Cloud

IBM SoftLayer chief: A Rackspace acquisition is ‘not exciting’

Above: Lance Crosby, chief executive of IBM's SoftLayer cloud business, at the SoftLayer data center in Dallas.

Image Credit: Ron Jenkins/Feature Photo Service for IBM

SAN FRANCISCO — For weeks, analysts have wondered about the fate of cloud and hosting provider Rackspace. Well, you might as well rule out an acquisition from IBM.

While Rackspace was smart to lead the charge in the OpenStack open-source cloud software, the company doesn’t have enough technology to warrant an acquisition, IBM SoftLayer cloud chief executive Lance Crosby said in an interview with VentureBeat.

“For us, I mean, outside of IP or some kind of technology that would really be compelling, we already could do everything they do on the professional services side of the house,” Crosby said. “At this point, we’d just be buying revenues and customers. That’s not exciting.”

Several cloud commentators have suggested IBM could be a likely Rackspace buyer, following Rackspace’s disclosure that it’s open to being bought. Hewlett-Packard, Cisco, and Red Hat have also been thrown out, for various reasons. But each seems to have downsides, and now it looks like we can rule out an IBM buyout.

And that’s despite Crosby’s longtime relationship with Rackspace’s founders and executives.

“I know Graham [Weston] and Lanham [Napier],” Crosby said. “Lanham’s gone now, but Lew [Moorman], all those guys, all the way back to 1998, 1999.”

The notion is also surprising given IBM’s stated interest in supporting and gaining money from OpenStack.

So, who would buy Rackspace, then?

“It probably makes sense for a company like HP, Accenture Infosys, that needs some of that kickstart in cloud,” Crosby said.

More information:

International Business Machines Corporation, abbreviated IBM and nicknamed Big Blue (for its official corporate color), is a global technology and innovation company headquartered in the Northeast US. IBM is the largest technology and ... read more »

Powered by VBProfiles


Mobile developer or publisher? VentureBeat is studying mobile app analytics. Fill out our 5-minute survey, and we'll share the data with you.
9 comments
Erik M.C. Peterson
Erik M.C. Peterson

“For us, I mean, outside of IP or some kind of technology that would really be compelling, we already could do everything they do on the professional services side of the house,” Crosby said. “At this point, we’d just be buying revenues and customers. That’s not exciting.” Isn't that what IBM does though? Is IBM trying to become more exciting now? I hope so..

Randall Shimizu
Randall Shimizu

I agree the Rackspace does make sense for IBM now that they own Softlayer.

Erik Godin
Erik Godin

If they money is so good then why is Rackspace selling its business? More importantly, why hasn't anyone yet jumped at the opportunity to buy them out?

Chris Topher
Chris Topher

Owning mc Donald's franchises is not exciting, but it pays. Well. Owning rack space could put the IBM brand name recognition back into the homes of everyone. Reason why I should have this guys job #47.

Benny Johnston
Benny Johnston

Here's a reason: IBM has the 4th most valuable brand in the world, Rackspace does not. There would be no point in paying billions for the Rackspace brand because they would probably drop it anyway to avoid confusion with Softlayer.

Chad Keck
Chad Keck

@Benny Johnston  The Rackspace brand is orders of magnitude more well known that SoftLayer. If there was some sort of acquisition it would make sense to drop SL in favor of Rackspace. Similar to what SBC did when they bought AT&T. Dropped their own name in favor of a more worldly brand. SoftLayer is/was relatively young in this market.