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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: soft

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.

blparker 13y ago
Interested in your opinion as to why you don't think this acquisition will help gain market share on AWS.
- josh2600 13y ago
  IBM can't build a cloud of their own or they wouldn't have needed to buy SoftLayer. Since they don't have this expertise, they pay a ton of money for a company that their perceive as knowing "the cloud". This is doubly ironic because its IBM that introduced the mainframe to the world, but that's another story. SoftLayer and everyone not named Google or Amazon can't drop their prices 40+ times every 5 years because this managed hosting is their core business. Google and Amazon are playing the ultra-thin margin long game and the result is that they hope to destroy the competition with an aggressive pricing floor. When all you have is hosting, you can't lose money on hosting. Amazon and Google can lose money on infrastructure because its not their core business. The same cant be said about SoftLayer, and I don't think their ability to execute will increase as a result of this acquisition. If anything it's akin to Zynga's FUD middle management practices and the resulting layoffs yesterday. I'm super bearish on IBM doing anything meaningful with SoftLayer. It's a pure revenue play from my perspective.
  - qwerta 13y ago
    > Google and Amazon are playing the ultra-thin margin long game and the result is that they hope to destroy the competition with an aggressive pricing floor. Could you explain this a bit? I found Amazon and Google overpriced and slow compared to other hosting solutions.
    - j-kidd 13y ago
      That bit is definitely wrong for EC2, which is notoriously slow in dropping the prices. The web hosting business has always been cut-throat, where price cutting and overselling are the norm. And since we started to have fast enough CPUs several years ago, the price has been dropping ever faster, as the CPUs continue to work after the initial costs have been recouped. For example, nowadays there are a lot of deals for dedicated servers with Xeon L5420, a quad core 2.5Ghz processor released in Q1 2008, before EC2 went public. The sad part about EC2 is that it doesn't shy away from overselling while keeping the same high price. The micro instance with its meager CPU allocation would be the poster child of overselling. There are some naive crowds here who believe EC2 doesn't oversell. Well, just ask Netflix: http://blog.sciencelogic.com/netflix-steals-time-in-the-cloud-and-from-users/03/2011 http://blog.sciencelogic.com/netflix-steals-time-in-the-clou...
  - thereallurch 13y ago
    IBM has had private clouds for a few years now. It's not like AWS where anyone can click and spin up an instance. It's geared towards very large companies. These companies have been reluctant to use AWS, or have specific requirements (hardware requirements, licensing issues, corporate policies). So it's incorrect to say IBM cant build a cloud. IBM's cloud isnt a public facing entity.
  - vidarh 13y ago
    In 2000, Telia got a single IBM G6 mainframe hosting 1500 virtual Linux images. You'll note that's a tiny, "ancient" model. IBM currently quotes ability to present "thousands" of virtual Linux images on a single current zSeries mainframe. These servers have virtualised storage IO, virtualised network interfaces etc. and management interfaces older than most of the developers on the hipper cloud platforms. So to claim IBM "can't build a cloud of their own" is quite ridiculous - they can deliver single mainframes with more capabilities than most smaller cloud providers entire infrastructure for many types of workloads, and have decades of experience aggregating workloads on collections of servers like this (and single system image clustering across up to 32 zSeries mainframes - some simple math should indicate you're then in the tens of thousands of VM images managed as one single system - this with software originally introduced in 1990....), as well as decades of experience building super-computing clusters with accompanying orchestration and management. Heck, they have a separate division doing integrated service management software. Claiming they can't build a consumer level / low end cloud solution would be more believable, and would explain the SoftLayer acquisition. But there's far more to this market than going for startups who order a handful of vm's. > When all you have is hosting, you can't lose money on hosting. That might have become an issue for SoftLayer in the long run if they remained independent. But IBM is a services company. And one that is an expert in extracting money from customers by building very deep and far reaching client relationships when you can afford them. They could lose money on hosting for the next century if they like, and still see it as a cheap foot in the door for their sales team if it helps them reach new customer segments. > Google and Amazon are playing the ultra-thin margin long game and the result is that they hope to destroy the competition with an aggressive pricing floor. Amazon at least is priced ludicrously high compared to providers like Softlayer that can offer hybrid "dedicated + cloud" solutions. If Amazon can compete on price in that market, they've so far not demonstrated any will to do so. Amazon is priced well for the batch "bring up ten servers for two hours" market, though.
    - josh2600 13y ago
      Perhaps it was facetious to say that IBM can't build clouds. A more realistic viewpoint is that they don't have significant expertise building large commodity infrastructures. There are definitely places where IBM plays well, but commodity clouds aren't one of them, at least to my mind. If you need a high-end computing cluster that's bigger than the max Amazon instances, that would definitely be a place where IBM could play, it's just not a place I see SoftLayer playing. You're right though; There is more than one way to skin a cat or a cloud.
ihsw 13y ago
> Personally I won't buy an IBM product because I know it's just like Oracle: software entrapment. Nobody buys IBM or Oracle products, they become 'partners' and negotiate license agreements. The entrapment is different in that your software (and hardware!) decisions now involve lawyers.
- Kallikrates 13y ago
  Many of the extremely large east coast customers have directives to move away from licenses as fast as they can. The recent news of IBM's protest against Amazon is very related to this acquisition. http://washingtontechnology.com/Articles/2013/05/31/amazon-protest.aspx?Page=1 http://washingtontechnology.com/Articles/2013/05/31/amazon-p...
- pnathan 13y ago
  > Nobody buys IBM or Oracle products, they become 'partners' and negotiate license agreements. A former employer bought IBM licenses without partnership. Boy, IBM software is lousy. :-/
AJ007 13y ago
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.
- jaredstenquist 13y ago
  I had the opposite experience. I used them for years and received prompt support, even getting direct to a sysadmin over the phone. I also regularly received up to 50% off their advertised prices just by doing a little negotiating. Of course I say all this as an AWS customer, as the value flexibility far outweighed the value of support to me. Also, the last time I checked, You had to go through a standard server ordering form process to get a cloud server up and running.
  - hboon 13y ago
    When I explored using SL a year ago, you could already use their API to provision cloud servers. It took quite a bit more time than EC2 (10 minutes?) to have the server provisioned and running (back then) though.
- jamesbritt 13y ago
  Here's a counterdote: I've been using them since they were The Planet and have been very happy. I've wedged my machine a few times and their support is great, too.
- dangrossman 13y ago
  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?
  - 13y ago
rdl 13y ago
This mostly makes me sad; softlayer was my default choice for managed hosting, and I really don't think I'd want to use IBM for this.
freehunter 13y ago
I would be surprised if Rackspace sold out to Oracle, considering how Rackspace has a stated goal to fight patent trolls.
- late2part 13y ago
  Well, you'll probably be surprised, then.
- shrikant 13y ago
  Every principle has its price. EDIT: Thought I'd add a bit more here. An entrepreneurial religious young man had set up a niche little bakery in my area, which was supposedly filled with pensioners and people nearing retirement. This bakery catered only to conservative Hindu beliefs (fully vegetarian, no egg or meat products or derivatives used in any of the goodies, images/idols gods and goddesses all over the place). A couple of months later, he put up a sign that said "We don't sell egg puffs here" (a savoury pastry with a boiled egg at the centre). A couple more months later, the sign was gone, a new boy was hired to serve at the counter, and egg puffs were on the menu.
- jonknee 13y ago
  RackSpace also has a longstanding stated goal to make tons of money. Oracle is a quick way to meet that goal.
cleaver 13y ago
> It's not going to work. Whether or not it really is an attempt to go up against AWS, it won't work. IBM has not been successful in slim-margin markets like low-end hardware (or in this case hosting). I currently have a dedicated server with Softlayer (at one point I had three). I actually started with Rackshack which was consumed by EV1, then merged with The Planet, then eaten by SL. I've been looking to move elsewhere, but this seals the deal. I believe IBM can't help but screw it up.
czbond 13y ago
Great play by IBM - do you have any experience in Enterprise, bc this statement isn't true? Unfortunately, I do (too much Big 4 consulting in my distant past). This is a great acquisition for IBM strategically. Many big enterprises still use IBM/Oracle products because of existing sales relationships and the fact CTO"s want to point the finger when resrouces go down. IBM will sell a ton of this. Also, with the numerous outages on AWS (unacceptable to Fortune 500) - the "selling point" well be "we're not amazon - and we can scale". IMHO

blparker 13y ago

Interested in your opinion as to why you don't think this acquisition will help gain market share on AWS.

josh2600 13y ago
IBM can't build a cloud of their own or they wouldn't have needed to buy SoftLayer. Since they don't have this expertise, they pay a ton of money for a company that their perceive as knowing "the cloud". This is doubly ironic because its IBM that introduced the mainframe to the world, but that's another story. SoftLayer and everyone not named Google or Amazon can't drop their prices 40+ times every 5 years because this managed hosting is their core business. Google and Amazon are playing the ultra-thin margin long game and the result is that they hope to destroy the competition with an aggressive pricing floor. When all you have is hosting, you can't lose money on hosting. Amazon and Google can lose money on infrastructure because its not their core business. The same cant be said about SoftLayer, and I don't think their ability to execute will increase as a result of this acquisition. If anything it's akin to Zynga's FUD middle management practices and the resulting layoffs yesterday. I'm super bearish on IBM doing anything meaningful with SoftLayer. It's a pure revenue play from my perspective.
- qwerta 13y ago
  > Google and Amazon are playing the ultra-thin margin long game and the result is that they hope to destroy the competition with an aggressive pricing floor. Could you explain this a bit? I found Amazon and Google overpriced and slow compared to other hosting solutions.
  - j-kidd 13y ago
    That bit is definitely wrong for EC2, which is notoriously slow in dropping the prices. The web hosting business has always been cut-throat, where price cutting and overselling are the norm. And since we started to have fast enough CPUs several years ago, the price has been dropping ever faster, as the CPUs continue to work after the initial costs have been recouped. For example, nowadays there are a lot of deals for dedicated servers with Xeon L5420, a quad core 2.5Ghz processor released in Q1 2008, before EC2 went public. The sad part about EC2 is that it doesn't shy away from overselling while keeping the same high price. The micro instance with its meager CPU allocation would be the poster child of overselling. There are some naive crowds here who believe EC2 doesn't oversell. Well, just ask Netflix: http://blog.sciencelogic.com/netflix-steals-time-in-the-cloud-and-from-users/03/2011 http://blog.sciencelogic.com/netflix-steals-time-in-the-clou...
- thereallurch 13y ago
  IBM has had private clouds for a few years now. It's not like AWS where anyone can click and spin up an instance. It's geared towards very large companies. These companies have been reluctant to use AWS, or have specific requirements (hardware requirements, licensing issues, corporate policies). So it's incorrect to say IBM cant build a cloud. IBM's cloud isnt a public facing entity.
- vidarh 13y ago
  In 2000, Telia got a single IBM G6 mainframe hosting 1500 virtual Linux images. You'll note that's a tiny, "ancient" model. IBM currently quotes ability to present "thousands" of virtual Linux images on a single current zSeries mainframe. These servers have virtualised storage IO, virtualised network interfaces etc. and management interfaces older than most of the developers on the hipper cloud platforms. So to claim IBM "can't build a cloud of their own" is quite ridiculous - they can deliver single mainframes with more capabilities than most smaller cloud providers entire infrastructure for many types of workloads, and have decades of experience aggregating workloads on collections of servers like this (and single system image clustering across up to 32 zSeries mainframes - some simple math should indicate you're then in the tens of thousands of VM images managed as one single system - this with software originally introduced in 1990....), as well as decades of experience building super-computing clusters with accompanying orchestration and management. Heck, they have a separate division doing integrated service management software. Claiming they can't build a consumer level / low end cloud solution would be more believable, and would explain the SoftLayer acquisition. But there's far more to this market than going for startups who order a handful of vm's. > When all you have is hosting, you can't lose money on hosting. That might have become an issue for SoftLayer in the long run if they remained independent. But IBM is a services company. And one that is an expert in extracting money from customers by building very deep and far reaching client relationships when you can afford them. They could lose money on hosting for the next century if they like, and still see it as a cheap foot in the door for their sales team if it helps them reach new customer segments. > Google and Amazon are playing the ultra-thin margin long game and the result is that they hope to destroy the competition with an aggressive pricing floor. Amazon at least is priced ludicrously high compared to providers like Softlayer that can offer hybrid "dedicated + cloud" solutions. If Amazon can compete on price in that market, they've so far not demonstrated any will to do so. Amazon is priced well for the batch "bring up ten servers for two hours" market, though.
  - josh2600 13y ago
    Perhaps it was facetious to say that IBM can't build clouds. A more realistic viewpoint is that they don't have significant expertise building large commodity infrastructures. There are definitely places where IBM plays well, but commodity clouds aren't one of them, at least to my mind. If you need a high-end computing cluster that's bigger than the max Amazon instances, that would definitely be a place where IBM could play, it's just not a place I see SoftLayer playing. You're right though; There is more than one way to skin a cat or a cloud.

ihsw 13y ago

> Personally I won't buy an IBM product because I know it's just like Oracle: software entrapment. Nobody buys IBM or Oracle products, they become 'partners' and negotiate license agreements. The entrapment is different in that your software (and hardware!) decisions now involve lawyers.

Kallikrates 13y ago
Many of the extremely large east coast customers have directives to move away from licenses as fast as they can. The recent news of IBM's protest against Amazon is very related to this acquisition. http://washingtontechnology.com/Articles/2013/05/31/amazon-protest.aspx?Page=1 http://washingtontechnology.com/Articles/2013/05/31/amazon-p...
pnathan 13y ago
> Nobody buys IBM or Oracle products, they become 'partners' and negotiate license agreements. A former employer bought IBM licenses without partnership. Boy, IBM software is lousy. :-/

AJ007 13y ago

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.

jaredstenquist 13y ago
I had the opposite experience. I used them for years and received prompt support, even getting direct to a sysadmin over the phone. I also regularly received up to 50% off their advertised prices just by doing a little negotiating. Of course I say all this as an AWS customer, as the value flexibility far outweighed the value of support to me. Also, the last time I checked, You had to go through a standard server ordering form process to get a cloud server up and running.
- hboon 13y ago
  When I explored using SL a year ago, you could already use their API to provision cloud servers. It took quite a bit more time than EC2 (10 minutes?) to have the server provisioned and running (back then) though.
jamesbritt 13y ago
Here's a counterdote: I've been using them since they were The Planet and have been very happy. I've wedged my machine a few times and their support is great, too.
dangrossman 13y ago
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?
- 13y ago

rdl 13y ago

This mostly makes me sad; softlayer was my default choice for managed hosting, and I really don't think I'd want to use IBM for this.

freehunter 13y ago

I would be surprised if Rackspace sold out to Oracle, considering how Rackspace has a stated goal to fight patent trolls.

late2part 13y ago
Well, you'll probably be surprised, then.
shrikant 13y ago
Every principle has its price. EDIT: Thought I'd add a bit more here. An entrepreneurial religious young man had set up a niche little bakery in my area, which was supposedly filled with pensioners and people nearing retirement. This bakery catered only to conservative Hindu beliefs (fully vegetarian, no egg or meat products or derivatives used in any of the goodies, images/idols gods and goddesses all over the place). A couple of months later, he put up a sign that said "We don't sell egg puffs here" (a savoury pastry with a boiled egg at the centre). A couple more months later, the sign was gone, a new boy was hired to serve at the counter, and egg puffs were on the menu.
jonknee 13y ago
RackSpace also has a longstanding stated goal to make tons of money. Oracle is a quick way to meet that goal.

cleaver 13y ago

> It's not going to work. Whether or not it really is an attempt to go up against AWS, it won't work. IBM has not been successful in slim-margin markets like low-end hardware (or in this case hosting). I currently have a dedicated server with Softlayer (at one point I had three). I actually started with Rackshack which was consumed by EV1, then merged with The Planet, then eaten by SL. I've been looking to move elsewhere, but this seals the deal. I believe IBM can't help but screw it up.

czbond 13y ago

Great play by IBM - do you have any experience in Enterprise, bc this statement isn't true? Unfortunately, I do (too much Big 4 consulting in my distant past). This is a great acquisition for IBM strategically. Many big enterprises still use IBM/Oracle products because of existing sales relationships and the fact CTO"s want to point the finger when resrouces go down. IBM will sell a ton of this. Also, with the numerous outages on AWS (unacceptable to Fortune 500) - the "selling point" well be "we're not amazon - and we can scale". IMHO