Watch out Amazon: What IBM’s $1.2B cloud investment really means

IBM insists it will be a major public cloud player

In classic IBM marketing flavor, Big Blue announced today a big investment into the cloud: $1.2 billion over the next two years to significantly beef up its international data center footprint for its cloud.

IBM has been aiming high in the cloud for the past few years and today's declaration makes it clear IBM is in the public cloud fight for the long haul. That is news that others in the market - particularly the likes of Amazon Web Services, Google, Verizon Terremark, Microsoft and Rackspace - may not be ecstatic to hear, but the statement can't come as a huge surprise to those in the cloud industry either.

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First, the details: As part of the investment, IBM says it plans to have more than 40 data centers on five continents across 15 countries by the end of 2014. New data centers will be built this year in China (which was previously announced), Washington D.C., Hong Kong, London, Japan, India, Canada, Mexico City and Dallas, with more new data centers in the Middle East and Africa in 2015. "This will be the most comprehensive global cloud service any company has offered," IBM SVP of global technology services Erich Clementi wrote in a blog announcing the investment, seemingly taking a swipe at Amazon Web Services.

AWS has nine regions including four in the U.S., one each in South America, Japan, Singapore, Australia, Europe (Ireland), and it has announced plans for a Chinese region.

IBM says the data center build out will allow it to serve more customers more quickly. By having data centers in close geographic proximity to the end users customers have the fastest access to those cloud resources, IBM says. Data sovereignty laws in foreign countries and concerns about government snooping will allow customers to keep data within their country's borders too.

The move represents really good news for SoftLayer, a public cloud IaaS platform that IBM bought for $2 billion in mid-2013. Since acquiring the company, IBM has made SoftLayer a centerpiece of its public cloud and today it said SoftLayer will serve as the "foundation" of its cloud portfolio moving forward. SoftLayer employees made a pretty penny on their buyout from IBM, and now the company is doubling down on their shiny new toy. SoftLayer data center capacity will almost double from 13 data centers to 25 when the expansion is complete.

IBM is certainly looking to take on the heavyweight in this industry: Amazon Web Services. At AWS's most recent user conference, IBM rented advertisements on buses driving around Las Vegas boasting that its SoftLayer platform hosts more web sites than any other cloud provider - including AWS. Andy Jassy, who heads up Amazon's cloud operations called IBM out during his keynote for placing the ads across the city - marking a rare foray by Amazon into a public marketing duel with competitors. (Check out Alex Williams' write up of the cmarketing gimmicks of competitors at AWS's show here.)

While IBM dropping a pile of cash on the cloud may irk some in the market, the reality is (continue to page 2) the industry is so young that there is enough business to go around for all the major providers to have their piece of the pie. IBM points to research noting that the public cloud computing market could top $200 billion by 2020, up from an estimated $113 billion in 2013, according to Gartner. There's enough share for multiple mega players.

Who this really threatens are the mid-size and smaller IaaS cloud players who may not be able to keep up with the billion-dollar investments of mega-players. No doubt Amazon, Microsoft and Google will respond to this news with evaluations of their own global data center footprint, which they're undoubtedly already doing anyway. IBM may be looking to differentiate itself as a true international cloud player: At this point, Amazon doesn't have any data centers in Mexico or Central America and it only has one in the European region, nor does AWS have any announced plans for services in the Middle East or Africa.

IBM seems to love making grandiose pronouncements like today's about its investment strategies. Last March, before its SoftLayer acquisition, IBM announced that OpenStack, the open source cloud IaaS platform, would be central to its cloud strategymoving forward. In September 2013, IBM committed $1 billion to the development of Linux-based cloud and analytics platforms. And just this month IBM said it will invest a reported $1 billion into what it calls cognitive computing, which is centered around its Watson technology.

Some may ask how newsworthy announcements like these actually are. Is this really new money that IBM is committing to Linux and the cloud? Or was IBM already going to spend this money in its budget this year anyway and now it's just making the announcement? Either way, it's clear IBM is looking to make moves in the public IaaS cloud market. Spending $1.2 billion to build a dozen new data centers is certainly one place to start.

 Senior Writer Brandon Butler covers cloud computing for Network World and He can be reached at and found on Twitter at @BButlerNWW.

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