Verizon, Time Warner Acquisitions: Harbingers For Change, Cloud Consolidation


Verizon's $1.4 billion blockbuster buyout of cloud infrastructure darling Terremark last week sent shockwaves through the cloud computing industry, illustrating once and for all that major telecom players are looking to get into cloud computing by any means necessary.

And less than a week later, Time Warner Cable made no bones about its cloud computing plans by scooping up cloud hosting and services company NaviSite for $230 million to bulk up its cloud computing services offerings.

Two mammoth cloud computing acquisitions by traditional service providers in less than a week is a true sign that these providers are taking the cloud seriously and a foreshadowing signal that more cloud consolidation is on the horizon. They also highlight a pivot-point in the cloud computing market where major providers are pressing hard to take top billing in the cloud services game.

"It validates the inevitability of this shift [toward the cloud] and the desires of all players in this ecosystem...to figure out what their role is going to be in this world," said Ryan Nichols, vice president of solutions marketing and strategy for San Mateo, Calif.-based solution provider Appirio. Nichols added that Verizon acquiring Terremark and Time Warner Cable buying NaviSite show that it's important to every type of player -- telcos, systems integrators, solution providers, and more – to investigate the cloud market and that they're "waking up and realizing how different it is."

And the acquisitions will prompt a new inflection point in the market.

"The Verizon deal really does change the market in a few notable ways," said Reuven Cohen, founder of cloud platform vendor Enomaly and cloud capacity clearinghouse SpotCloud. "In terms of the biggest IT players such as HP and IBM, services have become a critical part of their revenue and earnings. The traditional service providers such as Verizon and AT&T are being forced to compete in both broad customer services -- mobile -- where their economies of scale limit additional competitors but also in areas where the economies of scale have shifted to economies of flexibility and efficiency -- cloud. Meaning, Terremark is able to compete not because they are bigger or have deep pockets, but instead because they are more nimble and more efficient. In a lot of ways Terremark hit to the core of this transformation: big and centralized versus small and efficient."

Verizon's acquisition of Terremark and Time Warner Cable picking up NaviSite is a sign that telcos and cable providers are getting serious about their role in the cloud, said Forrester Research analyst Vanessa Alvarez. It also shows that traditional telcos and providers will shift their focus and become cloud and IT providers in a blending of the "old school and new school."

"Terremark gets cloud, they understand the enterprise, making it a killer combination," Alvarez said. "Verizon needs this to remain competitive."

 

Next: More Cloud Consolidation To Come; Who's Next?


See the latest cloud technologies, learn best practices, and interact with your peers at the channel’s first all-inclusive cloud event: NexGen Cloud Conference & Expo, December 4-5, 2014 at the San Diego Convention Center. Register now at  www.NexGenCloudCon.com