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BLOG: Why IBM will win the war with Amazon Web Services

Rob Enderle | Nov. 11, 2013
Amazon dominates the cloud, but IBM, strengthened by its SoftLayer acquisition, has unleashed a marketing campaign that fires on all cylinders. Whether IBM's cloud is, in fact, better may matter less than Amazon's ability to challenge a company that's made many competitors crumble over the past 102 years.

IBM Cloud Making Progress, Ready for Storm
IBM released its cloud marketing against Amazon this week. The associated stats are impressive. Realize that this is done to cause the belief that Amazon will fail to proliferate. This is less about IBM's progress and more about showcasing that Amazon can't compete, or that the market is moving away from Amazon, so that anyone buying into this service for an IBM-class deployment looks foolish.

IBM reports that cloud revenues exceeded $1 billion in Q3 and are growing at a whopping 70 percent, thanks largely to its $2 billion SoftLayer acquisition. This cuts through Amazon's sales like a hot knife through butter.

IBM also points out that its solution is far more reliable, thanks to a $6 billion R&D investment and 1,400 patents, including a solution to the " noisy neighbor" problem that occurs when companies share cloud resources. This implies that Amazon may be at some intellectual property risk and can't strategically compete with IBM because it simply lacks the skills and resources. (AWS users do have the option of running their cloud applications on dedicated hardware.)

Additionally, IBM cites its key role in OpenStack and its massive scale of 25 data centers and 37,000 cloud experts, which exceeds the rest of the market, let alone Amazon itself. IBM knows most companies need a hybrid approach that integrates cloud and on-premises technology, so it's comparing its open approach and 2,200 available APIs to Amazon's proprietary approach and 60 APIs.

IBM wins run the gamut from trendy companies such as Tumblr and Yelp to traditional powerhouses such as Molson Coors, PG&E and AT&T and government agencies such as the GSA, the VA and HUD. (Amazon does have the CIA's private cloud, thanks in part to a recent court decision.

Each statement from IBM is designed to showcase that Amazon doesn't just have an inferior offering but is simply outclassed. Without an enterprise-class partner, Amazon is vulnerable to this sort of attack.

Don't Bet Against the Old Dog in the Fight
IBM learned early on that fights in any market are often won and lost on perception. The company allocates staff and resource accordingly. In these battles it comes down to who has the most resources and knows the battlefield best. On all vectors, this should be IBM. Amazon may, as the first mover, have the tactical advantage, but IBM has the strategic advantage. At the end of the day, this is IBM's battlefield. It has the best weapons and the appropriate skills.

Up to now, IBM hadn't been fighting. This week, that changed. The fight does raise Amazon's stature, and AWS could very well counter with the combination of a strong IT partnership and a better funded and executed marketing effort. But others have failed to see how they are exposed - and to devote the right resources to this kind of fight. In the end, this mistake will likely assure that IBM wins this fight yet again.

 

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