Verizon is the latest company to get out of the enterprise cloud and hosting market, as it has announced plans to sell off that business to IBM.
However, Verizon is characterizing the IBM deal as something more than a simple sale. SVP George Fisher explained the move in a blog post:
Last week, Verizon agreed to sell its cloud and managed hosting service to IBM. Additionally, Verizon agreed to work with IBM on a number of strategic initiatives involving networking and cloud services.
Our goal is to become one of the world’s leading managed services providers enabled by an ecosystem of best-in-class technology solutions from Verizon and a network of other leading providers.
Our customers want to improve application performance while streamlining operations and securing information in the cloud. VES is now well positioned to provide those solutions through intelligent networking, managed IT services and business communications.
Existing customers won't see any immediate impacts to service, and the deal will close later this year, Fisher added. Terms were not disclosed.
IBM has aggressively invested in data center infrastructure, and with the opening of four new U.S. locations last month, now has 55 data centers in 19 countries across six continents, according to a statement.
Verizon initially built out its cloud offerings with the acquisition of Terremark, but last year shuttered its public cloud service and sold off 29 data centers to Equinix.
Ultimately, Verizon's decision to fully divest its cloud business comes as no surprise, given the general retreat of telcos from IaaS (infrastructure as a service), says Constellation Research VP and principal analyst Holger Mueller.
"This was the big diversification play for telcos, and apart from some pockets in Europe, Asia and Africa, it has all but fizzled," Mueller says. "Capital demands for LTE and now Gen5 network buildouts and the need to understand the IaaS market has proven too much for most telcos. For IBM it's another service, and if it's able to transfer customers to IBM platforms that means more load for IBM Cloud and BlueMix."
But the move is also good for customers, "because with IBM, you have someone who long-term has to be in the cloud business, versus someone who is on the fence," Mueller adds. Moreover, "IBM has more to offer as a vendor to enterprises than Verizon," he says. "Verizon is basic data center and then networking, whereas IBM has a full stack."
While enterprises need to make sure IBM's stack is what they want, the bare metal nature of IBM's SoftLayer cloud architecture allows it to take on practically any workload, Mueller notes: "So if an enterprise is also trying to get out of the data center business, IBM is a good partner for that."
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