Verizon Sharpens Cloud, Channel Strategy With Terremark Integration

Verizon Thursday gave the first glimpses of how it will move forward with its acquisition of cloud service provider Terremark, a multi-layered plan in which Verizon said the channel will play a major role and that arms the telecom giant for domination in the highly competitive cloud market.

Following on Verizon's $1.4 billion acquisition of Terremark, which closed in April, Verizon said it has shaped a hearty go-to-market strategy for Terremark and has put a host of new cloud services and solutions underneath the Terremark umbrella. Verizon has said that Terremark will retain its name and be a wholly owned Verizon company.

"It's the new way that enterprises governments and consumers are going to consume IT," said Kerry Bailey, Verizon's Terremark group president, in an interview, calling the cloud the "third wave of IT."

"Making the bet right now -- just like we did with LTE and just like we did with FIOS – is the right answer for us," Bailey said.

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Verizon's Terremark integration comes as major telecom, cable and service providers seek to bulk up their cloud computing profiles through acquisition and strategic investment. Following Verizon's Terremark buy, Time Warner Cable spent $220 million to purchase NaviSite, a cloud hosting provider; and major telco CenturyLink scooped up cloud provider Savvis. And Verizon rival AT&T has vowed to invest $1 billion in cloud services and mobility this year.

Adding Terremark to the fold gives Verizon a distinct advantage, Bailey said. Verizon has the background in networking and the infrastructure in place to support cloud services.

As part of its Terremark strategy, Verizon has beefed up its cloud solutions to target North America, Latin America, Europe and Asia-Pacific. Bailey said Verizon will give Terremark the task of delivering cloud infrastructure and managed IT and security plays and the Miami-based provider will act as Verizon's arm for the delivery of enterprise and government IT services. Verizon has also wrapped its managed security, risk and compliance, and identity and access management services, along with application management services and IT and security professional services into the Terremark brand.

Terremark's new portfolio focuses on three key areas: IT infrastructure and cloud, security and professional services. The IT Infrastructure and Cloud Services are underpinned by a delivery model that helps enterprises integrate their existing infrastructure and applications. The offering includes collocation, managed hosting and enterprise cloud and will be supported by a platform that lets customers move to cloud at their pace via public, private and hybrid clouds coupled with Terremark's suite of peering, interconnect and managed routing services.

The expanded suite of Security Services fives Terremark the ability to offer solutions for physical security, policies and controls for compliance; vulnerability assessments; testing services; and other data protection and high availability offerings.

And Terremark also now has a set of related professional services and will focus on aligning with technology partners and carriers via a go-to-market strategy that includes a host of collaborators including Accenture, Cisco, EMC, HP, NetApp, SAP and VMware, as well as other key technology providers, and a continued emphasis of carrier neutrality at its datacenters around the world.

The Verizon-Terremark tie-in, Bailey said, now gives both Verizon and Terremark the ability to deliver services leveraging nearly 50 data centers, which gives a massive scale injection to Terremark's existing data center footprint and bulks up its capabilities to be a triple threat of cloud, hosting and collocation.

NEXT: Verizon-Terremark: Where Does The Cloud Channel Play?

Bailey added that at its core Terremark will offer an IT platform that combines advanced infrastructure and provisioning and automation.

Bailey said the combination of the two companies' assets and resources will build a cloud and IT delivery powerhouse that will be a force to be reckoned with in the burgeoning cloud market.

"To go after this market, you need to go after these assets," he said, later adding "We're off to the race."

And Verizon's and Terremark's respective channels will join forces to offer cloud services and solutions globally, Bailey said, adding that Verizon expects a significant percentage of Verizon's and Terremark's business to be driven via indirect channels to augment Verizon's 5,500-strong enterprise sales team.

"Our view is that 40 percent of our business will come through channels and we expect to drive that higher," he said.

In addition, Bailey said the Verizon-Terremark channel will comprise systems integrators, ISVs, Web and software-as-a-service developers and a host of other partners. "We will be a material channel of how they're selling services," he said.

Bailey said Verizon-Terremark will take its existing channel and "put that on steroids" with services at the forefront for partners.

"It will be a significant piece of Verizon Business," he said.

Additionally, the Terremark tie in will also have an impact on Verizon's wholesale channel, which serves smaller service providers and telecoms, Bailey said.

And partners shouldn't fear competition from Verizon and Terremark.

"We have the craziest competitive landscape we've ever seen," he said. "Everyone is making a rush to this. Everyone is trying to move toward this cloud environment from their center … We're all going after a space that is very big and we're ultimately going to enable each other."

Verizon's ability to scale, its network legacy and its mobile story make it a natural partner for solution providers, Bailey said, and there is enough of a pie for everyone to have a piece.

Bailey said the new product portfolio and new Terremark services are in play now, and over the next month or so more partner and co-innovative solutions and portfolio enhancements will hit the market.

Bailey said Verizon and Terremark are confident in their offerings.

"When we look at the infrastructure and even the platform-as-a-service layer, we're fairly comfortable," he said.

One thing that's missing is the application component, and that's an area Verizon-Terremark will continue to invest.

Overall, Bailey said, Verizon spent nearly $2 billion to acquire Terremark and the addition of services and other offerings adds another $2 billion or so, showing that Verizon is making a major investment in cloud computing.

"If you think of big bets, there's billions into enabling this because we think it'll be game changing for us," he said.