SEC investigates IBM for possible cloud washing

The SEC is investigating IBM for possible cloud washing, and Linthicum and his guest debate what this and recent price drops mean for the industry.

Many pros in the IT industry are still wishy-washy on what cloud truly means, but the U.S. government is asserting it has a firm hold on the concept. The Security and Exchange Commission (SEC) is investigating IBM for how it's reporting its revenue, claiming it misrepresented income as cloud-based when it's truly from just traditional hardware and software. Cloud washing is rampant in the IT market because cloud hype is so high that vendors are better positioned in the market if they represent themselves as cloud vendors – forcing providers to reposition revenue as cloud-based when it's not.

David Linthicum and his guest Mike Kavis, vice president and principal architect at Cloud Technology Partners, wonder just how the government and SEC know what's cloud revenue and what's not.

Dave and Mike also discuss ProfitBricks' and CloudSigma's recent massive cloud price cuts and the IT industry's low-tech secret about transferring data. Topics include:

  1. The SEC is investigating IBM for how it's reporting its cloud revenue. IBM is definitely in the cloud with its SoftLayer buy this year, but how much in the cloud? Dave asks, "How the heck does the government know cloud revenue versus not cloud revenue?" and "How does the government understand what cloud is if people in the industry hardly understand what cloud is?" Vendors may have to pad their numbers because big corporations want to follow the big success stories in the cloud, but is marketing spin and cloud washing fair game?
  2. After CloudSigma's similar announcement last week, ProfitBricks cuts cloud pricing -- in some instances by 50%. It seems to be a race to the bottom for IaaS providers trying to compete with Amazon Web Services (AWS), but is this the best tactic? For the time being, AWS doesn't seem to have too many chinks in its armor, so the only way they can compete is to lower prices, but will it matter if the product is still years behind Amazon's? And finally, who are Amazon's real competitors?
  3. Migrating information to the cloud seems like a high-tech process, but it's hush-hush that this migration is often done via the postal service and disk drives. Now iDrive is looking to address this low-tech procedure and bring it to 2013 -- is this a viable business model?

 

This was first published in August 2013

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