After rumors last year that IBM was getting out of the Government Cloud game in New Zealand, which we now know to be untrue, today they unveiled a new level of investment in New Zealand Cloud to the tune of $10 million including Highbrook and another North Island data centre.
The announcement isn’t unexpected given that IBM internationally is pouring $1.2 billion into Cloud Computing transforming itself in a similar way to Microsoft. It’s doubling the number of its global data centres across the world just this year and already has a kit bag with over one hundred different SaaS solutions, with more on the way. IBM says that it expects pure Cloud revenues of $7 billion by 2015.
This is an interesting announcement for a variety of reasons.
It shows that IBM is committed to delivering Cloud services from within New Zealand and they aren’t going anywhere.
IBM is still, as far as I know, the only global Cloud player that has a presence in New Zealand at the moment, though I know of one other that is likely to land within the next six months.
It gives customers the ability to not only leverage local Cloud services but expand out into IBM’s global Cloud. No one else offers this today within New Zealand, companies who want the power of offshore and the localisation of data need to have a hybrid solution with more than one provider and no doubt a broker.
It is likely to see price pressure put on the other players in the market forcing a reduction in pricing. Particularly in relation to the Government IaaS services. It stands to reason that IBM can start and win a price war against the other players in the local market. That can only be good for the consumer.
SaaS. The local market is still reasonably dominated by IaaS and PaaS (infrastructure and platform) with little offerings in the way of software. IBM brings a toolbox with a lot of products ready to go.
The question in my mind for the last couple of years has been, why is the uptake with IBM been so slow? Particularly with Government IaaS? They have a good service, it’s reasonably price, they are eager for business, they are making investment, they arguably have a deeper range of services, they are likely to bring more and more products to market locally, so why the reluctance on the customer’s part?
Privately, IBM New Zealand admits that they have been difficult to do business with over the last couple of years and that some changes are underway to remedy that. The fact that they are admitting that, albeit privately, shows that they know it is a problem and are likely to do something about it. That’s a tough cultural change no doubt, but a necessary one. Kiwis are a strange bunch, we don’t like to be told what to do, don’t like experts in expensive suits, and are nervous if we think that the person we are dealing with is anything less than completely open and honest.
There is no doubt a degree of parochialism there as well, an unwritten provincialism that makes us nervous of the overseas mega corps. Though, there are signs of this changing with the move to Amazon and Microsoft Clouds underway, and they don’t have local presence.
IBM is set to disrupt the local market this year. They will be the ones to watch. Game on.
“This investment into a local cloud offering brings onshore state-of-the-art cloud computing to our local clients. It makes it easier for New Zealand organisations to adopt cloud and drive business transformation and innovation, bringing greater flexibility to the way enterprise and government agencies manage their data, run their business and deploy their IT operations locally.” – Kate Tulp, IBM New Zealand