IBM pumps $1.2bn into cloud and data centre offering

James is editor in chief of TechForge Media, with a passion for how technologies influence business and several Mobile World Congress events under his belt. James has interviewed a variety of leading figures in his career, from former Mafia boss Michael Franzese, to Steve Wozniak, and Jean Michel Jarre. James can be found tweeting at @James_T_Bourne.

IBM has today announced a $1.2bn (£735m) commitment to “expand its global footprint”, building data centres to cover all geographies and financial centres.

“Today’s announcement is another major step in driving a global expansion of IBM’s cloud footprint and helping clients drive transformation,” thundered Erich Clementi, IBM global technology services SVP in a statement.

IBM plans to open 15 data centres in the coming year, to add to its 12 already deployed and the baker’s dozen it picked up following the $2bn acquisition of SoftLayer last year. Armonk claims the acquisition has helped pick up 2400 clients.

The new data centres will be launched in China – joining a long list of firms with the same idea – Hong Kong, India and Japan, alongside Dallas, London, Mexico City and Washington DC.

You’ve got to spend money to make money, as the old saying goes, and IBM certainly believes this, with the plan laid out in 2012 to have $7bn per year in cloud revenue by 2015 still on track.

Yet whilst this announcement further outlines IBM’s huge commitment to cloud computing and particularly the IaaS space, the Armonk firm will still have to perform well above prediction to topple the market leader, Amazon Web Services.

Nowhere is this more clearly noted than by Synergy Research, whose latest findings into the IaaS and PaaS market back in October saw Amazon’s revenues ahead of Salesforce, Microsoft, IBM and Google combined.

Cloud thought leader David Linthicum, writing for InfoWorld, sees the situation thus: “The fact that Amazon leads the cloud computing pack drives a lot of the established enterprise providers nuts.

“They continue to lose market share because, at the end of the day, there is no compelling reason to use their services over those of AWS and other pack leaders,” he adds.

IBM’s partnership with SoftLayer has earned a lot of critical love, with noises coming from the right places about how well the transition has been going.

But what about the rest of its ecosystem? Last week IBM announced the arrival of three new Watson services over the cloud, with key impetus on the pharmaceutical, publishing and biotechnology industries.

Yet as innovative and popular as the technology is, if it doesn’t balance the books it won’t be around – just ask Google fans. According to the Wall Street Journal, Watson’s revenues were only at $100m by October – IBM expects it to turn over $1bn annually by 2018.

The rivalry between Amazon and IBM is certainly barbed. Before Amazon’s re:Invent conference back in November, IBM hired out buses to travel through Vegas with artwork boasting Big Blue’s credentials. Andy Jassy, AWS senior vice president, couldn’t resist a dig in his morning keynote.

What do you make of this latest update from IBM? Can they realistically become the market leader?

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