|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.
When building large, cloud-based applications that operate at a high scale, it’s important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. “Fly two mistakes high” is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Lee...
Feb. 14, 2016 09:15 AM EST
The Quantified Economy represents the total global addressable market (TAM) for IoT that, according to a recent IDC report, will grow to an unprecedented $1.3 trillion by 2019. With this the third wave of the Internet-global proliferation of connected devices, appliances and sensors is poised to take off in 2016. In his session at @ThingsExpo, David McLauchlan, CEO and co-founder of Buddy Platform, will discuss how the ability to access and analyze the massive volume of streaming data from mil...
Feb. 14, 2016 09:00 AM EST Reads: 103
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
Feb. 14, 2016 09:00 AM EST Reads: 102
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, will discuss using predictive analytics to ...
Feb. 14, 2016 08:45 AM EST Reads: 428
WebSocket is effectively a persistent and fat pipe that is compatible with a standard web infrastructure; a "TCP for the Web." If you think of WebSocket in this light, there are other more hugely interesting applications of WebSocket than just simply sending data to a browser. In his session at 18th Cloud Expo, Frank Greco, Director of Technology for Kaazing Corporation, will compare other modern web connectivity methods such as HTTP/2, HTTP Streaming, Server-Sent Events and new W3C event APIs ...
Feb. 14, 2016 08:30 AM EST
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
Feb. 14, 2016 08:30 AM EST Reads: 117
At first adopted by enterprises to consolidate physical servers, virtualization is now widely used in cloud computing to offer elasticity and scalability. On the other hand, Docker has developed a new way to handle Linux containers, inspired by version control software such as Git, which allows you to keep all development versions. In his session at 17th Cloud Expo, Dominique Rodrigues, the co-founder and CTO of Nanocloud Software, discussed how in order to also handle QEMU / KVM virtual machin...
Feb. 14, 2016 08:15 AM EST Reads: 157
SYS-CON Events announced today that FalconStor Software® Inc., a 15-year innovator of software-defined storage solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. FalconStor Software®, Inc. (NASDAQ: FALC) is a leading software-defined storage company offering a converged, hardware-agnostic, software-defined storage and data services platform. Its flagship solution FreeStor®, utilizes a horizonta...
Feb. 14, 2016 07:30 AM EST
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
Feb. 14, 2016 04:30 AM EST Reads: 406
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Feb. 14, 2016 04:00 AM EST Reads: 263
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
Feb. 14, 2016 04:00 AM EST Reads: 491
Eighty percent of a data scientist’s time is spent gathering and cleaning up data, and 80% of all data is unstructured and almost never analyzed. Cognitive computing, in combination with Big Data, is changing the equation by creating data reservoirs and using natural language processing to enable analysis of unstructured data sources. This is impacting every aspect of the analytics profession from how data is mined (and by whom) to how it is delivered. This is not some futuristic vision: it's ha...
Feb. 14, 2016 03:45 AM EST Reads: 481
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
Feb. 14, 2016 01:15 AM EST Reads: 298
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Feb. 13, 2016 11:15 PM EST Reads: 318
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Feb. 13, 2016 09:00 PM EST Reads: 262
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
Feb. 13, 2016 08:45 PM EST Reads: 403
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
Feb. 13, 2016 07:00 PM EST Reads: 425
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 13, 2016 04:45 PM EST Reads: 213
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, will discuss the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filte...
Feb. 13, 2016 02:00 PM EST Reads: 265
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies adopt disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevO...
Feb. 13, 2016 01:30 PM EST Reads: 296