Acquisitions Position Company to Compete for Business in Media Services
By Fred Dawson
February 20, 2014 – IBM, having positioned itself for a more aggressive approach to public cloud services, is taking steps that should make it a viable competitor for business from service providers and media companies who see advantages to leveraging public cloud resources.
Last year IBM responded to ongoing declines in its private cloud datacenter sales by spending a reported $2 billion to acquire SoftLayer Technologies, a second-tier player in public cloud provider rankings by Gartner and others but one which gave Big Blue a global foundation for expansion. With IBM’s public cloud revenues now tracking at over $1 billion per quarter and targeted to hit $7 billion next year, the company says it is investing another $1.2 billion this year to add 15 datacenters to the SoftLayer portfolio, bringing the total to 40 locations in 13 countries as it phases out its previous public cloud operation, SmartCloud Enterprise.
At the same time IBM is hoping to gain a competitive edge in the public cloud business with acquisition of Aspera, a leading supplier of fast-file transfer technology that addresses one of the primary concerns among distributors of high-value IP video services who want to use the public cloud to lower costs of storage, encoding and other video processing functions. The deal, which closed in January for an undisclosed sum, puts IBM’s cloud service in a better position to capture business from Aspera users, including many of the leading television networks and motion picture studios.
“Aspera solves critical challenges at the intersection of two of the most influential trends driving business today – Big Data and cloud computing,” says Craig Hayman, general manager for IBM’s Industry Cloud Solutions. “With this acquisition, IBM will help our customers more effectively and efficiently move large files to and from the cloud and within the enterprise to where individuals can extract real business insights from that data.”
Aspera’s key business will go on as before, supporting data transfers across private and public clouds regardless of who the datacenter supplier is. But as the year progresses the Aspera technology will be integrated into the SoftLayer infrastructure, making it a key component of IBM’s public cloud offering, Hayman says.
IBM will be able to exploit the fast-file transfer capabilities other cloud suppliers, notably Amazon Web Services and Microsoft Azure, have been able to offer through integration with Aspera. Moreover, the acquisition could give IBM a big leg up in the video distribution business, given the relationships Aspera has with other players in the ecosystem, including CDN suppliers Akamai, Level 3 and Limelight, encoding providers such as Elemental, Brightcove’s Zencoder and encoder.com and providers of content management services such as thePlatform and Brightcove.
As described by Francois Quereuil, senior director for worldwide marketing at Aspera, the company’s software platform is designed to turbo charge content delivery with line-speed transfers at any distance from Infrastructure-as-a-Service (IaaS) facilities while creating an overlay of security for managing secure user authentication, content browsing and access control across all major cloud and enterprise storage platforms. “Our customers achieve five to ten times faster transfers by installing our software on managed metro networks and 1,000 times faster transfers across the Internet,” Quereuil says.
For example, the transfer of a 24 gigabyte file over the Internet’s default TCP/IP (Transfer Control Protocol) mode of transmission might take about 26 hours to go half way around the world, whereas customers using Aspera’s fasp (Fast Adaptive Secure Protocol) technology can do it in 30 seconds, he says. fasp operates in the UDP (User Datagram Protocol) domain, replacing the resend mechanisms used with TCP with precise proprietary methods that only retransmit lost packets while utilizing available bandwidth to the fullest extent possible based on the selection of optimal paths and various prioritization parameters.
All of this requires placement of what Quereuil describes as “very lightweight” Aspera processing modules at both ends of any transport path. With its integration into CDNs and various cloud providers’ facilities, the Aspera footprint has grown to where customers have a wide range of distribution options for shifting content where end points are already equipped to support the fasp transfer technology, he notes.
In addition, with the expanding ecosystem of Aspera-connected suppliers it has become easier for customers to integrate the file transfer component of their operations into other workflows at all points in the distribution chain. The backend architecture and APIs allow for fine-grained, centralized control over content access, security and bandwidth, regardless of content storage location, Quereuil explains.
“We bridge the gaps across all steps from production to delivery by integrating manufacturers, solution providers, network service providers, etc. directly into their products and services,” he says. “This really facilitates workflow orchestration with transcoding, media asset management, watermarking, CDN distribution and other functions. For example, in TV distribution a network can automate the use of the cloud to store, archive and push content to broadcasters on schedule, which can really cut time and costs.”
How all this impacts IBM’s ability to draw players in the high-value video distribution market to its cloud service remains to be seen. But it has a big hill to climb when it comes to taking on Amazon Web Services, which, according to Gartner, has a workload capacity five times larger than a dozen of its top competitors combined.
AWS is said to be pouring about $1 billion per year into facilities expansion and cloud technology development. With launch of a regional location based in China at the end of 2013, the company is positioned to support public cloud offerings in ten regions of the world with 26 “availability zones” or datacenter clusters within those regions. The AWS server count has been variously estimated at anywhere from 158,000 to north of 400,000 servers.
Reporting on a talk given by James Hamilton, vice president and distinguished engineer at AWS, at an AWS customer conference in November, The New York Times said the firm is building its own specialized computers, data storage systems and optical networks with the goal of sustaining performance at higher levels than the most advanced commercial systems. “We’re changing everything everywhere,” Hamilton said.
Notwithstanding its big market lead, AWS has every reason to remain aggressive as IBM, Google, Microsoft and other tech giants respond to the rapidly expanding demand for public cloud services. Gartner, at the outset of 2013, predicted public cloud services would register a cumulative annual growth rate of 17.7 percent from 2011 through 2016 with revenues hitting $210 billion in 2016.
What the growth rate turns out to be in reality will depend in large measure on the extent to which enterprises, including media firms and service providers, are willing to go beyond using the public cloud as a resource for handling spikes in datacenter usage. Reporting from the same AWS conference in November, The Wall Street Journal quoted AWS senior vice president Andy Jassy as saying he expects that “in the fullness of time, very few enterprises will own their own datacenters and those that do will have a much smaller footprint.”
Lending some credibility to that prediction, News Corp.’s Dow Jones & Co. says it is moving nearly all its datacenter operations to AWS over the next three years, reducing its own datacenter count from 40 to six as it shifts some 3,000 applications into the cloud. With many apps already running on AWS facilities, the company says it has gained enough experience to be confident it can go to that level of dependency on the public cloud, which it believes will allow it to shift $100 million in infrastructure costs to investments in product innovation.