IBM takes aim at Amazon Web Services via marketing campaign

Summary:IBM's aggressive anti-AWS marketing may just validate Amazon as a go-to enterprise vendor, but Big Blue argues its SoftLayer acquisition is transformational.

IBM has launched a marketing campaign to position itself as a cloud leader and take a few shots at Amazon Web Services. Much of your take on the tale of the tape will depend on your definition of cloud computing.

In print, online and TV ads, IBM plans to tout its $1 billion in third quarter cloud revenue and argue that it is beating Amazon in the federal and enterprise markets with its services.

Moving to IaaS: An overview

Moving to IaaS: An overview

The move is interesting since Amazon Web Services (AWS) recently won a deal to provide services for the CIA. IBM was against the AWS win. The other item to note is that IBM's aggressive anti-AWS marketing may just validate Amazon as a go-to enterprise vendor.

Of course, AWS is a big dog in the public cloud services market. And its Re:Invent conference next week in Las Vegas is likely to feature a bevy of enterprise customers and testimonials. AWS is also very disruptive to traditional enterprise vendors because Amazon doesn't care all that much about profit margins. As a retailer, Amazon skates by with razor thin margins. Amazon CEO Jeff Bezos would be stoked with profit margins in the high single digits for AWS. The problem is that profit margin is a long way down for enterprise giants.

Related:  IBM's Q3 mixed, hardware business thumped  |  We first failed at cloud because we were closed: IBM  |  Private cloud is ill-advised and archaic says AWS boss  |  Value of Amazon's AWS trumps Kindle franchise, says analyst

IBM's talking points go like this in its marketing campaign:

  1. IBM Cloud supports 270,000 more Web sites than Amazon and supports 24 of the top 25 Fortune 500 companies.
  2. Big Blue's cloud services are high value, open and reliable.
  3. SoftLayer gives IBM a big cloud jump-off point .
  4. IBM plans to go after AWS outages in a big way and tout its OpenStack infrastructure. Rackspace has also touted its OpenStack approach.

Now what's tricky here is the definition of cloud when it comes to revenue. Of IBM's $1 billion in third quarter cloud revenue, $460 million was cloud services and the rest was hardware, software and IT services to build cloud infrastructure for customers.

AWS and Google would scoff that hardware would be counted as cloud revenue. Oracle, HP and others wouldn't.

ibm ad vs AWS
A look at IBM's print ad vs. AWS.

 

Amazon's third quarter "other" revenue, which largely consists of AWS was $960 million in the third quarter. For the nine months ending Sept. 30, "other" revenue was $2.55 billion, up 61 percent from a year ago.

If you go with a cloud services only argument, AWS is twice as large as IBM. If you include hardware in the cloud revenue equation, the two are about equal on revenue give or take a few million.

As for pricing comparison's IBM's SoftLayer has the most AWS-ish pricing schemes. SoftLayer's pricing is transparent. IBM's other cloud calculators take a bit more work. The biggest takeaway is that AWS is on its enterprise rivals radar in a big way.

Topics: Cloud, Amazon, IBM

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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