IBM Acquires SoftLayer: Will Small Biz Hosting Remain?

IBM is acquiring SoftLayer Technologies, a company specializing in hosting and cloud infrastructure. The deal is in the $2 billion range.

SoftLayer, based in Dallas, Texas, claims to be the world’s largest privately held hosting company. It has 25,000 customers, many of them large customers like AT&T. GI Partners purchased the equity in partnership with the company’s management in August 2010.

According to a Reuters report, IBM plans to “create a new division for clients interested in so-called cloud services, a move to better compete with larger rivals in the space.”

Senior vice president of IBM Global Technology Services Erich Clementi says the acquisition is aimed at serving larger clients.  “As businesses add public cloud capabilities to their on-premise IT systems, they need enterprise-grade reliability, security and management. To address this opportunity, IBM has built a portfolio of high-value private, public and hybrid cloud offerings, as well as software-as-a-service business solutions,” said Clementi in the official announcement. “With SoftLayer, IBM will accelerate the build-out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovation.”

However, our own experience shows how small businesses needing to scale growth may benefit from the resources IBM and SoftLayer together bring to the table.  It all depends, though, on IBM’s approach to smaller customers post-acquisition. It remains to be seen whether IBM will value small business customers or move away from them.

SoftLayer is the hosting company for Small Business Trends and certain of our cloud applications, such as BizSugar, and our proprietary Awards platforms.

“I have to believe we’re among the smaller customers,” says Anita Campbell, CEO of Small Business Trends. “So far that has suited us just fine. Over the years we’ve had a number of bad experiences with hosting companies whose target market is small businesses. Sure, they were inexpensive. But lack of responsive service and unreliability were key issues. We had one hosting company show us the door, because we needed service but the company was charging a cut rate and didn’t want to spend any time on us. So for our larger sites we deliberately aimed up at a hosting provider used to serving larger customers, even though we paid a bit more.  Service has been reliable, and we’ve had access to sophisticated monitoring tools.”

However, she notes, “We’re taking a ‘wait and see’ attitude as to the direction IBM takes the company in. Will they move away from standard hosting, especially for small businesses, to pursue their larger vision of  cloud services for big enterprises?  That’s an open question in my mind.”

Lance Crosby, founder of SoftLayer, sent an email notice to existing customers saying it would be business as usual.  We’ve embedded the text below - just remember that once the transaction is complete IBM will be calling the shots, not necessarily Crosby:

IBM Photo via Shutterstock