IBM Cloud Revenues, SoftLayer Grow; Server Sales Shrink

By samdizzy

IBM says its Q3 2013 cloud revenues exceeded $1 billion, of which $460 million involved cloud services. Read between the lines and SoftLayer (IBM’s recent IaaS acquisition) is paying dividends even as Big Blue’s traditional server business disappoints investors. What’s the takeaway for channel partners?

The answer is simple: The shift from on-premises servers to cloud services is accelerating even faster. That means SoftLayer Channel Chief Drew Jenkins could be a strategic name to know for IBM partners that are looking to get into the cloud even faster.

While the overall server market has been weak, the hardware situation at IBM looks particularly grim. As part of its Q3 earnings results, IBM said total systems revenues dropped 19 percent. Ouch.

IBM is working hard to sell converged infrastructure (servers, storage networking) known as the Flex System. At the same time, Big Blue is trying to coordinate its existing SmartCloud strategy with the recent SoftLayer acquisition.

Generally speaking, SmartCloud isn’t a well-known brand or platform. Amazon Web Services, Microsoft Windows Azure, Google Apps and even Rackspace have overshadowed the IBM’s SmartCloud moves.

Still, SoftLayer — IBM’s recent IaaS acquisition — holds great promise. SoftLayer is ranked among the world’s Top 100 Cloud Services Providers, according to Talkin’ Cloud’s 2013 research report. The company’s flexible pricing and subscription model — which forces SoftLayer to earn partner and customer loyalty every month — has become quite popular.

Over time, IBM will likely blur the lines between SoftLayer and SmartCloud. But for now the acquisition remains branded as “SoftLayer, an IBM company.”

That’s a smart move. Customers and investors are a bit concerned about IBM’s recent performance. SoftLayer can’t eliminate the transition from on-premises servers to cloud services. But SoftLayer could help IBM to increasingly profit from that new world reality.