IBM betting $1.2B on its cloud services through acquisition
International Business Machines Corp or IBM intends to pour $1.2 billion to build on its cloud services as the company seeks to nurture a business it is relying on for growth after its $2 billion acquisition of SoftLayer Technologies Inc last year, Bloomberg reported.
SoftLayer Chief Executive Officer Lance Crosby told Bloomberg that IBM is looking to increase by 15 the number of its data centers around the world by the end of this year. He said that the world's biggest provider of technology services is closing down its SmartCloud Enterprise product in the first quarter of 2014. However, the platform's premium service will continue to be offered together with SoftLayer's, the report said.
As customers make the shift to the cloud, IBM is striving to remain competitive as clients move away from purchasing computer servers. Due to the falling demand for hardware, IBM has posted declining revenue for six quarters in a row and has consequently needed to adjust.
Crosby said in the interview, "That's the transformation that IBM is in right now. That's why we are spending the money."
The report said the fresh investment highlights the high regard that IBM has for SoftLayer. Bloomberg data also showed that the acquisition price that IBM paid for the Dallas-based company last year was the largest that it had revealed for a takeover since 1995 when it bought software firm Lotus Development Corp.
Crosby said that since the takeover, there were 2,400 customers added to Softlayer to the 20,000 clients it had at the time when it was acquired.
Armonk, New York-based IBM did not detail the time frame for investing the $1.2 billion. It did not also reveal how it was allocating for the expense. IBM's capital expenditures average each year is pegged at $4 billion, the report said.