Verizon's planned acquisition of Infrastructure-as-a-Service cloud computing player Terremark Worldwide is the first of many big steps Verizon will make this year as it hammers out its cloud computing services strategy.
Verizon on Thursday announced that it would acquire Miami-based Terremark for a whopping $1.4 billion, folding in the company as a wholly owned subsidiary. The acquisition gives Verizon more cloud computing services muscle domestically, but also helps it crack into the European and Latin American markets where it had trouble breaking.
The acquisition sent shock waves through the cloud computing industry and was the next step in Verizon's "everything-as-a-service" (EaaS) initiative, through which the service provider offers security, storage, computing capacity and more as cloud computing services.
"Cloud computing continues to fundamentally alter the way enterprises procure, deploy and manage IT resources, and this combination helps create a tipping point for 'everything-as-a-service,'" Lowell McAdam, president and chief operating officer of Verizon, said in a statement. "Our collective vision will foster innovation, enhance business processes and dynamically deliver business intelligence and collaboration services to anyone, anywhere and on any device."
The Terremark acquisition is a major component in Verizon's transformation from a traditional infrastructure, networking and communications player into a true cloud computing service provider.
"Verizon as a company has really undergone a significant transition in the past five years," said Patrick Verhoeven, Verizon Business' manager of cloud services in an interview with CRN days before the Terremark acquisition was announced.
And buying Terremark is just a start for Verizon in the cloud in 2011. Verhoeven said the company will continue building out its cloud Infrastructure-as-a-Service (IaaS) portfolio and plans to launch hybrid cloud offerings, as well.
"We're going to expand those capabilities," he said, adding that Verizon Business is also planning a key investment in cloud storage moving forward.
Another big initiative for Verizon in 2011 is to build a private cloud version of its CaaS (Computing-as-a-Service) offering for companies that want more control over their cloud environments, Verhoeven said.
Verhoeven said Verizon is also going to add more muscle to its SaaS offerings and target offerings like CRM and more on-demand capabilities. Verizon will also start investigating the launch of a Platform-as-a-Service play for developers, Verhoeven said.
Verhoeven said Verizon's heavy focus on the cloud in 2011 comes as its customers start to recognize the importance of the technology and turn to service providers. He added that he foresees Verizon becoming a company's IT shop as they navigate the move to cloud services.
Verizon's upcoming cloud computing services full court press follows a transitional 2010 for the carrier which saw the launch of many new cloud computing services. In 2010, Verizon made a massive updates to its CaaS cloud computing infrastructure; teamed up with Novell for the launch of a cloud storage service; and moved down-market with a CaaS cloud infrastructure offering for the SMB.
Verizon's laser-focus on the cloud also comes on the heels of it promising to plunk down nearly $17 billion to build out its infrastructure, a good chunk of which was flagged specifically to amass a solid arsenal of cloud computing services.
"All of those investments in some way are tied to our cloud services initiative," Verhoeven said, calling 2010 the year that Verizon "doubled down on the cloud" despite its late entry to the cloud computing services game.
Next: Verizon Eyes More Cloud Services Partnerships In 2011
And Verizon stood by that investment promise, closing out fiscal 2010 with reported capital expenditures totaling $16.5 billion for the year. In 2010's fourth quarter, Verizon's sales of strategic enterprise services, which include cloud computing services, rose 7.5 percent since the fourth quarter 2009 and its total enterprise revenue totaled $4 billion.
Along with new services coming in 2011, Verizon is also building out new partnerships to make itself a household cloud name. Where 2010 saw Verizon team up with VMware for hybrid clouds and virtualization capabilities, 2011 will see a host of new partnerships emerge as its cloud portfolio grows. Verhoeven called Verizon's partnership model "integral" to its continued growth.
Verizon recently launched a partnership with Google Apps where Verizon Business SMB customers have access to Google Apps for Business, which gives SMB customers access Gmail, Google Calendar, Google Docs, Google Sites, Google Video and more.
"Most of Verizon's service offerings are in the cloud and delivered to any business connected to the Internet with a click of the mouse," wrote Monte Beck, vice president of small business marketing, at Verizon wrote in a blog post highlighting the Google pairing. "So it makes sense for us to offer Google Apps for Verizon to allow businesses to communicate and collaborate in the office or on the go."
Verhoeven added that with its legacy in networking, Verizon is in the unique position to offer myriad services and tie in cloud computing, whether that is collocation, networking or any numerous other offerings.
"When we look at cloud, we don't look at that as the end game," he said. "Most of the customers that come to us don't just want the cloud."
Verhoeven said that as the momentum carries from 2010 into 2011, Verizon will continue to educate customers on the cloud and its benefits, an area where he said Verizon fell short in 2010. He said that the market perception of cloud services has largely been created by Verizon's competitors, like Amazon Web Services.
"One of the struggles we have is the education process," he said, adding that some customers "simply don't understand what the cloud needs."