Did SoftLayer CEO's Big Vision Attract IBM Takeover Bid?

Did SoftLayer CEO's Big Vision Attract IBM Takeover Bid?

If IBM acquires SoftLayer, the cloud services provider (CSP), watch for SoftLayer CEO Lance Crosby to earn big-time applause. Here's why.

IBM (NYSE: IBM) may apparently bid to acquire SoftLayer, the cloud services provider (CSP), for $2 billion or more. The really remarkable part of this story involves SoftLayer CEO Lance Crosby. Indeed, Crosby successfuly merged and transformed two hosting companies (SoftLayer and The Planet) into the world's largest, privately-held IaaS (Infrastructure as a Service) company. And now, apparently, Big Blue envies Crosby's work.

But how did SoftLayer reach this point? Rewind to July 2010, when MSPmentor (Talkin' Cloud's sister site) heard rumors that SoftLayer and The Planet were in merger negotiations (see No. 6 on this rumor list). By August 2010, the two companies confirmed that they were in M&A negotiations. In November 2010, the deal was completed and Crosby emerged as CEO of the combined company.

Ever since, Crosby has been out in front of the cloud channel partner program wave. In February 2011, he told Parallels Summit attendees that VARs had to aggressively prepare for white label cloud services. At the time, Crosby said SoftLayer was generating about $300 million in annual revenues and $105 million in EBITDA (earnings before interest, taxes, depreciation and amortization).

Today, SoftLayer has 13 data centers across the U.S., Asia and Europe. Reuters this week reported a rumor that IBM and EMC were potentially looking to buy SoftLayer. But Gigaom's Barb Darrow -- a top tech blogger -- suggests EMC really isn't in the bidding.

Let's assume for a minute that IBM really is interested in SoftLayer. What are the potential synergies?

  • First, there's IBM's SmartCloud strategy, which would certainly benefit from 13 more data centers.
  • Second, there's IBM's own SaaS application portfolio, which SoftLayer could host.
  • Third, Crosby knows how to manage M&A deals -- so he could help to ensure the IBM-SoftLayer business combination lives up to expectations.

What are the potential challenges? IBM is backing OpenStack, the open source cloud platform. SoftLayer does not back OpenStack, which means IBM and SoftLayer could run into platform standardization issues.

But hey: I'm getting a little ahead of myself. Neither IBM nor SoftLayer have actually confirmed that IBM will bid for SoftLayer. And some pundits -- Barb Darrow included -- are suggesting that IBM might be better-served to buy Rackspace, given the OpenStack synergies that would result.


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