Slashdot Mirror
IBM Buys Dallas Based Softlayer For $2 Billion
An anonymous reader writes "IBM this morning announced a deal to acquire the Dallas based hosting company Softlayer, the largest privately held cloud computing provider in the world. Formerly known as The Planet, they have a dark past and hopefully a bright future. Interesting that ISS and Softlayer will now be under the same roof. 'IBM will integrate SoftLayer’s public-cloud services with its own IBM SmartCloud portfolio. In theory, that will allow IBM to more speedily deliver a combination of private, public and hybridized cloud platforms to business clients. CloudLayer features include the ability to deploy virtual cloud servers (with processors 2.0GHz or faster), a content-delivery network with scalability and security, an object-storage platform based on OpenStack Object Storage, and private-cloud solutions.'"
OK, there's little doubt that there's a serious cloud bubble going on, and in that context it may seem that IBM just threw away lots of money. But, they have tons of money to begin with. On top of that, SoftLayer is a provider of datacenter space at its core, and I'm sure IBM has customers who need hosted systems.
When you peel off the marketing junk, "cloud" is actually a good thing for a datacenter provider. They get to buy less hardware to support more customers and get it running for them faster, if they know what they're doing. For traditional businesses to adopt it, a middle ground between public cloud and on-site physical servers like this might be the stepping stone they need to move some of the stuff *that makes sense* to a hosting provider.
IBM is a very staid company by nature, so you know they've gone over this deal backwards and forwards and see potential in it. The only downside I see is the one that comes with most US/European acquisitions by IBM. They have a tendency to come in, acquire all the intellectual property, then find every single possible position that can be offshored, resulting in a lot of job loss.
Softlayer was founded by Lance Crosby, the COO for The Planet.. They forced him out of the company, so he left and started Softlayer. Shortly after The Planet merged with EV1, and then about 5 years later Softlayer and The Planet merged and kept the Softlayer name.
I had servers at The Planet the entire time.. it's a good company.. and they have the revenue and profits to actually be worth $2B.. unlike some other recent acquisitions.
Considering that IBM is actually getting datacenters+software+customers+sales people+support organization, this is a much better deal than, say, Instagram or many of the other recent "Cloud" deals. This is an actual cloud provider, with actual hardware and sales. Looks like Big Blue is getting serious about switching to being a service provider instead of a hardware provider.
Those who can, do. Those who can't, sue.
I assume the "dark history" refers to the period when Lance Crosby was kicked out of The Planet, which was the impetus for founding Soft Layer. The Planet was in the process of having capital investors from Bain come in and overhaul the business. Bain didn't like that the COO, Lance Crosby, was so young and inexperienced and basically had the owner, Peter Pathos, cut him loose. Lance rounded up the rest of the executives and vice presidents and they all walked out the day The Planet was going to host Network Solutions to try and become their official partner. The exiled management went and founded Soft Layer. There was a very long legal battle about noncompetes and intellectual property between them.
Considering that IBM is actually getting datacenters+software+customers+sales people+support organization, this is a much better deal than, say, Instagram or many of the other recent "Cloud" deals. This is an actual cloud provider, with actual hardware and sales. Looks like Big Blue is getting serious about switching to being a service provider instead of a hardware provider.
You're right that this is probably a better deal than buying Instagram. You're a little late with noticing that Big Blue is serious about services compared to hardware. That's their main interest for the past 10 or maybe 15 years. Since the PC debacle they completely transformed from hardware to services.
The cloud bubble can't get much bigger than this. Can it?
they have assets and real paying customers..
they have 81 thousand servers (per wikipedia, probably a different amount now) so really it's not that bad price.
the pricing is much more sensible than any 1b+ deal I've heard of in several years.
world was created 5 seconds before this post as it is.
I wouldn't say completely - they definitely jettisoned their consumer hardware, but they were still a big player in enterprise hardware, with a big focus on selling servers. It looks now that they plan to completely remove themselves from selling hardware altogether. The main thing I would retain from their acquisition is that this is how you do a complete switch in your core business model: you first expand the area you want to switch to, then quietly jettison the area that used to be your core business. Furthermore, you do it quietly, with internal reorganizations preceding small, easily absorbed acquisitions. HP, you might want to take notes.
Those who can, do. Those who can't, sue.
HP and MS should always have been taking notes - IBM is wiser, older, slicker. It's been on the radar for years that the money won't be in hardware - how could it be if you end up competing with Dell, HP, Samsung et al in the race of a thousand discounts to be the bottom?
What they are doing looks like a very (relatively) well-executed multi-year strategy. Consumer hardware would have always gone first, since the margin isn't there when you don't own the space vertically. There will be still be significant opportunities in upselling services once you've got your enterprise hardware foot in the door, and it avoids spooking your corporate customers, so if you have non-commodity hardware, you may as well sell it.
Buying established companies in infrastructure and the enabling software stack is the expensive but least risky way to position themselves. I'd say they are banking on a permanent change to enterprise software, including coding practices, to establish themselves as the premium provider on the mission critical/high availability/high performance side for a very long time.
TP was -according to Netcraft- the provider hosting by far the most scam or phishing sites for quite some time.
Oh, the beautiful gloss of greality!
I know this is Slashdot, but seriously, 2 clicks from the summary isn't fucking rocket science. http://dealbook.nytimes.com/2013/06/04/i-b-m-buys-cloud-computing-firm-in-deal-said-to-be-worth-2-billion/