IBM to Spend $1.2 Billion on 30 Cloud Datacenters by 2015

IBM will add 15 datacenters to its cloud in 2014, followed by 15 more in 2015.

IBM will spend an additional $1.2 billion to expand its cloud-services datacenters, in an effort to remain competitive in a rapidly growing market.

With that funding, IBM expects to build and equip 15 new datacenters in territories including China, Washington, D.C., Hong Kong, London Japan, India, Canada, Mexico City and Dallas. The expansion will raise the number of IBM’s cloud-platform-providing datacenters to 40 and add more capacity close to its biggest customers or richest potential areas for growth, according to the announcement.

The current list of IBM’s cloud datacenters includes 12 Smartcloud facilities it built, along with 13 it acquired from other companies. The company said it will add more datacenters in 2015 to beef up its facilities in the Middle East and Africa. This is the third major expansion of IBM’s cloud services in the past six months, and the second already this year.

The biggest jump was IBM’s acquisition of SoftLayer in June 2013, which was designed to enhance the “mishmash” of aging legacy systems, OpenStack architecture, and existing IBM hardware powering its Smartcloud service with more up-to-date facilities able to provide more granular specification of cloud environments, as well as dedicated servers and automated management and provisioning that is cost-effective for SMBs as well as enterprises, according to a June 2013 story on the acquisition in GigaOM.

The acquisition of SoftLayer was designed specifically to help IBM compete with Amazon’s AWS cloud services, which gained a huge lead in the market for public cloud with the ability to offer enterprise-class, large-scale computing services at “retail economics” few other cloud companies could provide, according to a May 2013 report on the cloud market from Morgan Stanley.

Amazon’s dominant market share in cloud services gave it such an advantage that, all by itself, AWS could “impact” between 3 percent and 17 percent of IT spending and gross as much as $24 billion per year by 2022, in a total market that could reach $152 billion, according to the Morgan Stanley report.

Cloud contracts with external providers could grow 50 percent per year through 2016, supporting as much as 22 percent of all enterprise workloads by that time, compared to about 10 percent during 2013, the report said. Growth that fast, combined with Amazon’s growing prominence in the space, meant that IBM, Oracle and other major enterprise vendors had to do something drastic to keep from getting left behind, the GigaOm story concluded.

IBM more than doubled its IaaS-providing capacity by adding SoftLayer’s 13 datacenters during 2013.

X-Architecture and PureSystems

The company announced its second big cloud change Jan. 16: it would add its X-Architecture and PureSystems servers to its menu of hardware available through its cloud services, making its existing legacy systems more flexible with modular x86-based servers, which will be assigned primarily as dedicated hosted servers and as servers underlying IBM’s SaaS services.

The new systems will also help boost the flexibility and software-definability of SmartCloud services, following the release of IBM’ Platform Resource Scheduler on private- and hybrid clouds, which makes it easier for large companies to automate their use of cloud-based resources by controlling everything from the number of OS or application licenses being used to storage capacity and bandwidth, according to IBM’s announcement.

IBM also announced Jan. 9 it would add its Watson supercomputing technology to the cloud as part of the IBM Watson Group, offering big-data analytics, cognitive computing and services for other computing challenges requiring enormous volumes of data or supercomputer-class number crunching.

IBM hopes that combination, plus additional datacenters to be rolled out during 2015, will help drive its global cloud revenue to $7 billion by the end of 2015.


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