Lance Crosby, CEO of SoftLayer, on IBM’s new cloud company
SoftLayer CEO, Lance Crosby, says selling to IBM was the smartest business decision he's ever made
Computing giant IBM has been promising for years to become a significant player in the cloud computing services business. But, for most of the time it has been saying that, it has been something considerably less than a significant player.
That was before June, when IBM paid about $2 billion for SoftLayer the Dallas-based cloud computing services player, a distant rival to the industry's 800-pound gorilla, Amazon Web Services. (SoftLayer had been privately held, and the actual price IBM paid was never disclosed).
Since then, IBM has started reminding the world about its aims in the cloud space. On a recent earnings call, CFO Mark Loughridge (who just announced plans to retire) reiterated Big Blue's goal that it expects to book $7 billion in cloud revenue by 2015.
And there are hints that it will get there. When it last reported earnings, IBM said it had achieved more than $1 billion in cloud-related sales: About $460 million from cloud services, and about $610 million from IBM hardware, software and services to set up cloud operations for IBM customers.
SoftLayer is turning out to be the central thrust of those cloud efforts. Since the deal was done in June, it has added 1,000 new customers it already had more than 20,000 with companies as varied as Yahoo's social blogging unit Tumblr, local-review site Yelp and social photo-sharing site Twitpic among them.
In fact, Big Blue is feeling so sure of its newfound cloud cred that it has started to run uncharacteristically aggressive ads taking shots at Amazon. In the ads, it claims that its cloud technology is behind 270,000 more websites than Amazon's.
Yet even with that new cred, IBM recently lost out on a high-profile bid to run cloud computing services for the U.S. Central Intelligence Agency, a deal worth $600 million.
As Amazon gets its big re:Invent conference under way this week I spoke to AWS head Andy Jassy in an interview published on Friday it seemed a good moment to check in with SoftLayer CEO Lance Crosby. My first question was about his view on the state of competition.
Q: Since SoftLayer has become part of IBM, the competitive map has obviously changed. How do you see it now?
Crosby: Obviously, Amazon and SoftLayer competed head to head for some time prior to the acquisition. It was our fiercest competitor. Part of the reason that we looked at doing the deal was to address one of the problems we had, which was that we didn't have the brand-name recognition.
When you put us together with IBM, we instantly have brand recognition. And so I would say in the course of four months we have gone from being a much smaller competitor in an inferior position to being a much bigger competitor in a much better position than Amazon is in today.
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