IBM Faces a Crisis in the Cloud

You may have heard about Big Blue’s recent ad campaign that takes a dig at Amazon.com. In its marketing material, IBM claims to power 270,000 more websites than Amazon, via its cloud computing service. It’s a flimsy jab at Amazon because IBM has been a major laggard in the cloud rental market, having bought its way into the business in July with its acquisition of SoftLayer Technologies.

Far from being a cloud pioneer, IBM has spent most of the past few years downplaying services such as Amazon’s as insecure, low-margin businesses of little interest to a serious computing company. “You can’t just take a credit card and swipe it and be on our cloud,” IBM executive Ric Telford told Businessweek in early 2011. The company’s pitch to customers was that it knew them intimately and its cloud system was safer. But thousands of startups, including Dropbox and Netflix, were more than happy to swipe their credit cards and get going on Amazon.