I.B.M., the largest provider of IT services globally, announced yesterday that it will take over the cloud computing company SoftLayer Technologies, for which it will pay, according to a source close to the deal, around $2 billion. The acquisition will enable IBM to compete with Amazon.com, the global leader of cloud computing services. I.B.M is trying to improve its position in the business services delivered over the Internet. This would be the largest acquisition made by I.B.M. since Virginia Rometty became chief executive officer in January of last year.
SoftLayer had a revenue last year of $335 million, according to chief executive officer Lance Crosby who said that his company goal was to become “the de facto and most flexible platform for Internet cloud computing. And we couldn’t get there on our own. I.B.M. has the financial resources and relationships with corporate customers to accelerate the adoption of its cloud technology.”
Through this acquisition I.B.M. wants to strengthen its own SmartCloud division and take advantage of the cloud services market, and, according to analysis company IDC, it will double its value to $105 billion by 2016.
“SoftLayer completes our portfolio,” said Erich Clementi, a senior I.B.M. vice-president, adding that SoftLayer “expands IBM’s public cloud operations, he said, while adding expertise and technology for private clouds and hybrid services, which blend the public and private models.”
SoftLayer specializes in data centers that manage IT activities for companies, an industry segment dominated by Amazon. Cloud computing business has brought in an estimated revenue of $2 billion last year and might reach 5 billion by 2014.
I.B.M. cloud-computing division, started in 2007, specializes in services for individual clients. After buying SoftLayer, I.B.M. be able to expand its services with worldwide cloud computing data centers.
“I.B.M. is very much a trusted brand here. Once they show up, they tend to have a big impact,” concluded Steven Milunovich, an analyst at UBS Securities.
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