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Back to the Bureau: IBM follows up on SoftLayer purchase

IBM is in possession of a long-standing cloud strategy with its SmartCloud Enterprise product, but the company has decided to get even cloudier. As part of a radical shake-up it’s ditching SmartCloud Enterprise and majoring on SoftLayer, a company it purchased last year for $2 billion, instead.

The idea is to propel IBM firmly into the big scale cloud domain where it can see a lot of the action is currently taking place. IBM recently lost a 'big data' CIA project to Amazon.com and wants to make sure such a thing can't happen again. The move to big scale cloud computing provision via the SoftLayer technology, is therefore being seen as IBM's big bet on the future - in a sense following Amazon into large-scale commodity storage and processing power which it can then lease to its customers as those customers buy fewer and fewer IBM computers to run their applications on and turn to the cloud instead. This move has been hurting IBM's earnings for several quarters.

Crucially though, its new big scale cloud computing capability will provide the horsepower for its customers to run IBM's own 'Watson' big data services where IBM has recently invested another $1 billion. The two can provide a compelling story on this year's and last year's big noise - 'big data'.

The SmartCloud Enterprise customers, IBM's existing cloud data centers and some staff are being moved across to SoftLayer. In addition - and to emphasise just how much IBM skin is going into this game - IBM is planing to spend an additional $1.2 billion on up to 15 new data centers (although it’s unclear over what timescale). In the end it plans to have a 40 data centers arrayed across the globe.

The transition to SoftLayer may be complete in the first quarter 2014.

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