
IBM to Acquire SoftLayer - porker
http://www-03.ibm.com/press/us/en/pressrelease/41191.wss
======
dewitt
Worth observing that for all the excitement about the recent crop of billion-
dollar Silicon Valley startups, SoftLayer is based in Dallas, TX (and founded
only in 2005).

I suspect, and this will be easy enough to prove one way or the other after a
few years so feel free to call me on it, that we'll see a disproportionate
number of successful exits come from /outside/ the valley.

My gut tells me that high-cost of living and inter-company cannibalization are
going to make it difficult for companies to sustain long-term growth in the
Bay Area (once the data-skewing, one-off, billion-dollar Instagram-esque deals
are factored out over time).

Whereas talent will tend to stick to the one or two success stories in less
saturated geographies, adding a natural doubling down effect when something is
working out well. Sort of a healthy survivorship bias, in a good way.

Edit: And while two anecdotes are still hardly data, I just now noticed that
Indianapolis, Indiana based ExactTarget sold today for $2.5B.

~~~
danielrhodes
There is one major problem to starting what are to become big tech companies
outside of the Bay Area: labor supply.

Very few places in the world can feed the labor needs of a fast growing tech
company. Even the largest companies in the Bay Area have to go to New York,
LA, and elsewhere to hire more people.

What that means is that you are welcome to start a company wherever you like,
but when it comes time to hire a lot of people fast, you wouldn't want to be
in any other place.

~~~
pionar
But it's normally not a good idea to grow by "hiring a lot of people fast".
Startups outside of SV aren't really interested in the rocket growth. What
happens usually is that companies with that hockey-stick growth generally just
have a lot of layoffs down the road, e.g. Zynga (if they're not bought out for
way too much money before this can occur).

The navel-gazing doesn't really occur outside of that environment, and the
"need to scale" is really just a pissing contest that amateurs crow about
while the real men and women get shit done by growing organically, turning a
solid profit quarter after quarter and not caring what SV hipsters that don't
know what the word profit means say they need to do.

------
josh2600
IBM is buying SoftLayer to try to go head up with AWS. It's not going to work.

Personally I won't buy an IBM product because I know it's just like Oracle:
software entrapment. Nothing wrong with that business model it's just not one
I want to be involved with.

In other news, great job by SoftLayer to exit as pricing pressure from AWS and
GoogleAppEngine was going to steadily erode their margins over time. I feel
the same way about Rackspace which I think has to be in the sights for Oracle
now.

So my opinion is: great job SoftLayer; questionable play by IBM.

~~~
AJ007
I've used SL in the past and have had business associates use them as well. I
experienced nothing but problems, and regularly hear complaints from those who
still use it.

This may just be a case of IBM needing to acquire companies to add revenue to
their financial statements.

~~~
dangrossman
That's strange. They're the #1 dedicated hosting provider used by YC-funded
startups. They have a reputation as the best facilities, best private network,
best control panel and best support staff you can get with rented hardware.
They've swapped failed hardware for me in under an hour at 3AM their time,
recovered data from a corrupt disk for me at no charge, their reliability and
network is generally excellent... what are the complaints you hear?

~~~
stephenhuey
I agree, SoftLayer seems to provide great performance for us at HealthPost.

------
EwanToo
Well done a Reuters reporter back in March :)

"Exclusive: EMC, IBM eye web hosting company SoftLayer- sources", suggests a
$2 billion valuation.

[http://www.reuters.com/article/2013/03/15/us-softlayer-
sale-...](http://www.reuters.com/article/2013/03/15/us-softlayer-sale-
idUSBRE92D18M20130315)

------
forgotAgain
Seems a bit on the desperate side for IBM.

Softlayer customer profile (small to medium) seems the exact opposite of IBM
(very large to huge). Does IBM take the Softlayer expertise and apply it to
large accounts or do they try to service a class of customers they know
nothing about.

On one hand IBM is selling dev-ops services to its customers. On the other, it
finds itself without sufficient in-house expertise to build out its own cloud
services. It's not like this is a new need for IBM. They've been talking cloud
for years yet still found themselves needing to buy this capability.

It seems IBM has found out that after years of shedding higher priced
operations staff they were nothing but a paper tiger when it came to cloud
offerings.

~~~
darkarmani
> Softlayer customer profile (small to medium) seems the exact opposite of IBM
> (very large to huge). Does IBM take the Softlayer expertise and apply it to
> large accounts or do they try to service a class of customers they know
> nothing about.

Doesn't that make sense though? They are trying to use the people and
experience of SL to enter the market of small businesses. It didn't work for
Cisco/linksys, but it does make sense to broaden your market if you think you
can make it work.

~~~
tensor
At the same time, if IBM came out with a decent ad campaign for a new IBM
service targeted at the little guy, a lot of people would take notice I'm
sure.

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whyleyc
Coming soon to a managed hosting environment near you:

"Call now to arrange a visit from our team of consultants to allow you to
launch and configure your new server".

------
barredo
I've been a customer of... +5 years of Softlayer. Their service has been
always good/great, even on odd hours. Congrats to them.

~~~
xradionut
Get ready for crappy service once the bean counters at IBM start outsourcing
everything...

------
therealbork
Nobody else here seeing the obvious reason?

Let me take you back a few years. Remember the SCO lawsuit? Their attempts to
sell licenses? Well, only one company bought one -- EV1. Who are now part of
SoftLayer (via ThePlanet). Clearly IBM is just after said license. :-)

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mrkodiak
Support will now be done through RETAIN and PMRs.

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shiftpgdn
Guess that means HN is now hosted by IBM. :)

~~~
xradionut
Does that mean we get a HN JCL API?

:)

~~~
jacques_chester
Rexx for everybody!

~~~
mjcohen
Or, even older

$ibftc

$execute ibjob

------
mathattack
The purchase makes sense, though I would have thought they have all the cloud
parts they need in house.

Is this more of an application play?

~~~
hemancuso
25k customers paying into this cloud is also pretty valuable for IBM

~~~
nknighthb
IBM had 104 billion in revenue and 16 billion in earnings last year. I'm not
sure I see 25,000 SL customers, most of whom are quite small, as substantially
more than noise on IBM's books.

~~~
late2part
this acquisition buys credibility for IBM in the 'cloudosphere'.

------
ChuckMcM
Fun stuff. Remember that IBM got its start by renting you a mainframe with
software on it. I've always been struck by how similar IaaS/PaaS type
companies are similar to that model. In many ways a data center becomes just a
really big mainframe that you're renting out.

~~~
mindcrime
_Remember that IBM got its start by renting you a mainframe with software on
it. I've always been struck by how similar IaaS/PaaS type companies are
similar to that model. In many ways a data center becomes just a really big
mainframe that you're renting out._

Good, maybe it's time for me to do something useful with this
_personalmainframe.com_ domain I've been sitting on.

We just need to get Matt Smith (of Doctor Who fame) to be our spokesperson...
I can just picture him standing there, adjusting his bow-tie and saying
"Mainframes are cool."

~~~
VLM
"Good, maybe it's time for me to do something useful with this
personalmainframe.com domain I've been sitting on."

A cloud of Hercules emulators that instantly spin up multiple MVS systems on
demand for RJE? I donno what VTAM would think about that. Or a linux on S390
SaaS provider, I guess.

~~~
mindcrime
I actually have some ideas for a service to develop on that domain, but it's
nothing to do with real mainframes. More like "Big Data Processing As A
Service" where the "mainframe" bit is just an analogy. I don't have time to
work on it right now though, so the idea is just kinda sitting on the
backburner ATM.

------
Hawkee
I was with ThePlanet for many years before the merger with SoftLayer. Up to
that point they were very reasonably priced and offered great service. After
the merge the prices nearly doubled and when re-negotiating my contract they
basically gave me the impression I'm not a worthy customer due to the prices I
was used to. They're after enterprise clients now and this acquisition just
furthers that goal. As a small business owner I'm happy to be out and won't be
returning to this company again.

------
harel
I'm not sure if I should start worrying or not... We've just moved our
infrastructure to SoftLayer. I'd hate it if they start to change for the worst
and I'd hate it even more if I had to move to yet another data centre.

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blantonl
I wonder what these means for all the resellers of Softlayer's infrastructure?
Will they join the IBM business partner community or will they be phased out.

This is going to be very interesting...

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codex
If SoftLayer sold, I presume they were selling at below cost and couldn't keep
up. How does SoftLayer's pricing compare with AWS?

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kmasters
This really only strengthens AWS, a self service cloud that anyone can manage.

IBM is chasing a dying consulting model "we know best". But they dont.

You yourself with the knowledge can outscale IBM using AWS.

IBM's business is profiting from enterprise ignorance.

Your mileage may vary...or be nonexistent.

~~~
angersock
Yeah, you're wrong. IBM--if you can afford them--can beat the everliving
christ out of problems you throw their way.

Consider the Cell chip, or any number of e-commerce platforms they power.

