IBM is set to boost its cloud offering with the acquisition of SoftLayer Technologies, in a bid to offer a cloud service that competes with market leader Rackspace.
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SoftLayer is a major cloud computing infrastructure provider, which IBM hopes will strengthen its position in cloud computing and will help speed business adoption of public and private cloud solutions.
The cost of the acquisition has not been disclosed but according to Reuters, it could be worth $2bn.
Erich Clementi, senior vice-president, IBM Global Technology Services, said: "As businesses add public cloud capabilities to their on-premise IT systems, they need enterprise-grade reliability, security and management. With SoftLayer, IBM will accelerate the build-out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovation."
He said the acquisition will enable businesses to marry the speed and simplicity of SoftLayer's public cloud services with the enterprise grade reliability, security and openness of the IBM SmartCloud portfolio.
SoftLayer has 21,000 customers and operates 13 datacentres in the US, Asia and Europe. The company offers both enterprise-class cloud services on dedicated or shared servers, offering clients a choice of where to deploy their applications.
The acquisition moves IBM closer to achieving its stated objective to reach $7 billion annually in cloud revenue by the end of 2015.
The acquisition puts IBM head-to-head with Rackspace, which has a market capitalisation of $7.2bn.
SoftLayer will become part of a new Cloud Services division at IBM.
"Our clients are telling us they want to realise the transformative benefits of cloud today not just for individual applications, but across their entire enterprise," said Clementi.
"SoftLayer will help us smooth the transition of our global clients to the cloud faster, while enabling IBM to more efficiently offer them its broad portfolio of open IT infrastructure and software services."
IBM intends to expand SoftLayer cloud to support OpenStack, the cloud operating system, supported by several major suppliers including IBM, Dell, Red Hat and Rackspace.