IBM invests $1.2 billion in new cloud data centers

Steven Loeb · January 17, 2014 · Short URL:

IBM will add 15 new centers in countries including China, England, Japan, India, Canada and Mexico

Last year, IBM bought cloud-computing service provider SoftLayer for around $2 billion. I think it goes without saying that no company would ever spend that kind of money on an acquisition without planning to go all in on it. An acquisition of that size means big plans.

And that is exactly what IBM is planning to do. The company announced on Friday that it will be spending another $1.2 billion going forward to "significantly expand its global cloud footprint." Specifically, that means adding a bunch of new data centers around the world.

IBM is going to add 15 new centers in countries that include China, Hong Kong, England, Japan, India, Canada, and Mexico. Centers will also be added domestically in both WashingtonD.C. and Dallas, and the company also says that it plans to expand in the Middle East and Africa next year. 

With the 12 centers that IBM already has, along with the 15 that it picked up when it bought SoftBank, that this move will give IBM a total of 40 data centers around the world in 15 countries and five continents. 

"Last year, IBM made a big investment adding the $2 billion acquisition of SoftLayer to its existing high value cloud portfolio," Erich Clementi, senior vice president of IBM Global Technology Services, said in a statement. "Today's announcement is another major step in driving a global expansion of IBM’s cloud footprint and helping clients drive transformation."  

The global cloud market is a very big one; some estimate that it could grow to $200 billion by 2020. And IBM obviously wants a piece of that action. Buying SoftLayer was a significant first step in that direction, and it will be the backbone of IBM's efforts going forward. 

SoftLayer will serve as the foundation for IBM's cloud portfolio. Its infrastructure will provide a base for the global delivery of its cloud services. Since the purchase was completed, IBM says that it has added nearly 2,400 new cloud clients.  

IBM recently made$1 billion into the Watson Group, in order to focus on development and research and bringing cloud-delivered cognitive applications and services to market. It also established the IBM Watson Group, a new business unit  that is dedicated to developed, and commercializing, cloud-delivered cognitive and Big Data innovations. 

As part of this initiative IBM says that it will also deploy Watson on SoftLayer. 

By investing heavily in the cloud and data centers IBM has to be hoping it can replicate the success of Amazon Web Services (AWS), which is a top money maker for its parent company.

In the third quarter of 2013, AWS generated $850 million in revenue, more than double that of Q3 2012. AWS is expected to generate $1 billion in the fourth quarter, at which point it will have generated an estimated $3.2 billion for the entire year.

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