IBM has acquired Dallas-based SoftLayer Technologies, a provider of public and private cloud services to small to midsized businesses (SMBs) and large organisations.
SoftLayer, which has 13 data centres in the US, Europe and Asia, offers scalable physical infrastructure hosting on dedicated or shared servers, offering various levels of performance and security for companies looking to deploy applications in the cloud.
IBM says it will combine SoftLayer's offerings with its own SmartCloud Franchise to form a new Cloud Service division, which will allow the company to mount an attempt at challenging Amazon's dominance in providing cloud services.
Terms of the deal were not disclosed, but the Wall Street Journal has reported that the deal is worth an estimated $2 billion, according to an anonymous source "familiar with the matter".
Erich Clementi, senior vice president at IBM Global Services, said SoftLayer will allow IBM to smoothly transition its clients to the cloud while offering a broad portfolio of open IT infrastructure and software services.
IT analysts Gartner placed SoftLayer in its "Niche Players" section of its Magic Quadrant for "Web Hosting and Cloud Infrastructure Services" in 2010 because of its focus on the SMB market.
In a company blogpost, Gartner analyst Lydia Leong says that SoftLayer "fills a gap" in IBM's portfolio.
She says: "IBM has historically not served an SMB market directly in general, and its developer-centric SmartCloud Enterprise (SCE) has gotten relatively weak traction (seeming to do best where the IBM brand is important, notably Europe), although that can be blamed on SCE's weak feature set and significant downtime associated with maintenance windows, more so than the go-to-market (although that's also been problematic)."
Gartner estimates that $109 billion (£71.1 billion) was spend on cloud servers in 2012, a 20% increase year-on-year.
Article continues below