A New Look at the IBM Softlayer Acquisition

By on 23/05/2015

In an effort to strengthen their position in the market for business-targeted computing services delivered over the internet, IBM has agreed to buy the cloud computing company SoftLayer Technologies. The exact purchase price was not disclosed, but a source who refused to be named (due to his lack of authority to speak publicly about the terms) has put it around $2 billion.

IBM’s acquisition of SoftLayer Technologies is possibly the largest yet under the leadership of Virginia M. Rometty, who became CEO in January last year. Aside from the bolstering of their position in their current market, the acquisition also gives IBM an even heavier presence in the cloud computing market.

One of the key takeaways with the acquisition is that IBM has effectively used it as a boost, because they now have an established footprint in the public cloud arena, and they don’t have to start everything from scratch, unlike the current market leaders AWS, Google, and Rackspace. With Softlayer’s cloud infrastructure platform, IBM now effectively has 21,000 customers in the cloud, which automatically gives them scale and relevance.

As far as the cloud is concerned, IBM’s acquisition of Softlayer isn’t really a gamechanger, and most likely won’t affect the industry much. What it does is give IBM the opening it needs to become a gamechanger. It’s not enough to turn IBM into a cloud leader, at least not directly, but it gives IBM more credibility that can accumulate once the tech giant acquires even more companies.

As it stands right now, SoftLayer provides IBM a defensive and offensive advantage. For the latter, they’ll finally have an increased market share that should put them on an almost equal footing with Rackspace, Google, AWS, and other cloud players. For the former, the acquisition gives IBM a migration path from traditional IT infrastructure space into the public cloud.