Welcome!

SDN Journal Authors: Elizabeth White, Liz McMillan, Yeshim Deniz, Pat Romanski, TJ Randall

Related Topics: @CloudExpo, Java IoT, Linux Containers, Containers Expo Blog, @DXWorldExpo, SDN Journal

@CloudExpo: Article

SoftLayer – IBM's New Quarterback for the Cloud

SoftLayer has a lot to offer for IBM and IBM seems to appreciate the new capabilities and innovations

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.

More Stories By Carlo Velten

Dr. Carlo Velten is founding partner and managing director of ITresearch and advisory firm Crisp Research. As senior analyst Carlo oversees the research and advisory initiatives at Crisp Research. Carlo is a seasoned industry expert with over 15 years of working experience as IT analyst. He helped numerous leading companies to transform their enterprise IT-platforms into agile cloud-based environments. He also advises large tech vendors regarding strategy, business model transformation and marketing excellence.

Before starting Crisp Research he was senior advisor and board member at European IT research firm Experton Group where he co-led the “Cloud Computing & Innovation Practice“. Prior to that he was the senior analyst at German research firm TechConsult. Carlo is a well-known speaker and moderator at industry events and contributing editor at Computerwoche and CIO magazine. He is a judging panel member for the “Best in Cloud Awards” of IDG and long-term research partner of tech association BITKOM.

Carlo holds a M.Sc. and PhD. in venture capital. He was research fellow at San José State University, CA. and partner at transatlantic venture firm GENES Ventures. Carlo serves as board member for the Managerkreis - a well-known think tank of the Friedrich Ebert Foundation based in Berlin.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@CloudExpo Stories
HyperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let's say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it...
Enterprises are moving to the cloud faster than most of us in security expected. CIOs are going from 0 to 100 in cloud adoption and leaving security teams in the dust. Once cloud is part of an enterprise stack, it’s unclear who has responsibility for the protection of applications, services, and data. When cloud breaches occur, whether active compromise or a publicly accessible database, the blame must fall on both service providers and users. In his session at 21st Cloud Expo, Ben Johnson, C...
It is of utmost importance for the future success of WebRTC to ensure that interoperability is operational between web browsers and any WebRTC-compliant client. To be guaranteed as operational and effective, interoperability must be tested extensively by establishing WebRTC data and media connections between different web browsers running on different devices and operating systems. In his session at WebRTC Summit at @ThingsExpo, Dr. Alex Gouaillard, CEO and Founder of CoSMo Software, presented ...
In this presentation, you will learn first hand what works and what doesn't while architecting and deploying OpenStack. Some of the topics will include:- best practices for creating repeatable deployments of OpenStack- multi-site considerations- how to customize OpenStack to integrate with your existing systems and security best practices.
As you move to the cloud, your network should be efficient, secure, and easy to manage. An enterprise adopting a hybrid or public cloud needs systems and tools that provide: Agility: ability to deliver applications and services faster, even in complex hybrid environments Easier manageability: enable reliable connectivity with complete oversight as the data center network evolves Greater efficiency: eliminate wasted effort while reducing errors and optimize asset utilization Security: implemen...
Your homes and cars can be automated and self-serviced. Why can't your storage? From simply asking questions to analyze and troubleshoot your infrastructure, to provisioning storage with snapshots, recovery and replication, your wildest sci-fi dream has come true. In his session at @DevOpsSummit at 20th Cloud Expo, Dan Florea, Director of Product Management at Tintri, provided a ChatOps demo where you can talk to your storage and manage it from anywhere, through Slack and similar services with...
Most people haven’t heard the word, “gamification,” even though they probably, and perhaps unwittingly, participate in it every day. Gamification is “the process of adding games or game-like elements to something (as a task) so as to encourage participation.” Further, gamification is about bringing game mechanics – rules, constructs, processes, and methods – into the real world in an effort to engage people. In his session at @ThingsExpo, Robert Endo, owner and engagement manager of Intrepid D...
Recently, WebRTC has a lot of eyes from market. The use cases of WebRTC are expanding - video chat, online education, online health care etc. Not only for human-to-human communication, but also IoT use cases such as machine to human use cases can be seen recently. One of the typical use-case is remote camera monitoring. With WebRTC, people can have interoperability and flexibility for deploying monitoring service. However, the benefit of WebRTC for IoT is not only its convenience and interopera...
Evan Kirstel is an internationally recognized thought leader and social media influencer in IoT (#1 in 2017), Cloud, Data Security (2016), Health Tech (#9 in 2017), Digital Health (#6 in 2016), B2B Marketing (#5 in 2015), AI, Smart Home, Digital (2017), IIoT (#1 in 2017) and Telecom/Wireless/5G. His connections are a "Who's Who" in these technologies, He is in the top 10 most mentioned/re-tweeted by CMOs and CIOs (2016) and have been recently named 5th most influential B2B marketeer in the US. H...
Michael Maximilien, better known as max or Dr. Max, is a computer scientist with IBM. At IBM Research Triangle Park, he was a principal engineer for the worldwide industry point-of-sale standard: JavaPOS. At IBM Research, some highlights include pioneering research on semantic Web services, mashups, and cloud computing, and platform-as-a-service. He joined the IBM Cloud Labs in 2014 and works closely with Pivotal Inc., to help make the Cloud Found the best PaaS.
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
"With Digital Experience Monitoring what used to be a simple visit to a web page has exploded into app on phones, data from social media feeds, competitive benchmarking - these are all components that are only available because of some type of digital asset," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"This week we're really focusing on scalability, asset preservation and how do you back up to the cloud and in the cloud with object storage, which is really a new way of attacking dealing with your file, your blocked data, where you put it and how you access it," stated Jeff Greenwald, Senior Director of Market Development at HGST, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
"Venafi has a platform that allows you to manage, centralize and automate the complete life cycle of keys and certificates within the organization," explained Gina Osmond, Sr. Field Marketing Manager at Venafi, in this SYS-CON.tv interview at DevOps at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Creating replica copies to tolerate a certain number of failures is easy, but very expensive at cloud-scale. Conventional RAID has lower overhead, but it is limited in the number of failures it can tolerate. And the management is like herding cats (overseeing capacity, rebuilds, migrations, and degraded performance). In his general session at 18th Cloud Expo, Scott Cleland, Senior Director of Product Marketing for the HGST Cloud Infrastructure Business Unit, discussed how a new approach is neces...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
"We're developing a software that is based on the cloud environment and we are providing those services to corporations and the general public," explained Seungmin Kim, CEO/CTO of SM Systems Inc., in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Leading companies, from the Global Fortune 500 to the smallest companies, are adopting hybrid cloud as the path to business advantage. Hybrid cloud depends on cloud services and on-premises infrastructure working in unison. Successful implementations require new levels of data mobility, enabled by an automated and seamless flow across on-premises and cloud resources. In his general session at 21st Cloud Expo, Greg Tevis, an IBM Storage Software Technical Strategist and Customer Solution Architec...
In his session at Cloud Expo, Alan Winters, U.S. Head of Business Development at MobiDev, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to maximize project result...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...