Business

IBM agrees to acquire cloud computing firm

IBM reportedly will pay about $2 billion for SoftLayer Technologies, a private company based in Dallas.
Stan Honda/AFP/Getty Images
IBM reportedly will pay about $2 billion for SoftLayer Technologies, a private company based in Dallas.

As businesses demand more services delivered over the Internet, the titans of technology are stepping up their offerings delivered from data centers afar, so-called cloud computing.

IBM made a big move Tuesday, announcing that it had agreed to buy SoftLayer Technologies, a cloud computing company, in an effort to strengthen its position in the fast-growing market.

The purchase price was not disclosed. But it was about $2 billion, according to a person told of the negotiations, who asked not to be named because he had not been authorized to speak publicly about the terms.

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The acquisition is the largest made under the leadership of Virginia M. Rometty, who became chief executive in January 2012. The purchase, analysts say, also gives IBM a broader presence in the business of cloud computing services.

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Amazon is the leader in the public cloud arena, and its roster of customers includes not just start-ups and research projects, but also large companies like Netflix.

Amazon does not break out the revenue for its cloud business, but it is growing quickly. The unit had estimated revenue of $2 billion last year, according a recent research report from Barclays.

IBM executives say its strategy is to compete in the public cloud market not with basic computing capabilities like processing and storage, but with software for marketing, procurement, and customer service delivered as cloud offerings.

The SoftLayer acquisition will sharply expand IBM’s capability to deliver computing services remotely to customers from IBM data centers — the public cloud model.

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SoftLayer, a private company based in Dallas, has a network of 13 data centers in the United States, Singapore, and Amsterdam, and revenue of about $400 million a year.