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Adding St. Louis-based Savvis to its ranks will enable CenturyLink, traditionally a telephone carrier, to scale globally as a managed hosting and collocation provider, it will also fuel CenturyLink's ability to offer managed hosting and cloud services. Post said that, combined, the companies will operate 48 data centers in North America, Europe and Asia with more than 1.9 million square feet of gross floor space; a national network of 207,000 route miles; and a 190,000-mile global access network. Together CenturyLink and Savvis will boast a customer list flush with Fortune 500 and Fortune 1000 companies.
"Cable and telcos, that's the business model that the cloud fits," said Jeff Hine, analyst with Enterprise Strategy Group. "They know how to take massive infrastructure and deliver it by the drip."
Additionally, adding smaller cloud and hosting providers to their arsenals gives large providers the ability to move both up and down market commercially, and also add new services with which to target consumers. Hine said he foresees telcos offering "grand slam" options versus their current "triple play" service offerings by adding cloud computing services to the cable, phone and Internet packages.
"It's going to be interesting," he said. "This is going to shake out in a big way."
Paul Burns, president of cloud analyst firm Neovise, called CenturyLink's Savvis acquisition a smart buy, but was cautious about saying telcos will own the cloud.
"I can't conclude yet that the telcos are going to be the key players here," Burns said, adding that their deep pockets and ability to acquire make a strong case in their favor, as does their ability to offer more services than just cloud. "People are starting to realize cloud isn't just pure cloud."
Paul Hilbert, partner at Englewood Cliffs, N.J.-based solution provider Network Doctor, said he also couldn't determine if large service providers will own the cloud in the future. He said he foresees a mix of the big boys and smaller providers.
"There are going to be a lot more players out there providing cloud services," he said. Hilbert said the bigger companies could drive down the price of smaller providers, like Network Doctor and since many decisions ride on price, that could have a major market impact.
Alvarez said telcos will be the main cloud providers in the country going forward, as long as they can adapt to cloud business models.
"They will be cloud service providers," she said. "Will they be leading? Will they be the best? That depends on if they can change their business models. It's one thing to buy yourself into a market. It's another thing to run it successfully."