Having once harbored ambitions of taking on Amazon Web Services in the cloud, both AT&T and Verizon Enterprise Solutions are now happily focused on the enterprise space and on customers specifically looking for high reliability and security in accessing multiple clouds in a hybrid environment.

Neither company has proven able to compete with the likes of Amazon Web Services Inc. or Microsoft Corp. (Nasdaq: MSFT) -- nor has any other telecom provider. The most recent Synergy Research Group Inc. report on cloud market share showed AWS still is larger than all of its cloud competitors combined at 28% market share. Microsoft is second at 10%, IBM Corp. (NYSE: IBM) third at 7% followed by Google (Nasdaq: GOOG) (5%), Salesforce.com Inc. (4%) and Rackspace (3%). The telecom players fall into the remaining 43% of the market pool, with smaller individual shares.

But as more enterprises and small to mid-sized businesses are growing comfortable moving workloads into the clouds and relying on cloud-based apps, the two largest US telecom service providers say they are able to steadily grow their business.

In separate interviews with Light Reading, the head of Verizon's cloud operations and the newly appointed vice president of cloud and cloud networking for AT&T Business Solutions both said they see their cloud operations as successful and point to significant growth in the enterprise space, based on tying together their networks and clouds and providing secure access to other clouds.

That's not to say their strategies are identical. This first story in a two-part series will focus on Verizon Enterprise Solutions , and the perspective of Siki Giunta, senior vice president of cloud and M2M solutions.

Figure 1: Verizon's Siki Giunta

Giunta stepped in to lead Verizon's cloud team after the company had assembled a cloud infrastructure, largely through acquisition of Terremark, and launched its own integrated cloud platform, in the fall of 2013. From the outset, her goal was an integrated service that unified its cloud assets, spanned the Verizon wireline and wireless businesses, including the Internet of Things, and gave customers more control and ease-of-use in navigating the cloud universe through a single console. (See Verizon Makes Integrated Services Push Around Cloud and Verizon Puts Cloud Customers in Control.)

Next page: How her plans are working

The idea was to focus on the enterprise and capitalize on features such as Verizon's Secure Cloud Interconnect, an on-demand WAN that provides secure connections to a variety of clouds including AWS, Microsoft, Google, HP, Salesforce.com and of course, Verizon. The company also added a cloud marketplace to make it easier for enterprises to shop for prepackaged cloud-based apps, and developed specific cloud services for customers such as state and local governments. (See Verizon Connects Cloud With On-Demand WAN, Verizon, Unisys Team Up on Cloud for Local, State Governments and Verizon Cloud Marketplace Simplifies Cloud Purchasing.)

Those developments helped lead to 19% cloud services revenue growth in Q1 2015 over Q1 2014, Giunta says and a 10% increase in new cloud customers. (See Verizon Reports Q1 Revenues of $31.98B.)

"We are very happy with our part of the market, with our solutions, with the engagement of the customer," she comments. "We have been maintaining customers that were heritage Verizon and heritage Terremark. But here now we are getting breakthrough customers on our platform. Q2 will be another strong quarter for us."

Selling to strength
Part of that success is the refocused effort by Verizon's sales team to sell to the company's strengths, Giunta says. "We really have understood which are the viable positions that are specific to us that would make us different," she says. "We redirected the sales force to think not of infrastructure as a service but [specific] services, because reliability and high quality are important characteristics of Verizon, when we go to our customers."

Verizon has laid out a series of use cases including Oracle applications, some dev/test, data center extensions, multi-tiered applications, rich media and e-commerce, where it is playing to its strengths.

"We want to be the number one or number two service provider of choice in those areas, and we will compete hard for that," Giunta says. "On dev and test for instance, if it is secure environment, we are going to be there and we are going to win that. There is a huge market in cloud that has not been spoken for yet. Everybody will come to the realization that you can't be everything to everybody and the market will get more fragmented."

Next page: How security factors in

Verizon also offers enhanced computing, memory and storage capabilities, including in AsiaPAC, as of March. Enterprises looking to make a significant shift to the cloud with multiple applications across their IT departments are looking for partners and Verizon believes it can combine network and cloud services in a way that is appealing to those firms. (See Verizon Expands Cloud Service in APAC.)

Giunta cites two of those -- National DCP LLC, the sourcing and distribution entity for Dunkin' Donuts and Baskin-Robbins and Altisource, a global provider of business and financial services -- as the kinds of customers Verizon is attracting. Both started small with dev/test type applications and ultimately made a bigger bet on Verizon's cloud.

Not challenging AWS
Verizon doesn't try to compete against AWS in the broader dev/test market, instead targeting companies who need more secure workloads, predictable performance or support for mission-critical apps. The same is true for storage, Giunta says. That's a highly competitive marketplace and Verizon doesn't go after the vanilla versions, but instead targets those who have higher security needs.

Verizon's Secure Cloud Interconnect does allow its customers to start dev/test activities in a public cloud service and then move it onto Verizon's more secure cloud service if and when the test/dev activity needs security or goes into production, she notes.

"The enterprise is starting to say not every dev and test is equal to others -- security is starting to be a big differentiator," she says. "We work with a lot of retailers, airlines and other companies [for whom] trust management is huge, because this is going to be the platform" on which they build their business and future revenues.

In general, businesses are looking for the ability to do hybrid cloud networking across multiple dimensions -- multiple clouds services, multiple regions and physical locations, and multiple networks, Giunta adds.

She calls the cloud adoption process "a journey" that many companies are just beginning. More than half of Verizon's current cloud customers -- by her estimation -- have some degree of cloud management services from the company as well, ranging from basic patch management to much more. Many as they go deeper into "cloudifying" their operations are looking to offload the more complex management and integration of network services, though they still want the flexibility to use other clouds if they choose, Giunta says.

What's to come
Verizon continues to hone its efforts -- in the coming months it will deliver retail templates, for instance, to help that segment more easily shift to the cloud and it is developing those with the aid of its retail advisory council, Giunta says. And considerable activity in the content delivery arena is also anticipating, building on the Edgecraft acquisition and looking to do more digital media. [Editor's note: The interview of Siki Giunta took place a few days before Verizon announced the purchase of AOL.]

On the security front, Verizon also is working to add some security services to its user console, to make adding them more automated and easier for customers. Today certain services such as protection against denial of service attacks is available on the console, but the full range of Verizon's managed security services portfolio is sold separately.

Verizon's cloud operation is still able to capitalize on the Verizon Enterprise experience and reputation for security services, and brings the transparency and governance policies of its security operation to its cloud. Building on its work in Payment Card Industry Data Security Standard (PCI-DSS), its compliance with federal NIST 800-53 security and privacy controls for federal information systems, and its support for healthcare and pharmaceutical industry compliance standards as well, Verizon is very focused on governance and transparency, Giunta says.

"Knowing that we provide customers full visibility to log into our policies, that is very important," Giunta says. "A customer can only get comfortable about how secure the cloud is if you are ready to open the kimono and provide the data, and how flows and access are there. And we are committed to providing visibility to our customers so they can understand the depth of our compliance."

She expects to see continued growth because cloud is just now taking hold, in her estimation. "I don't think the market of cloud is made," Giunta says. "There is still a lot of growth to come."

— Carol Wilson, Editor-at-Large, Light Reading