In a recent article at CIO.com, Rob Enderle made a very clear and somewhat compelling case that IBM would ultimately dominate public cloud computing. I believe he's wrong. Yes, IBM will make an impact, but it won't end up being a dominant public cloud computing player. To me, the reasons are obvious.
Enderle's argument is this: "IBM is gearing up for war. Because Amazon.com is mucking around in IBM's space, the folks in Armonk should have the positional advantage. I focus here on IBM's strengths compared to Amazon's weaknesses largely because Amazon isn't fundamentally an IT solutions provider. Rather, Amazon is a successful retailer that found a low-cost way to provide services through its retail model to IT."
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Enderle lists a few core issues that should propel IBM ahead of Amazon Web Services:
- "Amazon lacks a deep relationship with IT"
- "IBM cloud making progress, ready for storm"
- "Don't bet against the old dog in the fight"
Of course, you would not know that if you look at any of the recent market numbers. Amazon took in around 35 percent of the $1.2 billion spent globally on public IaaS in the fourth quarter of 2012, and IBM came in a distant second with 5 percent, according to Synergy Research Group. Other studies show the same (or worse) for IBM, with a few analyst firms leaving IBM off the research altogether, instead naming Rackspace, Microsoft, and Google as Amazon's true competitors.
There are three reasons why IBM won't win against Amazon.
First, the fact that Amazon does not have a long history in enterprise IT is precisely why it's the preferred public cloud solution. It doesn't have legacy baggage, so is not limited by the traditional constraints we place on IT and IT technology providers such as IBM. Amazon was able to build its offering from the market requirements up. It doesn't have to deal with maintaining synergy with existing and aging product lines, nor does it have to deal with the internal politics as IBM does.
Second, IBM has done a poor job in both understanding the cloud computing marketplace and providing compelling products to capture the market. Heck, just last week IBM announced it's tossing out SmartCloud Enterprise, to migrate users to SoftLayer cloud. Although IBM is offering free migration to customers off its SmartCloud platform, this has to make IBM cloud users feel a bit uneasy about the company's shifting strategy.
Third, IBM won't beat Amazon -- or the other major cloud providers, for that matter -- because IBM is, well, IBM. Although IBM does understand the enterprise and certainly has the sales force to go sell stuff to enterprises, it doesn't have a culture prepared to promote public cloud services, which are very different than enterprise hardware and software.
In addition, the more cloud services that IBM sells, the less money it will make. In essence, it will displace existing IBM hardware and software with its own public cloud offering. If not, Amazon, Microsoft, Rackspace, and Google will displace IBM hardware and software. It's truly a no-win situation for IBM, but other large enterprise providers are in the same boat.
Ultimately, the market will decide which of us is right. It's too soon for either Enderle or myself to declare victory. But I believe I'm more realistic about IBM's chances of succeeding on the cloud shift.
This article, "Amazon Web Services has no reason to worry about IBM," originally appeared at InfoWorld.com. Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.