IBM’s late cloud play aims for Amazon catch up

IBM made headlines over the weekend when it said it will spend US$1.2 billion to expand its cloud computing business. The plan includes adding 15 new data centres on five continents to the 13 it already has. Eventually there will be 40 data centres.

Last year the company paid around US$2 billion to buy SoftLayer, a cloud computing business.

There’s no question IBM’s aim is playing catch up with Amazon Web Services. Amazon dominates the market. It has almost five times as much capacity as any other cloud provider and earns US$3 billion a year from the cloud.

Amazon’s cloud business is spread around the globe with 40 or so data centres.

IBM has little option but to compete with Amazon.

Cloud computing continues to grow at a steady pace. It’s already disrupted the server and enterprise computing markets where IBM plays.

IBM has struggled to stay relevant with its legacy computing business and, until now, had a fragmented and confusing cloud strategy. Revenues have been falling and its hardware business is in sharp decline.

While there’s still a market for companies to own their own computing infrastructure, the big money is now being made from cloud services. Amazon is a pure cloud play, it doesn’t sell hardware.

IBM has pushed private clouds – an idea that combines in-house infrastructure with cloud-like capabilities. Private cloud promises some of the benefits of cloud computing but it requires companies to buy hardware, install it in a data centre, buy software and hire the staff to keep everything ticking over. True cloud computing gets rid of all these costs and complications.

In truth for everyone except the very largest organisations – and that means no-one in New Zealand at all – a true cloud is a less expensive, more flexible and safer option.

These days IBM’s greatest strength is in providing professional services. It has much to offer cloud customers, for example integrating their cloud projects.

[digitl 2014]

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