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Comment by gbasin | Hacker News Reader

This is pretty smart. Cloud is driving the massive valuations for MSFT and AMZN, a standalone company will get a higher multiple here

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Speaking as a former IBMer. I understand IBM wanting to be a player in the cloud space but I'm not sure they ever will be. Like who seriously uses IBM Cloud? I know some big corps probably accidentally get IBM cloud credits with their large IBM contracts but does anyone actually choose IBM in this space?

Much of IT spending is controlled by people that aren't technical and don't really understand what they're buying. No tech firm is going to choose IBM cloud but plenty of corporations will.

Anyone who has been connected to the internet knows the current cloud standards are set by AWS and Azure (maybe with Google and Oracle thrown in there as decorations).

Yeah but they're not really buying cloud. Theyre buying applications +consulting + support along with the cloudm

Even for non-tech corporations, only those with the grayest of hair would consider IBM branding a safer bet than AWS/Azure.

Not really. If you’re eg a Retail corporation, you would not want to spend a dime on AWS. So it’s usually not just tech that’s involved in making these decisions.

I heard (from IBM sales people) that they do sell cloud services to banks.

They are slowly replacing the mainframe contracts by (private) cloud contracts

My unit in IB bought such a thing and didn't do anything with the multi-million dollar outlay over the two years I was there.

Also a former IBMer. IBM cloud has really good compliance for "legacy type" customers. Things like banks and governments where all of the hoops discredit other cloud providers.

So does azure, but azure is not a joke

I’ll take a guess. DB2, mainframe, and Watson?

IBM bought the best hosting company, at the time, SoftLayer, and transformed it into a the absolute worst.

I see where they’re going, if they’re trying to learn from what went wrong with SoftLayer. IBM culture destroyed SoftLayer, so if they want another go at cloud, they do need that business to stay VERY fare away from the traditional IBM and their consulting business.

Oracle tried cloud couple times and failed, and finally they opened huge cloud division in Seattle away from corporate mothership.

Softlayer was a one trick pony. They had the best bare metals in the market. But their product was very poorly built and extremely hard to scale out or add features to.

This is not unexpected. Startups will optimize for a few use cases and deliver, get acquired on those strengths only for the acquiring company to realize that ... the tech isn’t easily scalable.

It also depends on what they mean by cloud. If cloud is their Softlayer acquisition, I am not impressed.

I would love to see them build out a real cloud solution, perhaps even using datacenters full of their z15's. I can't imagine anyone competing with that on commodity hardware in terms of deployment speed and connectivity speed between instances in the same location. It would be crazy expensive though and I doubt they would ever consider it and someone at IBM would have to write a web interface / API into the system that mimics the options of all the current cloud providers.

They acquired RedHat, and with that came Openshift.

It seems smarter to focus on something the top tech companies aren't all focusing on, especially when you were late to the game and others have better engineering teams. There will probably only be a few winners in the cloud wars..

I think that's what they attempted to do with Watson and Watson Health, but it didn't take off the way they were hoping. It seems like they were early in the "AI" space.

For IBM, that may not be true. They're a slow moving older company. Their primary asset is their brand (for older companies) and their distribution (their large network of large clients).

That's a perfect opportunity to clone something and sell

Even if Microsoft or Amazon multiples are out of reach, if it's perceived as a shiny "cloud" company then it might get something like the average of a popular ETF or index which rides the "cloud" bandwagon, currently e.g. 3.5 on sales. With sales of 77 G$ in 2019, and 25 % lost to the spinoff, new IBM would get to 200 G$ of valuation, twice what it was before the announcement. (Are investors this gullible? Maybe.) https://www.bloomberg.com/opinion/articles/2020-10-08/bm-spi...

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