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IBM close to big cloud unveiling

Sreejiraj Eluvangal / DNA

May 1, 2010 2:15 IST

New Delhi: IBM, the world’s largest IT company, is set to announce its entry into the hottest area in information technology — cloud computing.

“There are a string of announcements we will be making, either in May or June,” said Ashok T Reddy, director with IBM’s Rational division, which makes developer-oriented software. “They will include one on public cloud and one on database.”

The company had last month launched a hosted cloud service aimed at developers and testers. Now, the big commercial launch is at hand.

The move is likely to signal the dawn of the age of direct competition between what has till now been two distinct camps in the industry —- the product companies and the services giants led by IBM.

IBM is primarily a services company, with a product division that depends to a large extent on the services division for its business. The company, whose four-lakh employees generate $100 billion (Rs 4.5 lakh crore) revenues a year, will be entering a sphere already dominated by web firms such as Google and Amazon and software product companies such as Microsoft and Oracle.

Cloud services, or delivering access to applications through the Internet, started off with web companies such as Google and Saleforce.com 3-4 years ago. When such services started threatening pure software companies such as Microsoft and its enterprise equivalent SAP, they too plunged into the market over the last two years.

Services companies, including Indian giants such as Infosys, TCS and Wipro, have been mostly talking about the transition and are yet to define a clear and aggressive cloud-strategy, even though they too have as much to lose from them as the product companies.

Without a strong, across-the-vertical product portfolio, IBM too is likely to focus more on product areas where it is traditionally strong, according to indications from the officials. Indeed, the company currently has an active ‘private cloud’ business, which focuses almost exclusively on other software companies or IT departments of other firms for its clients.

Unlike the traditional cloud business, which accumulates the IT infrastructure of many companies at a single location, ‘private clouds’ accumulate the IT equipment of a single company at a single place.

IBM says it has the largest number of enterprise cloud customers, including private clouds within the scope of clouds. IBM’s entry into cloud will be unlike those of others as the company is in charge of running entire IT networks of large firms such as American Express and Bharti Airtel.

Unlike Microsoft and Oracle, which have to negotiate with the companies to move their applications to the cloud, IBM can simply do it.

Reddy points out that many cloud systems in place today, such as those of Google and Amazon, have evolved from consumer applications like web email and e-commerce and as such, may have limited applicability to the needs of large enterprises. “A lot of them are giving leftover capacity from their main business… But we are setting up 30 different data centres around the world for our cloud business. We are investing $2 billion in the one at North Carolina alone. Several of them are already functional,” he added. The company believes that its somewhat late entry is justified by the need for extra security that enterprise-grade offerings need.

However, unlike product companies such as Microsoft, SAP and Oracle, which are all famous for a particular function such as office productivity, enterprise planning and data storage, IBM does not have a strong product to push, except in the area of software development itself and office productivity.

It will therefore push a more collaborative cloud service, pitching itself as a ‘blank slate’ on which it will deploy others’ software. “We will support a bring-your-own-licence model,” Reddy says.

IBM also has strong partnerships with other IT services firms such as Infosys Technologies and Wipro Technologies and will try to bring them into the cloud world as well. Like IBM’s own IT services division, these companies use many of IBM tools to create custom software for their clients. “We will provide the tools to create a cloud to our partners… So they can either use these tools to make their own clouds or even resell our [fully formed] cloud,” he added.

The company also believes that customers are likely to continue to use a mix of private and public clouds, partly due to privacy and security concerns and partly due to legal concerns on shipping data outside the country of origin.