I.B.M. Buys SoftLayer Technologies Firm for $2 Billion

ibmIBM announced on Tuesday that it had agreed to buy SoftLayer Technologies, a cloud computing company, in an effort to strengthen I.B.M.’s position in the fast-growing market for computing sold to businesses as a service delivered over the Internet. As businesses demand more services delivered over the Internet, the titans of technology are stepping up their offerings delivered from data centers afar, so-called cloud computing. I.B.M. made a big move on Tuesday, announcing that it had agreed to buy SoftLayer Technologies, a cloud computing company, in an effort to strengthen its position in the fast-growing market. The purchase price was not disclosed. But it was about $2 billion, according to a person told of the negotiations, who has asked not to be named because he had not been authorized to speak publicly about the terms.

The acquisition is the largest made under the leadership of Virginia M. Rometty, who became chief executive in January 2012. The purchase, analysts say, also gives I.B.M. a broader presence in the business of cloud computing services. Amazon is the leader in the public cloud arena, and its roster of customers includes not just start-ups and research projects, but also large companies like Netflix. Amazon does not break out the revenue for its cloud business, Amazon Web Services, but it is growing fast. The unit had estimated revenue of $2 billion last year, according a recent research report from Barclays, which forecast that Amazon’s cloud business would reach $5 billion or more by 2014.

I.B.M. executives say its strategy is to compete in the public cloud market not with basic computing capabilities like processing and storage, but with software for marketing, procurement and customer service delivered as cloud offerings. Since 2007, the company has spent $4.5 billion on more than a dozen acquisitions to build up its cloud software and services offerings. We’re focusing on business services that leverage the cloud model,” said Ric Telford, vice president for I.B.M. cloud services. I.B.M.’s first moves in the cloud market date to 2007. But its early emphasis, analysts say, had mainly been on so-called private clouds, in which the computing is delivered to users as service over the Internet, but from data centers owned by I.B.M.’s corporate customers. But the SoftLayer acquisition will sharply expand I.B.M.’s capability to deliver computing services remotely to customers from I.B.M. data centers — the so-called public cloud model.

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