CenturyLink Cuts Cloud Prices, Touts Power
Five months after it purchased Tier 3 and restructured its cloud services business, CenturyLink is hoping to call attention to its newfound power in IT services, built on a series of acquisitions including a global network with major new pricing and new offers based on support and consultative selling. (See CenturyLink Shows Cloud Is Still Critical and CenturyLink Buys Cloud Leader Tier 3.)
No longer content to be, as Andrew Higginbotham, senior vice president, cloud and technology, puts it, "the biggest company you've never heard of," CenturyLink Inc. (NYSE: CTL)'s announcement Thursday is the latest in a recent series of moves explained in this blog post from Jared Wray, CenturyLink Cloud CTO, who came to the company with its purchase of Tier 3. (See A Peek Inside CenturyLink's Cloud Expansion, CenturyLink Cloud Goes Hyper, and CenturyLink Brings Savvis Into Brand Alignment.)
CenturyLink's new pricing changes include an immediate 60% or more decrease in cloud-based CPU, RAM, and block storage -- the commodity building blocks of cloud – and a 50% decrease in bandwidth pricing as well, scheduled for mid-June. The company is also adding tiered support bundles that can be purchased à la carte, alongside the ability to purchase technical account management services as needed to assist in migration efforts and other tasks.
These announcements follow significant expansion efforts to get CenturyLink to 56 data centers, including 16 nodes offering its public cloud product and a 21-day release cycle. They've also helped it achieve benchmarking from CloudHarmony that gives CenturyLink Cloud Hyperscale better CPU performance ratings than Amazon Web Services LLC and Rackspace Hosting (NYSE: RAX), according to Higginbotham's blog post here.
All of this is more than bluster, says Structure Research analyst Phil Shih. "I think this is definitely a sign they are investing heavily in the infrastructure services space," he says. "What they've done with acquisitions, data center expansion, hire, everything certainly points to a significant strategic shift in how CenturyLink does business and what kinds of IT infrastructure services they serve their customers and what parts of the market they go after."
Higginbotham says CenturyLink is laser-focused on capturing a significant share of the "trillion dollars still trapped in the legacy IT model" and believes the company is poised to do that. While past acquisitions, including that of Qwest Communications, led to consolidation of most executives and operations at CenturyLink's Monroe, La., headquarters, Wray and the CenturyLink Cloud operation will continue to be based in the Seattle area, with its access to software development talent.
The new pricing strategy will let CenturyLink "put a stake in the ground that we will be in lockstep on public cloud," Higginbotham says, while adding premium performance and support capabilities as additional options for enterprises. The idea is to have the pricing for the developers and the scalability to support full enterprise deployments.
"We really wanted to make sure the market understood you have to be price competitive to be relevant," he says. "So we are clarifying our position -- as a top provider of cloud, we have to do that. We are 140 days into the creation of the CenturyLink cloud since buying Tier 3, and we are ready from a capacity standpoint to support a full enterprise platform."
On the enterprise platform side, CenturyLink is building in orchestration, automation, and management capabilities to make it easier for IT apps to migrate and be supported in the cloud.
"The enterprise has very prescriptive things they need done for production-based workloads: They need better latency, faster performance, guaranteed minimums on performance, advanced management, and more feature sets -- we are very focused on that," Wray says. A significant piece of that focus is tying in CenturyLink's global network, he adds.
Analyst Shih doesn't see CenturyLink getting into head-to-head competition with AWS, despite its new pricing, but does see the company competing more effectively against the traditional players -- Verizon Terremark , AT&T Inc. (NYSE: T), IBM Corp. (NYSE: IBM), and others -- it has faced in this market. He thinks it will deliver a more differentiated offering that will likely evolve based on continued investment in software development.
— Carol Wilson, Editor-at-Large, Light Reading