EMC is just not that into SoftLayer, but IBM may be

Written on:March 15, 2013
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When word surfaced Thursday that EMC and IBM were kicking the tires of SoftLayer as a potential acquisition target, there were plenty of raised eyebrows. Now sources close to the matter say that EMC is not really in this hunt at all; but IBM may well be.

Reuters broke the news of a potential SoftLayer acquisition the day after EMC protege VMware announced plans for its Amazon Web Services competitor that would, in theory, give EMC a horse in that race without having to buy anything. So when a source close to the matter says EMC is not party to this competition, I’m inclined to believe it.

ibmlogoIBM, on the other hand, is (or at least was) very interested in SoftLayer, according to one former IBM exec who spoke on the condition of anonymity. This source, however, said as of a month or so ago, IBM was also looking at Rackspace, which is an OpenStack player and is thus more closely aligned to IBM’s OpenStack strategy than SoftLayer, which is not an OpenStack member. IBM joined the OpenStack Foundation a year ago and announced its first OpenStack-based products last week.

That IBM insider said IBM has lots of cash but struggles when it tries to develop products internally.

EMC logo“Realizing this, IBM’s become a holding company of sorts, buying assets, integrating them and reselling them as an IBM brand,” said this source, who remains close to IBM. That growth-by-acquisition pattern may well continue in cloud.

“IBM does not want to fund its own development because past history shows we’re not very good at it. The internal OpenStack work may suffer from that tendency so there was an effort underway to just buy an OpenStack company,” he said. When prompted, he confirmed that Rackspace was on the short list of the OpenStack companies under consideration.

SoftLayer and EMC declined comment on this story. IBM and Rackspace officials said they do not comment on rumors.

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