IBM’s Big Plans for Cloud Computing

By QUENTIN HARDY

In June, IBM agreed to pay about $2 billion for SoftLayer Technologies, which has a global network of more than a dozen data centers, including this one in Dallas.SoftLayer TechnologiesIn June, IBM agreed to pay about $2 billion for SoftLayer Technologies, which has a global network of more than a dozen data centers, including this one in Dallas.
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Ambition is an impressive thing, particularly when a desire for world domination is combined with existential survival.

Four heavyweight tech companies are translating that ambition into investments in their cloud computing services: IBM, Microsoft, Amazon and Google are all expected to spend more than $1 billion annually on their global networks in the coming years.

Even more important, however, is that all the companies are developing knowledge through their cloud services of how to run truly huge Internet-based computing systems — systems that may soon be nearly impossible for other companies to match. If any other company is thinking of entering the business, like China’s Tencent, for example, they’ll need to move fast or come up with something revolutionary.

IBM’s response? You ain’t seen nothing yet.

In 2014, the company will make a series of announcements that will shiver all challengers, according to Lance Crosby, chief executive of SoftLayer, a cloud computing company that IBM purchased earlier this year for $2 billion.

More than 100 products, like e-commerce and marketing tools, will be put inside the cloud as a comprehensive series of offerings for business, Mr. Crosby said. So will another 40 infrastructure services, like big data analysis and mobile applications development.

“It will take Amazon 10 years to build all of this,” he said. “People will be creating businesses with this that we can only dream about.”

Maybe. IBM already claims to lead in cloud computing revenue, with $1 billion in revenue in the past quarter alone. That’s impressive, though that revenue includes revenue from software that used to be attributed to a different category at the company. And some of the revenue is being generated by companies IBM recently acquired, including SoftLayer.

On many other fronts, such as the number of machines it operates, the number of major companies running big parts of their business on IBM’s public cloud, and the new technology it appears to have built for cloud computing, IBM is arguably the laggard among the top four providers. As the SoftLayer purchase indicates, it has had to buy big for what the others have mostly grown internally.

What IBM does have, however, is a lot of money and resources it plans to throw at cloud computing. And given its experience in the early-1990s, when it faced a near-death experience after missing a major technology shift, the company may also have a belly for a swift change.

Lance Crosby, chief executive of SoftLayer, a cloud computing company that IBM purchased earlier this year.IBMLance Crosby, chief executive of SoftLayer, a cloud computing company that IBM purchased earlier this year.

The big push will begin in February, Mr. Crosby said, with a formal inauguration of its new cloud offerings by Virginia M. Rometty, IBM’s chief executive.

IBM has also deployed 400 employees to OpenStack, an open source software project with more than 200 corporate members that goes after much of the proprietary cloud systems of Amazon, Microsoft and Google. This seems much like IBM’s involvement a decade ago in Linux, which helped that open source operating system win corporate hearts and minds.

In addition to the consolidation of online software and services, Mr. Crosby said, IBM is “absolutely” looking to sell its big mainframe computing capabilities as a cloud-based service. It also plans to draw on the insights it has gained from building and licensing technology used by Microsoft in the Xbox gaming console, and Google in its own network operations, he said, and will make more acquisitions for the cloud business.

“We make the processors in Google’s server racks,” he said, “We understand where gaming is going. Before I got here, I thought this was a big old tech company, too; I didn’t see all of the assets.”

It’s true that IBM is big. And, it is also a tech company. And undeniably 102 years old, which makes it both a survivor and a creature of successful processes. Mr. Crosby has two bosses between him and Ms. Rometty, and numerous executive vice presidents above him that may agree on the eventual future, but have their own views about the speed with which they’ll move there.

 

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