On Monday, IBM opened a new SoftLayer datacenter in Hong Kong as part of a $1.2 billion investment to strengthen its cloud services in Asia and all over the world. The Hong datacenter represents the first of 15 datacenters that IBM plans to open worldwide this year, bringing its total fleet of centers to 40 by the end of the year. Separate from the Hong Kong datacenter, IBM currently has 13 SoftLayer data centers and 12 from IBM. The Hong Kong data center has capacity for over 15,000 servers and complements IBM’s presence in Asia by way of the Singapore datacenter and “network points of presence” in Hong Kong, Singapore and Tokyo. Moreover, it positions SoftLayer to serve the entrepreneurial community’s cloud services needs in Hong Kong. IBM intends to deploy data centers in all major geographic regions and financial centers worldwide, including plans to extend its cloud services presence to Africa and the Middle East in 2015.
A recent IDC survey ranks IBM as the top IaaS cloud computing provider as measured by responses provided by over 400 companies and 1000 employees. IDC’s survey asked respondents which vendor is most capable of providing Infrastructure as a Service for public and private clouds. Survey results ranked Cisco second, HP third, AT&T fourth, Google fifth, Microsoft Azure sixth and Amazon Web Services seventh. Whereas IBM captured 35% of votes, Microsoft and Google claimed 16 percent and Amazon Web Services garnered 13%. According to IBM’s press release, factors used in IBM’s survey include cost, simplicity, provisioning speed and quality of service with respect to availability. Building on its July 2013 acquisition of the SoftLayer IaaS platform, Big Blue has launched a multitude of recent investments in its portfolio of cloud products and services including the IBM BlueMix Platform as a Service in February, the first BlueMix garage based in San Francisco’s Galvanize start-up community and the IBM Cloud Marketplace. While all available data suggests that IBM lags far behind Amazon Web Services in terms of IaaS cloud market share whether it be measured in revenue or installations, IDC’s recent survey underscores the positive perception had by IBM as a trusted provider of enterprise software and professional services. IDC’s report notes that “buyers selected IBM as their overall top preference among providers they believe can most effectively provision IaaS, whether private or public,”. Although the IDC report reinforces analyst concerns about the ability of vendors such as Amazon and Google to gain credibility amongst enterprise customers, its precise significance remains difficult to evaluate without more details regarding the 400 participants involved. What seems certain, however, is that IBM is progressively establishing its credibility with respect to cloud-based products and services and that its long history of collaboration with the open source community and developers, in conjunction with its infrastructure business, means that it will be a force to be reckoned with as the battle for cloud market share unfolds.
IBM recently announced the launch of its first BlueMix garage composed of a “physical location where developers, product managers and designers can collaborate with IBM experts” based in San Francisco’s “Galvanize” startup incubator and workspace located in San Francisco’s South of Market neighborhood. The BlueMix garage will enable Galvanize developers to collaborate with BlueMix experts to determine how best to utilize BlueMix, the Cloud Foundry-based Platform as a Service to accelerate application development and integrate applications with cloud-based infrastructures. Densely populated by startups, investors and students, the Galvanize entrepreneurial community is expected to house more than 200 startups by the end of 2014. Jim Deters, co-founder and CEO of Galvanize, commented on the significance of the proximity of the first BlueMix Garage to the Galvanize community as follows:
Galvanize is a co-learning campus, providing digital startups with the industry-critical tools, mentoring and connections they need to learn, grow and launch. The inclusion of IBM’s first BlueMix Garage within the Galvanize community will equip our strong network of developers with the ability to competitively innovate apps with speed, using the power of cloud and open standards.
The partnership between Galvanize and IBM includes the addition of educational content about BlueMix to Galvanize coursework such as its developer training program. IBM’s launch of its first BlueMix garage coincides with its announcement of over 30 new services on the BlueMix platform focused around Cloud Integration, The Internet Of Things, Data and Analytics and DevOps. Since its inception in February, BlueMix has witnessed impressive traction marked by clients such as GameStop, Pitney Bowes and Continental Automotive. Michael Garel, CEO of EyeQ, another of BlueMix’s clients, noted that, “With BlueMix, we are able to reduce the amount of time spent on monthly server maintenance by 85 percent, and turn our attentions back to greater innovation.” The garage in San Francisco is expected to be fully operational in June with an emphasis on providing mentorship focused on agile application development and deployment in the context of cloud-based infrastructures.
The launch of IBM’s first BlueMix garage represents a highly original, bold attempt to render its Cloud Foundry-based PaaS more amenable to the developer community both as a means of increasing its adoption as well as obtaining feedback on its platform in order to accelerate product development. BlueMix is also available on IBM’s recently launched cloud marketplace, along with 100 SaaS applications and the SoftLayer IaaS platform. The larger point here is that IBM is pushing its cloud strategy on multiple fronts by making an aggressive push into the PaaS space with a platform built on the Cloud Foundry infrastructure. The launch of its first BlueMix garage constitutes a “high-touch” attempt to woo developers in Silicon Valley’s startup community that illustrates the seriousness of Big Blue’s interest in the cloud as part of its overall business strategy. Given IDC’s recent survey that claims U.S. companies ranked IBM #1 as a cloud computing provider over Google, Microsoft and Amazon, which placed 5th, 6th and 7th, respectively, IBM’s cloud strategy appears to be bearing fruit, although Big Blue is set to receive stiff competition from the likes of Microsoft, Google and Amazon as the battle for cloud market share matures.
Marketing automation vendor Act-On Software today announced the finalization of $42 million in venture financing in a round led by Technology Crossover Ventures (TCV) with additional participation from Norwest Venture Partners, Trinity Ventures, US Venture Partners, and Voyager Capital. As a result of the funding raise, David Yuan, general partner at TCV, joins Act-On’s board of directors. Act-On intends to use the funding for all aspects of its business operations, including product development, sales, marketing and operations. The announcement of Act-On’s funding raise comes in the wake of IBM’s announcement of its agreement to acquire marketing automation firm Silverpop on April 10.
IBM’s acquisition of Silverpop for an undisclosed sum builds upon Oracle’s acquisition of Eloqua and Responsys, Salesforce.com’s acquisition of ExactTarget and Marketo’s IPO in May 2013. Silverpop specializes in the personalization of marketing content based on the creation of customized audience profiles derived from email, social media and web and mobile activity and boasts 8000 customers in over 50 countries including the likes of Mazda, Stonyfield Farm and Advanced Micro Devices. Atri Chatterjee, CMO of Act-On, commented on the significance of IBM’s acquisition of Silverpop as follows:
The marketing automation industry has been heating up and Act-On is playing in one of the hottest markets right now…IBM acquiring Silverpop further validates the rapidly growing market and substantiates the industry as a whole. We are seeing an increasingly growing demand for marketing automation as companies are doing more online multi-channel marketing and moving beyond email. Corporate Darwinism is at work here in a fast evolving market. The companies that remain standing are the hyper-growth ones with leading edge technology, or the behemoths that are scrambling to enter the market.
Here, Chatterjee notes that the marketing automation landscape is rapidly bifurcating into two spaces marked by “behemoths” like IBM and Oracle that elected to scoop up attractive platforms such as Silverpop, and a selection of standalone vendors that differentiate themselves by consistently demonstrating their ability to innovate and respond nimbly to customer needs and the changing technology horizon in which all marketing vendors operate. Act-On definitively stands in the category of the “hyper-growth” vendors “with leading edge technology” as evinced by its growth to over 2000 customers and accolades such as the designation of leader in the Forrester Wave report on lead-to-revenue management platform vendors for Q1 of 2014. Today’s funding raise brings the total capital raised by Act-On to $74 million since it was founded in 2008. Act-On now has the luxury of innovating upon its integrated marketing platform to develop more accurate analytics and predictive modeling algorithms to drive the personalization of marketing content at both a population and individual customer level. Key challenges for the Beaverton, Oregon-based company will involve the platform’s ability to incorporate real-time analytics into its prescriptive marketing campaigns, the refinement of customer profiles as they evolve in the specific context of the customer’s relationship with specific brands and the ability to generate effective outbound content such as text messages that match the needs and predispositions of targeted consumers. With an extra $42 million in cash in hand, however, Act-On may well end up becoming one of the vendors scooped up by the “behemoths which are scrambling to enter the market,” particularly if it can consolidate its impressive traction to date and enhance its platform to the point where it becomes the undisputed leader in the marketing automation space.
Last week, IBM announced an agreement to acquire NoSQL database as a service vendor Cloudant for an undisclosed sum. An active contributor to the Apache CouchDB project, Cloudant delivers a JSON document database-based platform that claims high availability, scalability and elasticity amongst its attributes. Cloudant customers can take advantage of its JSON-based database as a service to store and mine structured and unstructured data from a variety of sources. Because the JSON database format is so widely used by developers of mobile and web applications, IBM’s acquisition of Cloudant stands to strengthen its positioning with respect to the development of applications for mobile devices in conjunction with the build out of its OpenStack-based cloud solution for the enterprise. The acquisition of Cloudant will be central to IBM’s MobileFirst solutions as well as its Worklight application for developing mobile applications. From an industry perspective, the acquisition represents a huge coup for the NoSQL space in general. CouchDB has historically not had the traction of MongoDB, Cassandra and Couchbase, so we should expect brand name tech companies to make similar offerings for the likes of MongoDB in the ensuing few months. Moreover, IBM’s acquisition of Cloudant testifies to the increasing emergence of cloud and big data behemoths with solutions for both hosting infrastructure, as well as database solutions that accommodate enterprise needs for scalability and the ability to store unstructured data. Cloudant CEO Derek Schoettle surmised the significance of Cloudant’s contribution to IBM’s SoftLayer cloud platform as follows:
Cloudant’s decision to join IBM highlights that the next wave of enterprise technology innovation has moved beyond infrastructure and is now happening at the data layer. Our relationship with IBM and SoftLayer has evolved significantly in recent years, with more connected devices generating data at an unprecedented rate. Cloudant’s NoSQL expertise, combined with IBM’s enterprise reliability and resources, adds data layer services to the IBM portfolio that others can’t match.
Schoettle notes that IBM is extending its infrastructure innovations to the “data layer” and as such, follows in the footsteps of Amazon Web Services and EMC/VMware spin-off Pivotal, which similarly deliver a combination of cloud and big data solutions in their platform and product offerings. The notable consequence of this convergence of cloud and big data product offerings is that only large enterprises with the requisite capital and resources can afford to cobble together combined cloud-big data product offerings. As a result, cloud startups and smaller data vendors will need to continue to compete by way of their agility, responsiveness, consultative support and superior technology. In effect, the IBM acquisition of Cloudant signals a Walmart effect in technology, of sorts, whereby large, well capitalized vendors have the ability to create marts of diverse data and analytics products that threaten the viability of cloud, big data and analytics startups in the same way that massive retailers such as Walmart threaten the viability of independent stores or small chains. Oracle’s recent acquisition of Blue Kai, a big data management platform geared toward marketing, constitutes another example of the way in which tech giants are continuing to integrate diverse data products into increasingly heterogeneous product portfolios. The question that remains unanswered, however, is whether the emerging Walmart technology maze is sufficiently easy to navigate that enterprises opt to partner either with one vendor for all of their technology needs, or whether they feel more comfortable shopping from a diverse range of technology vendors in order to avoid vendor lock-in and locate products that richly respond to the specificities of their industry-vertical and customer needs.
Garantia Data’s (Garantia) Redis Cloud and Memcached Cloud products are now generally available on the IBM SoftLayer cloud by means of its Dallas region. As a result, Garantia Data’s Redis Cloud is now available on Amazon Web Services, Windows Azure and IBM SoftLayer Dallas. Redis is an open source, in-memory, key value data store that differs from other NoSQL databases by way of its ability to “serve a very high volume of write and read requests…at sub millisecond latency” as noted by CEO Ofer Bengal in an interview with Cloud Computing Today. The partnership between Garantia Data and IBM means that IBM benefits from the feather in its cap marked by the addition of Redis to its IaaS platform, whereas Garantia Data cements yet another high profile partnership with a major public cloud platform that promises to attract even more developers into using Garantia’s distribution of Redis. The Redis Cloud offers developers a fully managed service for development within an infrastructure that includes “automated clustering, scaling, data persistence, performance optimization, and failure recovery from a single console” according to Garantia Data’s Itamar Haber. IBM is pricing Redis on SoftLayer Dallas aggressively at $79/month for 1 GB of storage in contrast to Azure, which charges $108/month for the same. In comparison, AWS prices the Redis Cloud competitively at either $79/month or $89/month for 1 GB, depending on the region.
A recent article by the Synergy Research Group (Synergy) claims that Amazon Web Services continues to dominate the IaaS and PaaS space in terms of revenue. According to Synergy, Amazon Web Services increased its quarterly revenue by 55% to over $700M in Q3 of 2013, whereas the aggregate of revenue for Salesforce, IBM, Windows Azure and Google was less than $400M for the same time period. Worldwide, total IaaS and PaaS revenues exceeded $2.5 billion for the quarter, with IaaS accounting for 64% of cloud revenues, a surprisingly small proportion given the limited penetration of platform as a service within the enterprise. Synergy Research’s John Dinsdale remarked on the company’s findings as follows:
We’ve been analyzing the IaaS/PaaS markets for quite a few quarters now and creating these leadership metrics, and the relative positioning of the leaders really hasn’t changed much. While Amazon dwarfs all competition, the race is on to see if any of the big four followers can distance themselves from their peers. The good news for these companies and for the long tail of operators with relatively small cloud infrastructure service operations, is that IaaS/PaaS will be growing strongly long into the future, providing plenty of opportunity for robust revenue growth.
Here, Dinsdale remarks that the “race is on to see if” Salesforce, IBM, Microsoft and Google can decisively secure second place in the battle for IaaS/PaaS market share. Strikingly, Microsoft, Google and IBM have revenues that are very close to one another, even though one might reasonably expect Microsoft’s Azure platform to edge out its competition given its earlier entry into the market than IBM and Google’s Compute Engine (GCE). That said, IBM’s sizeable IaaS revenue derives largely from its acquisition of SoftLayer, which itself had a rich and venerable history that predated IBM.
Synergy’s chart illustrating Q3 IaaS and PaaS revenues is given below:
Notable omissions from the findings include Rackspace, HP, Oracle, Pivotal One and Red Hat, the middle three of which (HP, Oracle and Pivotal One) are still relatively nascent, and hence justifiably excluded from the present calculation. As Dinsdale notes above, however, “the good news for these companies” and for remainder of the space is that revenues are set to increase significantly in the near term. Going forward, one of the key questions for subsequent IaaS market share analyses will be whether OpenStack’s momentum and gradual maturation propels disproportionate growth amongst OpenStack-based cloud platforms for vendors such as HP, IBM, Oracle, Rackspace and Red Hat.