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IBM Spends $1.2 Billion On New Cloud Datacenters

Company builds on cloud strategy with 15 new data centers designed to help customers meet compliance requirements and improve application reliability.

IBM plans to invest $1.2 billion in the coming year to build out its network of cloud datacenters in an effort to put computing resources closer to customers.

IBM has been rolling out an aggressive cloud strategy the past couple of years, and it spent $2 billion last summer to acquire cloud infrastructure provider SoftLayer -- a commitment this newest investment clearly targets.

IBM said last week that it would add 15 new datacenters to its cloud arsenal by the end of 2014, bringing to 40 the total number of datacenters it will have to support customers' cloud environments. The company wants to spread its geographic footprint, and much of the planned expansion will focus on adding data centers in international markets, including Hong Kong, London, Mexico City, and Sydney. The new data centers will primarily provide Infrastructure-as-a-Service, enabling IBM to extract maximum value from the SoftLayer deal.

Dennis Quan, IBM's VP of cloud infrastructure services, said during a phone interview that the move is intended to do two things: Help customers better contend with regulatory compliance requirements by enabling them to keep data within the countries they operate in, and ensure that their apps are more reliable.

"By placing data centers in more countries around the world, we're much more able to meet these needs and enable our customers to keep data in country," Quan said.

On the first front, having more data centers geographically closer to clients would allow those companies to satisfy local regulations requiring that personal data be retained within a country's borders. But it also will give them more options for storing data outside of the U.S., and thus away from the prying eyes of the National Security Agency -- an important consideration ever since contractor Edward Snowden leaked documents detailing the NSA's far-reaching surveillance tactics.

[Read how IBM is focused on software-defined storage and the importance of storage integration with networking, virtualization, big data, and the cloud in "IBM Emphasizes Integrated Storage."]

And even though IBM is distancing itself from that topic, the two goals -- giving customers more flexibility in where they store their data, and shielding them from unwelcome snooping -- are intertwined.

"The concerns about data locality are real," Eric Hanselman, chief analyst at 451 Research, said via email. "The NSA revelations aren’t causing a sudden dash for the exits. The reality of what it takes to get into and out of a datacenter is that it just can’t happen that quickly. But it is a major concern that is shaping decisions that are being made today."

Major enough that a recent survey by co-location provider Peer 1 found that one in four companies in the UK and Canada is moving data out of the U.S. to dodge the NSA's surveillance efforts. In such an environment, having cloud data centers in as many international locations as possible clearly is an advantage.

"Geographic diversity was a nice feature pre-Snowden," Hanselman said. "Now it’s mandatory."

That said, IBM is focused on the business benefits of its pending data center investment, not the security implications. IBM promises to deliver app reliability by routing traffic between its cloud data centers via its own private network.

Quan said the private network enables clients to avoid bottlenecks and other sources of latency, but he also acknowledged that having traffic moving between data centers over public networks "exposes those data transmissions to any of the issues that might affect the public Internet."

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