In a press release today IBM announced it's intention to extend its current data center landscape from 20 to up to 40 data centers in 2014, effectively doubling the data centers running on SoftLayer architecture (our take on the acquisition is here). To get there IBM plans to invest 1.2B US$ in the coming quarters.
And with that IBM kicks of the cloud data center monopoly race - as we borrow from the popular board game. Of course the board game's most prized possession - the Boardwalk - does not apply to cloud data center race - as the player will not be able to own a country exclusively. But a land grab it equally is - as you can only build a finite number of data centers in a year, and put only so much fiber in the ground. So being early and fast matters
Location, location, ....
We may be seeing the old brick and mortar retailer adage applied to cloud data center locations in 2014 and going forward. Location matters for a variety or reasons, the most prominent among them are:
Data privacy compliance - Many countries have strict requirements in regards of and where local data can be stored. The industry and customers have been largely ignoring this and been looking the other way. The conversation with prospects and customers to get cloud loads gets significantly easier when you have an in country data center.
NSA / PRISM fall out counter - The recent NSA / PRISM scandal gives a number of new and extra concerns to enterprises about naively using the cloud. Local and national data centers, under local jurisdiction, help to address this concern.
Performance gains - Quite rightfully many users in the world complain that a number of cloud apps work best in Silicon Valley, work ok in the US - but try them in Cape Town or Melbourne. As much as vendors want it - the internet is not a consistently performing system and placing data centers closer to users benefits their cloud application user experience.
Reliability gains - Ever since the widely publicized lessons learnt from AWS clients not using the AWS availability zones correctly - the smarter enterprises have realized that their cloud processes and data need to run in more than one location. Additional data center locations help enterprises to design an optimized reliability strategy.
What will be the 2014 prized possessions?
During 2013 the prized possessions for IaaS vendors were Australia and China. If memory serves me right, it was AWS to start the race for Australia and Microsoft to start the one for China. Now we see IBM leading for new countries like e.g. Mexico. The next week and other vendor announcements will show what the prized possessions will be in 2014.
IBM InfoGraphic from here
Load drives the location strategy
As in the past, IaaS providers will have to chase load to make their investments work. All of them bring significant load by themselves - IBM for instance has over 100 SaaS applications, AWS its online business, Microsoft the XBox, Outlook.com, etc, Google its search and apps load and of course SAP and Oracle their respective SaaS apps.
What's interesting to note is, that when it comes to sources of different load - IBM has been able to conserve the strong SoftLayer gaming presence. This was and remains one of the fortes of the SoftLayer architecture and drives a valuable and high end load profile. It's good to see that game developers keep trusting SoftLayer after the IBM acquisition and IBM being able to expand this high end load profile.
As an interesting side note - two of the data centers will be dedicated to US government cloud loads - a business all cloud infrastructure are competing for.
IaaS vendors need to overlay their existing and expected load profiles (from new subscription revenue) - to chart their planned and next data center locations. As all the players move beyond 20 locations in 2014 - we do not expect the coverage to differ significantly yet - once we move post 40 locations we may see different worldwide coverage.
Watson throws his weight in
With last week's IBM announcement to form a division around Watson - it's no surprise today's announcement includes using any Watson load to the new data centers. Depending on the success of IBM selling Watson, it could quickly become the largest driver of IBM cloud load. The interesting aspect to watch is that due to the high performance nature of the Watson applications, IBM maybe moving more into the direction of high end cloud infrastructure. It remains to be seen if IBM will join Google in that positioning - or if it will provide a two tiered cloud performance offering. Both require investment and that's what we are seeing. Going forward the location of new Watson clients may give an indication of IBM's further cloud data center locations.
SoftLayer is key
As previously blogged, SoftLayer is central to IBM's cloud strategy. All new data centers will follow SoftLayer design and code, the separate, triple network architecture, the flexible and transparent deployment options, the single API design, the central admin console etc.
Its impressive how fast IBM is moving to the SoftLayer architecture - and shows at the same time how high the table stakes in the cloud game are. Competitors still counting on IBM moving at former pedestrian speeds will be surprised.
In the past we have seen cloud vendors to use multiple data center locations - but then deployments decisions would usually put a single, main system into one location - with n backup sites. If IaaS and SaaS vendors want to be in line with local data privacy laws they will need to come up with an architecture to make their system run in a distributed data center environment. Many questions in regards of security, access, code and data replication, reporting etc remain. This will be a significant headache for many SaaS vendors and we expect the smarter, high end IaaS vendors to help their SaaS ISV clients to address these challenges more and more in the future.
As for IBM, it claims that SoftLayer addresses a number of these challenges and it will be key to follow how quickly IBM will be able to show uptake of these capabilities in real customer success stories - addressing these specific challenges e.g. in the vast IBM SaaS portfolio.
All cloud infrastructure players need to continuously invest into expanding their locations and capacities. Credit goes to IBM for being first out of the gate in 2014 and moving the yardstick from around 20 to 40 cloud data center locations. It's now to the usual competitors to respond and we will see their response in the next weeks. Stay tuned.
The other aspect is the strong commitment to the SoftLayer architecture - which seems to have invigorated IBM's cloud ambitions and accelerated its cloud roadmap. A lot of 1B+ US$ acquisitions have faltered in the high tech industry - by all indication the SoftLayer acquisition is not one of them. On the contrary.