IBM to Acquire Cloud Infrastructure Provider SoftLayer

In an aggressive move to bolster the tech giant’s position in the cloud computing market, IBM (News - Alert) announced it will acquire Dallas-based cloud infrastructure company SoftLayer Technologies.

While financial terms were not disclosed, The Wall Street Journal said the acquisition is worth around $2 billion, citing a “person familiar with the matter.”

Under the terms of the deal, IBM is creating a new cloud services division within its Global Services group to house SoftLayer (News - Alert) as a stand-alone company and combine it with other cloud computing services. Following the close of the acquisition of SoftLayer, which is expected in the third quarter, the new division will combine SoftLayer with IBM SmartCloud into a global platform.

The acquisition will allow the Armonk, N.Y.-based company to accelerate the build-out of its public cloud infrastructure for its customers, giving them a wider array of choices, according to Erich Clementi, senior vice president of IBM Global Technology (News - Alert) Services.

“As businesses add public cloud capabilities to their on-premise IT systems, they need enterprise-grade reliability, security and management. To address this opportunity, IBM has built a portfolio of high-value private, public and hybrid cloud offerings, as well as software-as-a-service business solutions,” Clementi said in a statement. “With SoftLayer, IBM will accelerate the build-out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovation.” 

SoftLayer has approximately 21,000 customers with a global cloud infrastructure platform spanning 13 data centers in the U.S., Asia and Europe. The company’s services allow clients to buy cloud services on dedicated or shared servers, offering clients a choice of where to deploy their applications. SoftLayer’s existing customers will benefit from the acquisition since it will provide them with enterprise-grade functionality from IBM, according to Lance Crosby, CEO of SoftLayer.

“SoftLayer has a strong track record with born-on-the-cloud companies, and our move today with IBM will rapidly expand that footprint globally as well as allow us to go deep into the large enterprise market,” Crosby said. “The compelling opportunity is connecting IBM’s geographic reach, industry expertise and IBM’s SmartCloud breadth with our innovative technology. Together SoftLayer and IBM expand their reach to new clients – both born-on-the-cloud and born-in-the-enterprise.”  

IBM expects the company to reach $7 billion annually in cloud revenue by the end of 2015. IBM offers more than 100 SaaS (News - Alert) solutions to help marketing, procurement, ecommerce, customer service, human resources, city management, and other professionals make better decisions and better serve their customers. IBM also offers Watson solutions such as Client Engagement Advisor in the cloud, superior solutions such as IBM PureSystems and SmartCloud Enterprise+, as well as cloud services for SAP (News - Alert).