Light Reading

CenturyLink Cuts Cloud Prices, Touts Power

Carol Wilson

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 Builds Business on Acquisitions
Qwest, Savvis, Ciber, Tier 3, and AppFog all factor into today's CenturyLink Cloud strategy.
Qwest, Savvis, Ciber, Tier 3, and AppFog all factor into today's CenturyLink Cloud strategy.

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."

CenturyLink's Consolidated Resources

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

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Mitch Wagner
Mitch Wagner,
User Rank: Lightning
5/2/2014 | 3:28:36 PM
Re: Threading a needle
Verizon is positioning itself as a different market than Amazon. Amazon is IaaS, while Verizon offers true hybrid cloud. It remains to be seen whether customers will perceive Verizon that way. 

Verizon has an accurate read on the future of the market. As markets mature, they begin to fragment. We now understand that the "software" market is not one thing -- Angry Birds doesn't compete with Oracle. The cloud market will fragment in the same way. The question is whether Verizon is ahead of the market here?

Yes, I know we were talking about CenturyLink here. But I filed a story on Verizon yesterday so I have that company on the brain. 
Carol Wilson
Carol Wilson,
User Rank: Blogger
5/1/2014 | 3:49:09 PM
Re: Threading a needle
In this case, CenturyLink is acknowledging that AWS, as far and away the market leader, sets the pricing bar and to compete, they need to be under that. 

I don't think the pricing strategy will cause them to be taken less seriously - the question is more likely whether the market will respond as they hope. 
Mitch Wagner
Mitch Wagner,
User Rank: Lightning
5/1/2014 | 3:47:18 PM
Threading a needle

Cutting prices are of course a good way to generate market share. And enterprises move to cloud to reduce spending, so that it makes sense that CenturyLink would be more attractive at a reduced price. 

However, cost custs can also backfire, and lead customers to fail to take a supplier seriously. "If it's that cheap, it can't be any good." That's a marketing needle that needs to be threaded. 

User Rank: Light Sabre
5/1/2014 | 11:22:48 AM
" investing heavily in the infrastructure "
Large scale phontonic integrated circuits- PICS- From Infinera
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Steve Saunders provides an overview of white box networking and introduces a new "slim line" version of the OSI 7-layer model.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
Centec on Ethernet Switching

11|26|15   |   09:58   |   (0) comments

Centec CEO James Sun talks to Steve Saunders about Ethernet switching and the white box revolution.
LRTV Custom TV
Delivering Service Agility in the Virtualization Era

11|25|15   |   5.41   |   (0) comments

Interview with Massimo Fatato, WW OSS Business Lead, Hewlett Packard Enterprise.
Wagner’s Ring
How Might Open Source Fail?

11|24|15   |     |   (9) comments

Open source, SDN, and NFV are looking inevitable – but performance, standards proliferation and regulatory capture could derail the movement.
LRTV Custom TV
NFV Lifecycle Orchestration – a Fresh Vision for Telco

11|23|15   |   6.40   |   (0) comments

Simon Osborne, CTO Comptel, and Heavy Reading's Caroline Chappell reveal the business impacts of new SDN and NFV, and what the term service orchestration actually means. Together they define Lifecycle Service Orchestration and how the virtualized future will look for telecoms operators.
Between the CEOs
Cisco's Virtual Role in Saudi

11|20|15   |   12:15   |   (2) comments

Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
LRTV Huawei Video Resource Center
Huawei Leads With Kubernetes for Cloud PaaS

11|19|15   |   08:26   |   (0) comments

Huawei is looking to Kubernetes as a key tool for building robust open source technologies for customers and partners, said Ying Xiong, chief architect of cloud platform at Huawei, in an interview with Light Reading West Coast Bureau Chief Mitch Wagner at the recent Kubecon conference.
Women in Comms Introduction Videos
WiC in London: The Highlight Reel

11|19|15   |   5:33   |   (1) comment

NetCracker's Mervat El Dabae headlines an inspiring morning in London with help from leading women from Vodafone, TalkTalk, Hyperoptics and Ciena.
LRTV Documentaries
Why Saudi's So Hot for New Tech

11|19|15   |   05:07   |   (0) comments

Light Reading's Steve Saunders reports from Saudi Arabia, a hyper-competitive market desperate to embrace the next generation of communications technologies and services.
LRTV Custom TV
Why Data Models Deliver More Value Than Information Models

11|19|15   |   5.08   |   (0) comments

Stefan Vallin argues that more automation is needed to manage end-to-end services and the hybrid networks they run on, and that data models are key to achieving this.
Telecom Innovators Video Showcase
SDN Management & Orchestration in the WAN

11|17|15   |   7.20   |   (0) comments

Carol Wilson and Packet Design CTO Cengiz Alaettinoglu discuss CSPs' SDN service delivery and assurance requirements. Learn about a modular approach to building automated control, orchestration and management functions for the WAN that are policy- and analytics-driven.
LRTV Custom TV
Flash Networks: Optimizing for Radio Spectral Efficiency

11|17|15   |   3:34   |   (0) comments

Today most optimization vendors only focus on optimizing voice or data. Ofer Gottfried, Flash Networks' CTO, shows how improving data throughput and maximizing spectral efficiency reduces capital and operating expenses while also providing a platform for user engagement.
LRTV Custom TV
Making Pay-TV User Experiences Millennial-Friendly

11|16|15   |   6:42   |   (0) comments

The unique challenge of reaching and engaging Millennials is driving pay-TV video experience transformation that can include higher quality UIs, viewing of multiple content streams at once and seamless transitions between handheld devices and the television.
Allot MobileTrends Report H2/2015 reveals how daily online behavior can be used to discover smarter ways to profile customers and propose valuable, real-time offers to them.
Hot Topics
Samsung to Sell Wireless Networking Unit?
Dan Jones, Mobile Editor, 11/23/2015
Samsung: No Sale of Wireless Unit
Dan Jones, Mobile Editor, 11/25/2015
Sprint, Verizon Face Reorganization, Job Cuts
Dan Jones, Mobile Editor, 11/20/2015
Sprint to Get $1.2B From New Leasing Venture
Dan Jones, Mobile Editor, 11/23/2015
How Might Open Source Fail?
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/24/2015
Like Us on Facebook
Twitter Feed
December 15, 2015
Virtualizing Cable Services
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Centec CEO James Sun talks to Steve Saunders about Ethernet switching and the white box revolution.
Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
Cats with Phones
Can't Find the Phone on Thanksgiving? Click Here
Check under the cat! (hint: bottom right)
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and for copper plant evolution and the various deployment possibilities for FTTH/B.