IBM offering companies their own cloud

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: April 11, 2012 - 9:13 PM

The new computers, designed for smaller corporations, deliver cloud computing without the Internet's security concerns.

IBM thinks it's possible to have your head in the clouds and still have your feet on the ground.

On Wednesday, IBM introduced its new PureSystems line of computer systems designed to bring the benefits of cloud computing technology -- while avoiding some of the risks -- to small- and medium-sized businesses.

The new computers were partly designed and tested at the company's Rochester, Minn., plant, and will be manufactured there until other production lines are set up. IBM says it spent $2 billion to develop the new computer systems, which start at $100,000. It said a typical system probably will cost $250,000 to $500,000.

Cloud computing is a technology in which tasks are shared by a large group of networked computers and data storage units accessed over the Internet from remote locations. The technology holds the promise of lower costs, simplified management and the ability to quickly scale up computing power for peak loads.

In theory, it doesn't matter whether cloud computing equipment is in the data center next door or in another data center half a continent away. But some critics point out that sensitive personal information, such as medical records, shouldn't be handled by a remote data center where data security can't be guaranteed.

As a result, Internet-based cloud computing -- offered by such big names as Microsoft, Amazon and IBM -- isn't widely used by corporations.

IBM's strategy with the new computers avoids that security controversy. The PureSystems don't use remote data centers (the "public cloud"), and instead keep everything within a local data center (a "private cloud").

"From a big-corporation standpoint, the biggest concern with the public cloud is security," said Eyal Ofir, an analyst with Canaccord Genuity in Toronto. IBM's PureSystems "is a way to go after a market that has stayed away from the cloud."

Tim Alpers, a product manager in the systems and technology group at IBM's Rochester plant, agrees.

"One of the key concerns of businesses is the security associated with cloud computing," Alpers said. "They may want to bring cloud computing in-house and manage it themselves to ensure security."

But Paul Burns, an analyst with Neovise, a Fort Collins, Colo., research firm specializing in cloud computing, says there's more to the appeal of IBM's new computers. He says IBM, like cloud computing competitor Hewlett-Packard, is trying to appeal to customers who want a cloud computing system that works right out of the box.

"Corporate data centers are definitely going to cloud technology, but corporations also want the benefits of not having to mix and match computer servers, data storage and networks from different suppliers," Burns said. "They'd rather buy something like the IBM PureSystems that are all packaged together and ready to go."

Added Alpers, "We put a private cloud in a box, and focused on expert integration of the pieces of the computer system."

One company interested in private cloud computing says the IBM strategy makes sense.

"The ability to quickly deploy a highly scalable and secure infrastructure is very desirable," said Keith Swingle, director of information technology at Array Services Group of Sartell, Minn., which handles credit card and patient health record information as part of its billing and collection operations for hospitals and businesses. "It's sort of like buying a cake and then putting on your own homemade frosting."

But Bil MacLeslie, president of ipHouse, a Minneapolis data center company that offers cloud computing in a local setting, argues that IBM is selling an expensive product.

"An entry-level system for $100,000?" MacLeslie asked, noting that his firm will provide similar service for $2,750 per month -- with skilled technicians on-site.

Analyst Burns said IBM may be trying to have it both ways: It is selling cloud computing systems that can function locally but that also can connect to IBM's own public cloud data centers, called the IBM SmartCloud.

"PureSystems is a 'private-cloud-in-box' that mirrors the capabilities of IBM's public cloud," Burns said. "That makes it easy for customers to move back and forth between the two."

Steve Alexander • 612-673-4553

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