Cloud Consolidation Strikes Again As Verizon Exits The Public Cloud Arena

Telecom giant Verizon, the latest provider to succumb to mounting pressures in the ultra-competitive public cloud market, will be closing its public cloud platform by spring, according to a letter to customers Thursday.

Basking Ridge, N.J.-based Verizon told its customers that any virtual servers running on its Public Cloud, Reserved Performance and Marketplace Services will be shut down by April 12. Verizon urged users to migrate to its pricier Virtual Private Cloud offering or find another cloud alternative. Verizon Cloud Storage (VCS) users won't be impacted, the company said.

Verizon partners said the carrier's move to decommission its public cloud could throw some weight behind any partnership between Verizon and Alphabet's Google. The two are developing a Verizon-branded hybrid cloud service that runs on Google's public cloud, according to sources familiar with the deal.

[Related: Sources: Google, Verizon In Talks About Strategic Hybrid Cloud Partnership]

"I think this is more evidence of that [Google deal]. It makes no sense for Verizon to maintain their own public cloud infrastructure if they are going to be doing that with Google," said one executive with a Verizon partner who requested anonymity.

"Culturally, these companies couldn't be more different," said the partner exec, "so how they integrate from either a partnership perspective or maybe through a merger or acquisition will be fascinating. I think that Google's technology within its cloud platform is a couple generations beyond where Verizon's cloud platform is."

Verizon users took to Twitter to share the letter Thursday. According to the letter, Verizon won't retain any data remaining on its public cloud platform after its discontinuation date and leftover content will be "irrecoverably deleted." Some partners speculated that the move could mean Verizon will sell off its data center assets.

During its fourth quarter earnings call, Verizon CFO Fran Shammo said the provider is evaluating the potential sale of its data centers, but no decision had been reached as of January.

Two executives with Verizon partners that asked not to be named said the shutdown won't impact their businesses because they aren't selling Verizon's public cloud offerings.

"We definitely sell more private cloud as opposed to public cloud offerings," one partner executive said.

Master agent and Verizon partner Intelisys isn't surprised by Verizon's decision to shut down its public cloud, said Andrew Pryfogle, senior vice president of cloud transformation for Petaluma, Calif.-based Intelisys.

"We are seeing huge growth in private hybrid cloud sales right now, and Verizon is a significant player in this space," said Pryfogle.

Public cloud hasn't been a hot seller in the channel because these solutions haven't been channel friendly. However, because business customers have workloads in both the public and private cloud, partners will be tasked with helping these customers migrate their data before the shutdown, Pryfogle said.

"Customers that had significant infrastructure in Verizon's public cloud will have to find new homes. Some of it could very well end up in an Azure or AWS, and some will end up in private cloud instead," he said.

The shutdown further proves that the pool of public cloud players is dwindling, with competition being edged out by industry heavyweights like Amazon Web Services and Microsoft Azure that allow users to spin up cloud services simply with a credit card. Hewlett-Packard made a similar move when it announced last year that its Helion Public Cloud platform would be shut down as of Jan. 31 in an effort to double down on its private and managed cloud offerings.

According to a Verizon spokesperson when reached for comment by CRN, the impending public cloud closure puts an end only to the cloud service that accepts credit card payments.

"As we continue to focus on the enterprise market, we’re discontinuing the niche cloud service that accepted individual credit card swipes on April 12. We have an enterprise-class range of cloud services including multi-tenant offerings such as cloud storage and virtual private cloud for enterprise and government customers. We’re making significant investments in our cloud platform in 2016," Verizon said.