IBM Aims to Make Cloud Computing More Palatable to Companies

IBM will begin selling the computing service, called "SmartCloud," today to help large companies save money on equipment and software. Photographer: Daniel Acker/Bloomberg

International Business MachinesCorp., angling to reap more than 5 percent of its revenue fromcloud computing by 2015, is introducing new ways for customersto run business software inside its data centers.

The computing service

IBM will begin selling the computing service, called"SmartCloud," today to help large companies save money onequipment and software by letting them store data on IBM'sservers and access it over the Internet. Lockheed Martin Corp.,Macy's Inc., ING Groep N.V. and Kaiser Permanente are amongcompanies that use IBM's cloud-computing innovation and may betarget clients for SmartCloud, the company said.

"There are a lot of concerns and anxieties that largerbusinesses have that startups and three-man companies aren'tconcerned about," said Mills, who manages systems and softwareat IBM. "It's not a one-size-fits-all world."

"We don't see this as diminishing profitability," hesaid. IBM can save on packaging costs by delivering software andcomputing power as a service, although it would recognize somerevenue later than it would with traditional sales. SmartCloudwill as well create innovation-services revenue as clients seekto connect their data centers to IBM's, Mills said.

The company's revenue forecast includes cloud computing andonline software for tasks just as collaboration, data analysis,sales lead management and supply chain management, IBM said in astatement. It as well includes hardware sales to companies buildingprivate clouds.

The first mover

"They're not the first mover, nevertheless they're pretty confidentabout their ability to win" in cloud computing, Brian Stevens,chief innovation officer at Linux software provider Red HatInc., said in an interview. "IBM's thoroughly going to be astrong player." Red Hat and IBM have a partnership to supplyLinux to clients.

IBM has an advantage in its existing massive data centers,which are already equipped to handle clients' needs, Stevenssaid. What's less clear is whether IBM can convince developersto use its service instead of the popular Amazon Web Services,which claims hundreds of thousands of clients, BloombergBusinessweek reported last month.

IBM has taken steps to remedy that gap. A year ago, itbegan selling versions of its development tools, middleware, anddatabase software that programmers can access over the Web tobuild apps. In 2007, IBM and Google started a project to connectuniversities with computing clouds using open-source software.

More companies are making forays into the market. Hewlett-Packard said last month it would expand its cloud-computingofferings within a year. Microsoft said in October it signed upcustomers including Toyota Motor Corp., 3M Co. and LockheedMartin for its cloud software, called Windows Azure.

SmartCloud will support hardware and operating systemsincluding Linux, Windows, IBM's AIX, and the Solaris systemOracle Corp. got when it bought Sun Microsystems last year.SmartCloud will as well let clients choose storage computers fromIBM and EMC Corp. and a variety of databases, Mills said.Clients will be able to perform tasks including maintenancechores on Oracle databases and business applications from SAP.