IBM Acquires SoftLayer Technologies For Around $2 Billion

Posted Jun 4, 2013

International Business Machines (IBM) has acquired cloud computing company SoftLayer Technologies for around $2 billion, according to sources with The New York Times.  IBM and EMC was reportedly in a bidding war for SoftLayer since March.

Based in Dallas, SoftLayer is a private company that has 13 data centers across the U.S., Singapore, and Amsterdam.  SoftLayer was hitting around $400 million per year in revenues at the time of the acquisition.  Private equity company GI Partners is a majority owner of SoftLayer.

This is IBM’s largest acquisition under Virginia Rometty, who became CEO in January 2012.  The acquisition will give IBM a way to offer computing services remotely to customers through their data centers.  SoftLayer’s data centers will be added to the 10 cloud data centers IBM has worldwide.  Since 2007, IBM has spent over $4.5 billion on acquisitions to build up their cloud software and services.

?We?re focusing on business services that leverage the cloud model,? stated IBM’s cloud services vice president Ric Telford.  ?Watson has a lot more potential because of the cloud delivery model.?  Watson is an artificially intelligent computer system that can answer questions in a natural language.  Named after Thomas Watson, the Watson computer was developed in IBM’s DeepQA project by a research team led by David Ferrucci.  Watson was specifically developed to answer questions on Jeopardy where the computer won a $1 million prize.

Yogurt company Dannon is one of IBM’s cloud services customers to optimize pricing and product planning.  Dannon was able to improve their percentage of products sold to consumers from 75% to 98%.