IBM Commits $1.2 Billion to Expand Its Cloud Network

IBM has announced plans to commit roughly $1.2 billion to expand its cloud network and add 15 new data centers to its existing group of 25. By adding locations in China, Washington, D.C., Hong Kong, London, Japan, India, Canada, Mexico City, and Dallas to its current fleet, IBM aims to deliver cloud services from a total of 40 data centers in 15 countries spanning five continents. The move, according to IBM, comes in response to estimates that predict the global cloud market will grow to $200 billion by 2020 as the number of users deploying cloud solutions continues to grow.

IBM's commitment to invest in its cloud network echoes the company's $2 billion acquisition of SoftLayer, a cloud services provider, last year. As IBM moves forward with its investment, SoftLayer's infrastructure—which provides a scalable delivery platform capable of supporting mobile, analytic and social solutions—will serve as the foundation of its cloud offering.

"It's impressive how fast IBM is moving to the SoftLayer architecture, and it shows how high the table stakes in the cloud game are," Holger Mueller, vice president and principal analyst at Constellation Research, writes in a blog post. "SoftLayer is central to IBM's cloud strategy. All of its new data centers will follow SoftLayer's design and code; [its] separate, triple network architecture; the flexible and transparent deployment options; the single API design; [and] the central admin console," he explains.

IBM's recent acquisition of Aspera will also play a role in its new cloud strategy. IBM signed a definitive agreement to acquire the high-speed file transfer software provider in December, extending its Smarter Commerce initiative, thereby enabling businesses to accelerate their digital supply chains with faster secure file delivery. "IBM has long shown its commitment to cloud computing," Jeanette Barlow, IBM program director of Smarter Commerce Product Management, told CRM back in December. "As the cloud market grows, we will continue to take advantage of our computing power and Aspera will enable us to do so quickly and securely," she said.

Watson will also come into play as part of IBM's cloud and big data strategies. In early January, the company announced plans to invest more than $1 billion into the supercomputer, including more than $100 million to support an ecosystem of start-ups and businesses building new Watson applications in the IBM Watson Developers Cloud. IBM's investment in Watson and the expansion of its cloud network go hand in hand, according to Mueller, because Watson could become among the largest drivers of IBM cloud load. "Watson requires prime resources to work his magic—fast CPUs, a lot of RAM, fast networks with little latency. With IBM running Watson now in the cloud, they will have to make sure they have these prime resources in their data centers," he says.

Ultimately, Mueller predicts, Watson's cloud and data needs could push IBM into the direction of higher end infrastructure. IBM's investment in Watson "is an indication that high end data centers and hardware are playing a dominant role for the IBM Cloud," he says.

Off to a running start in 2014, IBM is setting the pace for competitors by nearly doubling its number of data centers, Mueller suggests. Still, the expansion does present a major concern—when cloud vendors elect to use multiple data center locations, Mueller explains, deployment decisions are still processed in a single system in the main location with a backup sites. This is problematic, because in order for IaaS and SaaS vendors to adhere to local data privacy laws, the system architecture would have to be adjusted to run in a distributed data center environment.

Since 2007, IBM has invested more than $7 billion in cloud initiatives. By 2015, the company plans to have data centers in all major geographies and financial centers including the Middle East and Africa.

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