My biggest gripe about cloud coverage in the media is that we’re almost never talking about what’s really going on, but rather simply pushing the most newsworthy claim. One result of this is that when something happens in the cloud space, even something that’s inherently newsworthy, we have no context of reality into which it can be placed. So, we miss the important details. So it is with IBM’s acquisition of SoftLayer.
Let’s get something straight from the first. IaaS is not a particularly good business. Why do you suppose that a mass-market online retail firm (Amazon) is the IaaS leader? Because they can tolerate low margins given that their core business already commits to them. IBM isn’t exactly a low-margin firm, and so it would be crazy for them to spend billions to get into a business that would draw down their gross margins by being successful.
So why, then, would IBM do the deal? The answer is what’s important about the deal in the first place. What IBM is telling us is that software and hardware and all of IT is becoming the cloud. The cloud is the architecture for which businesses will write or buy future applications. The cloud is the platform for which operators will develop or purchase elements of service functionality. The cloud is what will do everything that our basic mobile devices don’t do, but that we still want done. If iPhones and iPads are our portal to information, it’s the cloud that is that information.
IBM, as an IT company, is confronting this long-term truth via a short-term requirement from its buyers—“cloudbursting”. Businesses have long told me that elastic use of public capacity to offload extra work or back up data centers in the event of a failure is the most credible application for cloud computing, and the only one that has any significant financial strength behind it. So what they’re saying is 1) every profitable business cloud is a hybrid cloud, 2) every piece of software deployed henceforth will have to be cloudbursting-ready, and 3) if you want to sell anyone IT from now on, you’d better want to sell them hybrid-cloud IT.
SoftLayer is the public cloud part of IBM’s hybrid cloud plans. SoftLayer gives them geographic scope and economy of scale in offering the hybrid services that IBM software must embrace or IBM won’t be able to sell it any more. SoftLayer is also the IaaS underlayment to what IBM will eventually offer, what every cloud provider will eventually offer, which is platform-as-a-service.
Anyone who has ever written large-scale software systems knows that you can’t just take a piece of software, make a second copy in the cloud, and expect the two to share the workload or provide mutual backup. Everyone who’s written systems designed for elastic expansion and fail-over knows that there are system services needed to make these processes work, and that you can’t build an operationally scalable system by letting every app developer invent their own mechanisms. So if you hybridize a cloud, you first create a common platform of system services that apps can draw on, and then you extend it over both the public cloud and the data center. That, IMHO, is what IBM now intends to do with SoftLayer.
This isn’t going to be an easy thing for IBM to do; they are essentially inventing an architecture on which future cloud-specific apps will be hosted. So the stakes are clearly very high, and that begs the question of how a trend that’s this important to IBM is likely to impact the other players in the space.
To start with, I think it’s clear that everyone who wants to sell cloud services to business will have to start thinking about having a cloud ecosystem that ranges from private software to public services. HP and Oracle already have this, and likely the risk of these two companies’ getting ahead of IBM was a major driver in IBM’s decision. Amazon doesn’t really have private software and Cisco, for example, doesn’t have public cloud. There will be pressure on both these players to do something astounding, and do that quickly. In other words, think M&A.
The second thing I think is clear is that when you start to think about failover and cloudbursting and hybridization, and you build a “platform” of services to handle that, it’s likely that your platform will extend to handle other areas of cloud hybridization that aren’t directly linked to the cloudburst/fail-over process. Database support is a good example. Network support is another good example. Deployment and management (“operationalization”) are likely the best example. In short, we’re going to invent pretty much that “cloud operating system” that I’ve been saying all along would be needed to get the most from the cloud.
From a networking perspective, the question is how this is going to happen. The boundary between networking and IT is soft here; I estimate that almost half the total functionality required for this cloud-of-the-future could be put into either camp. If networking were to grab the lion’s share of this up-for-grabs functionality, then networking and network vendors would have a very big stake in the cloud of the future and would likely gain market share and strength overall. If networking hangs shyly back (or, let’s face it, hangs stupidly back) then the boundary between IT and networking will be pushed further down, leaving more functionality for guys like IBM and less for guys like Alcatel-Lucent or Cisco or whoever. Which, of course, is something else driving IBM’s moves.
It seems to me that our old friend NFV is square in the sights of this change. The fact is that every single thing that NFV requires to deploy service elements on hosted platforms is the same as what’s required to deploy application elements in a hybrid cloud. So NFV could, if it plays its cards right, define a big chunk of that cloud-of-the-future while all the IT guys are still getting their heads around the process. Even IBM may have less a plan than a goal here, and thus there may be some time for networking to get ahead. Since I’m a networking guy (even though I’m a software architect by background), I’d sure like to see that.