to the dogs. Key executives will leave the team, product roadmaps will lose their binding character and strategy will get fuzzy due to the sheer magnitude of the organization and its inherent complexity. But not so with SoftLayer / IBM.
It has become obvious over the past 6 months that IBM's senior management had more in mind than a pure opportunistic acquisition when they bought hosting firm SoftLayer in the summer of 2013 for 2 billion USD. Eric Clementi who was among the early cloud advocates within IBM has made a strategic bet that will enable IBM to regain its position as one of the key cloud leaders in the market over the next 2-3 years.
SoftLayer - IBM´s New Strategic Asset
IBM has officially dedicated over 1.2 billion USD in additional investments to its new cloud data center infrastructure. That makes roughly 80-100 million USD for each of the 15 newly planned data center locations (15 new DCs adding to 13 SoftLayer and 15 IBM data centers) that will cover all geographic regions. Although IBM has tremendous in-house expertise when it comes to building and operating data center facilities, the new cloud data centers will follow the blueprint of SoftLayer. Why's that?
As a typical hosting provider SoftLayer not only commands a highly scalable data center architecture with over 80,000 running servers, it is foremost a highly cost-efficient data center operations and broad set of services that makes it attractive for IBM to switch platforms from its own IBM SmartCloud to the SoftLayer platform. What SoftLayer also brings to the table is a substantial revenue share. Crisp Research estimates the annual revenue for 2013 to be around 520 million USD. Given the new investments and the IBM brand as a backing for enterprise deals - 2014 revenue can easily be around 600 million up to 1 billion USD.
Within a positive market scenario the new IBM/SoftLayer business unit is likely to surpass 4 billion USD in revenue within the next 5 years and thereby contributing up to 10% of IBM GTS revenue by the end of 2018.
SoftLayer to Become IBM's Prime Cloud Delivery Platform
But this is only possible if IBM will stick to its current roadmap and make SoftLayer the prime cloud delivery platform for its new SaaS and PaaS offerings. As of today IBM plans to make most of its software portfolio accessible as cloud services - within shared, hybrid and private cloud environments. For example, the CloudFoundry-based IBM Bluemix-offerings (PaaS) is already being hosted on the SoftLayer platform. The same will happen to new collaboration services (e.g., Connect), infrastructure management solutions and even "Watson"-based analytics services.
There is even more evidence that IBM is getting down to business with SoftLayer. Relatively unnoticed IBM has migrated hundreds of customers from its SmartCloud to the SoftLayer platform over the past 5 months. It could be said that this was one of the largest cloud migrations (vendor-to-vendor) - by the number of clients - but not in terms of capacity. Most of the workloads were "under the radar" applications.
The IBM SmartCloud has been never been more than a stepchild in IBM's overall strategy. The platform was not capable of handling thousands of agile and scalable web workloads in a competitive operations model. Thereby the IBM senior management team has come to the right decision - let SoftLayer grow - shut SmartCloud down.
Bare Metal Cloud Hosting - The Secret Sauce in the IaaS Market?
Over the past 5 years the cloud market has come a long way in terms of technical maturity and overall adoption. What vendors and CIOs both learned alike is that there is a clear demand for different types of cloud infrastructure services. One-size-fits all virtual machines are not the right solution for all customers. Workloads have highly differentiated characteristics. Especially for advanced workloads "dedicated performance" instead of mellow SLAs can help customers sleep better. Business cases vary in terms of flexibility and cost. As more and more workloads are migrated toward the cloud, "cost prediction" becomes key to numerous CIOs and CTOs. To cover baseline infrastructure capacity, reserved resources (e.g., bare metal or dedicated VMs) help to save budget. These savings can be allocated to innovative projects or to cover "peak" capacity.
The market for infrastructure-as-a-service (IaaS) is still under development and covers a large spectrum of providers and delivery models. It ranges from the large public cloud platform providers AWS, Google and Microsoft Azure, which offer mainly standardized services, to the classical managed service providers with their private cloud offerings. That gap is being bridged by a small number of hosting firms that have transformed their portfolio in the direction of cloud. SoftLayer is among the group of Host Europe Group, OVH, Rackspace, et al, that combines agility, dedicated performance and cost predictability in the right balance with solid support operations. Looking at the growth numbers delivered by this peer group over the last few years we can reason that the "cloud hosting" model has a huge fan base in the market. This is mainly true for SMB customers, eCommerce firms and part of the startup world.
Remaining Questions and Outlook
SoftLayer has a lot to offer for IBM and IBM seems to appreciate the new capabilities and innovations. But some strategic questions are not answered yet. For example: How does the SoftLayer hosting business fits with the IBM high-margin model in the long run? Even when IBM is able to drag enterprise customers (who are willing to pay more for dedicated compute power then for virtual compute power) onto its new platform the IaaS business will not have the same margins like the mainframe business.
One next question relates to IBM´s plan to migrate its entire software portfolio to the cloud ("SaaS First"). The ambitious growth plan for SoftLayer will only pay off if the migration and go-to-market for the different software solutions is successful and well communicated. Currently it is not quite clear which of the hundreds of software solutions are able to run in the cloud and which of them will be migrated first.
But the most important question is: Will IBM stick to its plan? From the perspective of Crisp Research there is no way out. After the current announcements customers are betting on IBM SoftLayer. SmartCloud is not a trusted platform any longer and will go to the dead pool. IBM´s current activities look very promising. But competition is fierce. Rich Miller estimated a whopping 7.3 billion USD that were spend by Google in 2013 to expand its data center and network capacity (up from 3.2 billion USD in 2012).
With SoftLayer as its new cloud quarterback IBM is back in the game. The next 12-18 month will show, if AWS, Microsoft and Google will get serious competition in the cloud capacity game where "economies of scale" dictate the rules.
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Jul. 28, 2016 10:30 AM EDT Reads: 749
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it ...
Jul. 28, 2016 10:00 AM EDT Reads: 255
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
Jul. 28, 2016 09:30 AM EDT Reads: 1,392
It’s 2016: buildings are smart, connected and the IoT is fundamentally altering how control and operating systems work and speak to each other. Platforms across the enterprise are networked via inexpensive sensors to collect massive amounts of data for analytics, information management, and insights that can be used to continuously improve operations. In his session at @ThingsExpo, Brian Chemel, Co-Founder and CTO of Digital Lumens, will explore: The benefits sensor-networked systems bring to ...
Jul. 28, 2016 09:00 AM EDT Reads: 1,603
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, discussed how leveraging the Industrial Internet a...
Jul. 28, 2016 07:30 AM EDT Reads: 519
There will be new vendors providing applications, middleware, and connected devices to support the thriving IoT ecosystem. This essentially means that electronic device manufacturers will also be in the software business. Many will be new to building embedded software or robust software. This creates an increased importance on software quality, particularly within the Industrial Internet of Things where business-critical applications are becoming dependent on products controlled by software. Qua...
Jul. 28, 2016 06:45 AM EDT Reads: 1,559
In addition to all the benefits, IoT is also bringing new kind of customer experience challenges - cars that unlock themselves, thermostats turning houses into saunas and baby video monitors broadcasting over the internet. This list can only increase because while IoT services should be intuitive and simple to use, the delivery ecosystem is a myriad of potential problems as IoT explodes complexity. So finding a performance issue is like finding the proverbial needle in the haystack.
Jul. 28, 2016 05:45 AM EDT Reads: 2,326
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Jul. 28, 2016 03:15 AM EDT Reads: 2,650
Large scale deployments present unique planning challenges, system commissioning hurdles between IT and OT and demand careful system hand-off orchestration. In his session at @ThingsExpo, Jeff Smith, Senior Director and a founding member of Incenergy, will discuss some of the key tactics to ensure delivery success based on his experience of the last two years deploying Industrial IoT systems across four continents.
Jul. 28, 2016 03:00 AM EDT Reads: 1,643
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...
Jul. 28, 2016 02:30 AM EDT Reads: 1,560
SYS-CON Events announced today that MangoApps will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device.
Jul. 28, 2016 02:15 AM EDT Reads: 1,414
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effi...
Jul. 28, 2016 02:00 AM EDT Reads: 2,069
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, explained how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
Jul. 28, 2016 01:45 AM EDT Reads: 1,122
In today's uber-connected, consumer-centric, cloud-enabled, insights-driven, multi-device, global world, the focus of solutions has shifted from the product that is sold to the person who is buying the product or service. Enterprises have rebranded their business around the consumers of their products. The buyer is the person and the focus is not on the offering. The person is connected through multiple devices, wearables, at home, on the road, and in multiple locations, sometimes simultaneously...
Jul. 28, 2016 01:15 AM EDT Reads: 881
“delaPlex Software provides software outsourcing services. We have a hybrid model where we have onshore developers and project managers that we can place anywhere in the U.S. or in Europe,” explained Manish Sachdeva, CEO at delaPlex Software, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jul. 28, 2016 01:00 AM EDT Reads: 1,639
"We've discovered that after shows 80% if leads that people get, 80% of the conversations end up on the show floor, meaning people forget about it, people forget who they talk to, people forget that there are actual business opportunities to be had here so we try to help out and keep the conversations going," explained Jeff Mesnik, Founder and President of ContentMX, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jul. 27, 2016 10:30 PM EDT Reads: 1,421
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Jul. 27, 2016 10:00 PM EDT Reads: 2,685
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discussed how businesses can gain an edge over competitors by empowering consumers to take control through IoT. He cited examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He also highlighted how IoT can revitalize and restore outdated business models, making them profitable ...
Jul. 27, 2016 09:45 PM EDT Reads: 2,019
"delaPlex is a software development company. We do team-based outsourcing development," explained Mark Rivers, COO and Co-founder of delaPlex Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jul. 27, 2016 08:00 PM EDT Reads: 2,047
We all know the latest numbers: Gartner, Inc. forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30 percent from last year, and will reach 20.8 billion by 2020. We're rapidly approaching a data production of 40 zettabytes a day – more than we can every physically store, and exabytes and yottabytes are just around the corner. For many that’s a good sign, as data has been proven to equal money – IF it’s ingested, integrated, and analyzed fast enough. Without real-ti...
Jul. 27, 2016 07:30 PM EDT Reads: 1,128