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IBM and Microsoft team up to push hybrid cloud options

IBM joins forces with Microsoft to support the other's cloud platforms with their respective enterprise apps. Whether the software gains can cover IBM's hardware losses remains to be seen.

A deal disclosed by IBM and Microsoft could benefit enterprises with investments in both IBM and Microsoft software, by giving the customers more flexibility in how they mix and match products and services.

The latest partnership disclosed this week, has both vendors pledging to make their respective applications and infrastructure software available on the other’s cloud platform. Both companies said they believe the pairing could spur adoption of hybrid cloud computing.

 "What you are seeing is infrastructure pieces from these software stacks now building on other cloud ecosystems," said Nigel Fortlage, vice president of IT at GHY International, a customs brokerage firm in Winnipeg, Manitoba. "This puts IBM in a better position for helping people understand what a hybrid cloud is. Not just an internal/external hybrid cloud but cloud- to-cloud hybrid options that could become more pervasive."

The deal calls for IBM to make middleware, such as WebSphere, MQ and DB2, available on Microsoft’s Windows Azure. Microsoft will make Windows Server and SQL Server available on the IBM cloud.

Also both companies are already collaborating on a Microsoft .Net runtime for IBM’s cloud-based Bluemix development platform. IBM will also extend support of its software that runs on Windows Server Hyper-V, as a way to better support hybrid cloud environments. Both companies also plan to make IBM Pure Application Service available for Azure.

The deal presents each company with new opportunities, said Larry Carvalho, an analyst at IDC, most notably Microsoft gaining .Net and Hyper-V support on IBM platforms and Microsoft’s best-selling applications now fully supported on IBM’s SoftLayer cloud environment. The deal also comes at an opportune time as each company, especially Microsoft, expands their respective data centers around the world, he said.

Executives from both companies did not say which party will optimize the server hardware to maximize the performance of applications, something Carvalho said needs to be addressed for competitive purposes.

Whatever hardware optimization that is done over the short term figures to be done on Intel chips, not IBM’s proprietary Power or mainframe processors, since all of Microsoft’s products are tuned for Intel chips. For this reason, some IBM users see the deal as a one-way street in favor of Microsoft’s products.

"Microsoft products in the Azure cloud are not supported on my Power servers, so that isn’t a win-win for me," said one IT professional with a manufacturing company in St. Paul Minn. "So from that standpoint this arrangement is just a win for Microsoft on Intel".

The Microsoft deal follows the one IBM struck with Apple this past July, which calls for the two companies to deliver 100 industry-specific enterprise-class applications, along with a raft of IBM cloud services tailored to take advantage of Apple’s iOS. That deal also potentially opens up new opportunities for IBM among both its existing and new user accounts.

While IBM’s cloud division reported 80% growth in this year’s third quarter on a pace to produce $3.1 billion in annual sales, and that its data analytics produced $16 billion in yearly revenue, the company’s server hardware continued its year in a more precipitous drop. This was the primary reason the company came up $1 billion short for the quarter in meeting Wall Street’s expectations.

The question remains, can IBM increase its software and services faster than the losses it is suffering on the hardware side of the house? Over the past year the answer is no. It needs the recent deals with Apple, Microsoft, SAP and probably a few more like them if it hopes to dig itself out of the hole it’s in.

"This whole business is changing to a low margin, high volume business and that is a real challenge for IBM," Carvalho said. "You will see more partnerships like this as IBM goes through this transition."

Ed Scannell is senior executive editor for TechTarget's Data Center and Virtualization media group. He can be reached at

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