January 17, 2014

IBM Is Making a $1.2 Billion Play for Cloud Computing

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IBM won’t be sitting still after their 2013 purchase of cloud computing provider SoftLayer. At the time of the acquisition, SoftLayer had the largest privately held cloud infrastructure in the world. On top of that, IBM has announced they’ll be putting $1.2 billion towards the construction of 15 new data centers across the globe, according to VentureBeat. Once complete, IBM will have a total of 40 centers.

Two of the planned data centers, in Dallas and Washington, D.C., will be reserved exclusively for government work. Another will be constructed in China. Unlike a lot of IaaS (Infrastructure as a Service) providers, SoftLayer doesn’t put a focus on building large regional centers that cater towards all data types. Instead, they construct their centers to meet specific compliance and regulatory needs, for industries such as government, health, or finance.

Since IBM’s acquisition of SoftLayer, the company has added over 2,000 customers, and now provides infrastructure for over 22,000 clients worldwide. In addition to their data center expansion, IBM will be adding another 10 sites where customer’s can connect directly into SoftLayer’s dedicated network. These sites (there are currently 20), allow companies to take access faster data connections between their own data warehouses and SoftLayer’s infrastructure.

IBM’s investment comes less than a month after Amazon Web Services announced their own infrastructure expansion, focused primarily on China. AWS is one of IBM’s main competitors in the cloud computing market. Last year, they won a lucrative $600M contract to construct a private CIA cloud system, over IBM’s rival bid. According to an analyst at Macquarie Capital, Amazon could account for up to $31 billion of a $71 billion overall cloud market as soon as 2015.

This expansion is likely designed to both boost IBM’s profile in the market, and help prepare for the continued expansion of cloud computing needs among enterprises. As the competition increases, you can except other vendors such as Microsoft and Rackspace to launch their own expansion efforts.