CenturyLink Continues Enterprise Cloud Blitz With Tier 3 Acquisition

CenturyLink on Tuesday snapped up public cloud provider Tier 3 in a move the telecom giant said will significantly bulk up its enterprise cloud services portfolio.

Financial terms of the acquisition, which closed Monday, were not disclosed.

Monroe, La.-based CenturyLink, the U.S.' third-largest telco provider, said Tier 3 products will serve as the foundation for CenturyLink's overall cloud strategy moving forward. Tier 3's cloud platform is also being rebranded as "CenturyLink Cloud" starting immediately.

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Tier 3's technology will also underpin CenturyLink's new Cloud Development Center in Seattle, CenturyLink said. Andrew Higginbotham, senior vice president of cloud and technology at CenturyLink, said the combination of CenturyLink's scale -- which is backed by 52 data centers worldwide -- with Tier 3's best-in-class cloud platform will make CenturyLink a major player in the enterprise cloud market.

"Our overall strategy for cloud has been to really pursue the enterprise market with the best products and best set of services that we can do," said Higginbotham, who is also CTO of Savvis, the cloud provider and hosting operator CenturyLink acquired in 2011. "The real focus of this acquisition is for us to enhance our product capabilities, enhance our road map significantly and give us what we think is the leading enterprise cloud in the market today."

Jared Wray, founder and chief technology officer for Bellevue, Wash.-based Tier 3, also said CenturyLink's global data centers, along with its robust services portfolio, will make the Tier 3 cloud platform more equipped than ever to handle complex enterprise workloads.

"As part of CenturyLink, it really enables not only just the cloud part, but all the resources. To bring on the enterprise, it requires fiber, [CenturyLink's] global footprint of data centers; it requires their managed services and professional services capabilities, and then, of course, a platform that understands what the enterprise wants," Wray said. "That's why we are excited about this acquisition."

Wray, whose new title is chief technology officer for the CenturyLink Cloud organization, will lead the CenturyLink Cloud Development Center and report to Higginbotham.

Higginbotham said CenturyLink will retain the Tier 3 team, with the exception of CEO Matthew Schiltz. Schiltz will stay with Tier 3 for the next six months, however, to help with the transition.

Tier 3's product portfolio includes infrastructure-as-service (IaaS), along with a platform-as-a-service (PaaS) offering that's based on Cloud Foundry, the VMware project that's now part of Pivotal. Tier 3 in 2011 also created Iron Foundry, the .NET extension of Cloud Foundry. CenturyLink said Iron Foundry will continue to be fully supported by engineers of the new CenturyLink Cloud Development Center as an open source project.

NEXT: CenturyLink's Other Cloud Buys, Channel Plans

Tier 3 in September was dubbed a "Niche Player" in Gartner's 2013 Cloud IaaS Magic Quadrant, with Gartner praising Tier 3 for its "excellent, highly differentiated set of features" as well as its "well-engineered platform" and "easy-to-use self-service portal."

Tier 3 represents one of several cloud providers CenturyLink has acquired over the past few years. In addition to its blockbuster $3.2 billion acquisition of Savvis in 2011, CenturyLink in June scooped up Portland, Ore.-based PaaS provider AppFog for an undisclosed amount.

CenturyLink's Higginbotham said AppFog's PaaS is expected to "sit neatly" on top of the Tier 3 IaaS offering.

For CenturyLink partners, Higginbotham said the Tier 3 platform will be the flagship enterprise cloud offering they sell moving forward. "They are already selling cloud today," Higginbotham said of partners. "They will now sell the Tier 3 cloud."

New partner opportunities, Higginbotham continued, will include solution providers being able to sell Tier 3's while-labeled cloud services.

Andrew Pryfogle, senior vice president and general manager of Cloud Services and Complex Bids at Intelisys, a Petaluma, Calif.-based master agency and CenturyLink partner, said CenturyLink's Tier 3 buy suggests the telecom giant is doubling down on its enterprise cloud push.

"We haven't done business with Tier 3 yet, but they have a great reputation in cloud infrastructure. We do a lot of business with CenturyLink and Savvis. We're excited to see CenturyLink continuing to double-down on their cloud strategy," Pryfogle told CRN in an emailed statement. "The Tier 3 acquisition is a bold move and solidifies CenturyLink's leadership position in the cloud."

At its annual Alliance Expo conference earlier this year, CenturyLink pledged to grow the company's percentage of channel revenue from 15 to 30 percent within the next five years, as part of a broader effort to leverage partners to attack hot markets like cloud.