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.
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.