IBM Repurposes $1B For Hybrid Cloud, Buys Database Startup Cloudant

Posted: Feb 24 2014, 10:36am CST | by , Updated: Feb 24 2014, 11:08am CST, in News | Technology News

IBM Repurposes $1B For Hybrid Cloud, Buys Database Startup Cloudant
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IBM's trying to get more into the hybrid cloud game. The company announced several products led by a new platform, BlueMix, and acquired Cloudant, a Boston-based database company.

The big news for IBM is that it’s waving the flag in the competitive hybrid cloud market, launching BlueMix on open beta. The product is a platform-as-a-service offering that allows developers at IBM client companies to build enterprise applications within the cloud instead of internally on their own databases. Along with BlueMix, the company is also bringing middleware patterns onto its cloud infastructure to make that transition possible. It’s all part of a shift in budget for IBM’s cloud unit that will cost $1 billion over the next two years, says senior vice president Robert LeBlanc.

“A lot of people are building new mobile applications and systems of engagement,” LeBlanc says. “The biggest challenge is to connect those to the back end, and we can now connect the enterprise data to the cloud.”

IBM’s tested BlueMix for “months” in a closed beta with clients like Continental Automotive, a supplier of auto parts like brake pads to the major U.S. manufacturers. Continental makes some parts to help with connected cars like one it’s developing to use maps and data in the cloud to know when a driver is about to go the wrong way or into a dangerous area. By connecting the electronics part by BlueMix, the car could transmit to cloud applications while also running internal analytics within the car. “It helps us move more quickly than we would otherwise,” says Continental vice president Brian Droessler. “Without BlueMix we would have been forced to piece this together from disparate components, possibly from many partners, and it would be really unwieldy.”

LeBlanc says IBM’s cloud unit will software and cloud unit will continue to invest in back-end systems, but the shift in attention to hybrid is supposed to keep customers who may want a locally-housed application for something like a secure manufacturing line, but would find it much cheaper and faster to build and upgrade that application remotely by the cloud. Along with middleware improvements, LeBlanc says the push to cloud will cost $1 billion in reallocated budget by the end of 2015, at which point the company hopes to be bringing in $7 billion in revenue from the unit as part of its 2015 turnaround plan.

IBM also announced its agreement to buy Cloudant today. Cloudant had raised about $16 million in funding, most recently a $12 million Series B last year, and counted hybrid cloud player Rackspace as a backer. A database-as-a-service company, Cloudant joins IBM’s Big Data unit and will be offered to BlueMix customers over the platform.

The news is the latest in a string of announcements from IBM, which has laid off staff and divested businesses no longer core to its strategy, most recently selling a server unit to Lenovo last month for $2.3 billion. The company’s investing $1 billion in a new Watson unit based in New York City, as well as another $1.2 billion to boster its data center network anchored by its $2 billion SoftLayer acquisition last year. The Cloudant acquisition fits into CEO Ginni Rometty’s mandate to spend up to $20 billion on acquisitions and new investments while looking to continue to cut staff and services that have dragged on IBM’s business. (LeBlanc’s software unit is IBM’s largest and most profitable today.)

“I see myself investing in the whole BlueMix platform for the rest of my career, that’s for sure,” says LeBlanc. “The cloud shift is the same shift that happened in client server computing and web computing, this is the next generation. Those lasted decades, and we believe that will be the case here.”

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Source: Forbes

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