Light Reading
Five months after announcing the Tier 3 purchase, CenturyLink unveils new cloud strategy built on cheaper prices and enterprise-scale power.

CenturyLink Cuts Cloud Prices, Touts Power

Carol Wilson
5/1/2014
50%
50%

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 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
Mitch Wagner
50%
50%
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
50%
50%
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
0%
100%
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. 

tojofay
50%
50%
tojofay,
User Rank: Moderator
5/1/2014 | 11:22:48 AM
" investing heavily in the infrastructure "
Large scale phontonic integrated circuits- PICS- From Infinera    

 http://www.infinera.com/pdfs/analyst_reports/Analyst_Reports-CenturyLink_Deploys_Infineras_DTN-X.pdf
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
Photos: Qualcomm Takes Over San Francisco
Sarah Reedy, Senior Editor, 9/19/2014
Connecticut Cities Crowdsource Gigabit Nets
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/15/2014
Like Us on Facebook
Twitter Feed