Verizon is looking to appeal to enterprise customers by marrying cloud elasticity with dependable managed services.

Mitch Wagner, Executive Editor, Light Reading

May 12, 2014

7 Min Read
Verizon Brings Thunder to the Cloud

Verizon is building out its cloud infrastructure to appeal to customers looking to take advantage of the benefits of the cloud without having to abandon tried and true enterprise infrastructure.

Familiarity is key to Verizon Communications Inc. (NYSE: VZ)'s strategy. It wants enterprise customers to be able to bring familiar applications to the cloud, rather than starting from scratch.

"Instead of saying 'ditch everything you know and go to the new stuff,' we'll run the new stuff but also give you the ability blend your environment and use some of the technologies that you already have," says John Considine, CTO, Verizon Terremark.

Figure 1: Verizon's John Considine

To that end, Verizon is building out its cloud infrastructure fabric to accommodate enterprise customers with hybrid cloud services, a program announced in beta in October. (See Why Verizon Needed a Cloud Reboot.)

Verizon uses a fabric architecture, using modules built in partnership with SeaMicro Inc. , which is owned by Advanced Micro Devices Inc. (NYSE: AMD). Each module contains compute, storage, and SDN networking components, on a building-block chassis that provides availability, reliability, and connectivity. (See Defining SDN & NFV.)

Networking switches, meanwhile, are provided by Arista Networks Inc.

"These hardware components comprise the entire hardware infrastructure," Considine says. "Everything else is our own software and from partners, in terms of firewalls and other network apps. We do this to obtain global scalability and flexibility."

To support its services, Verizon has built data centers in seven locations: Culpepper, Va.; Miami, Fla.; Denver, Colo.; Santa Clara, Calif.; Sao Paolo, Brazil; London; and Amsterdam.

Built in-house
Verizon wrote the base platform software in-house, using Linux and other open source components. The storage stack is ZFS; Verizon wrote its own SDN and orchestration software. On top of that, Verizon works with partners to provide enterprise applications to customers, including:

  • F5 Networks Inc. (Nasdaq: FFIV) for virtualized traffic management and security policy management.

  • NetApp Inc. (Nasdaq: NTAP) for virtualized storage.

  • Oracle Corp. (Nasdaq: ORCL) for its 11G and 12C database software, as well as its Fusion middleware.

  • Cloudera for analytics and Hadoop management.

"Our customers can come in and say, 'Get me one of those.' It can be anything from an Oracle template to Hadoop, and run them in our cloud," Considine says.

Verizon's infrastructure investment is a differentiator for the company, says Heavy Reading analyst Caroline Chappell. "The big thing that is different about Verizon is that it has gone out and invested very heavily in a new architecture and cloud infrastructure. It very strongly believes that, as a cloud provider, you have to innovate and do your own thing, and control it, just don't buy the standard cloud blocks from Cisco Systems Inc. (Nasdaq: CSCO) and VMware Inc. (NYSE: VMW)." (See Can Cisco Help SPs Offer Cloud-based Apps? and Cisco's Cloud Bet: What's in It for SPs?)

The differentiator hasn't allowed Verizon to pull ahead in the marketplace -- at least not yet, Chappell says. "But Verizon is definitely one of the big contenders, and the US cloud market is one of the most advanced and competitive in the world. Verizon is making a big play to be a major dominant player in that market and around the world," she says.

And so the operator continues to develop its service offerings. In April, Verizon announced its Secure Cloud Interconnect (SCI) service to connect enterprise private networks into Verizon's and other providers' clouds. It's part of Verizon's overall strategy of allowing enterprises to run applications locally where they make sense, and in the cloud where that makes sense, Considine says. (See Verizon Connects Cloud With On-Demand WAN.)

Next page: Taking on Amazon

Taking on Amazon
Verizon's cloud strategy puts it squarely in competition with Inc. (Nasdaq: AMZN), of course. Amazon's domination of the cloud market is amazing: AWS has five times the computing capacity of 14 other leading cloud providers combined; One third of Internet users visit an AWS-powered site daily.

But Verizon tries to compete with Amazon by targeting the enterprise with a complete portfolio of applications and services, whereas Amazon is limited to infrastructure, Considine says. "Amazon is driving toward and would like to be more involved with the enterprise, but that's where we live," says the Verizon man. Amazon is strongest with cloud-native businesses (such as Netflix, a marquee customer for AWS), as well as small business and developers.

Verizon's goal is to build out a service to compete with Amazon by going beyond infrastructure-as-a-service (IaaS), he adds. Whereas IaaS platforms such as Amazon require customers to conform to the IaaS's standards, Verizon lets customers bring their own, familiar infrastructure to the cloud.

Verizon believes it's playing a bigger game than the public cloud market where Amazon is dominant. The public cloud IaaS market is worth $10 billion to $15 billion annually. IT spending overall will be $3.8 trillion this year. "We can go in and compete for the cloud-ready market, but we want to tap into the disruption of the $3.8 trillion market and solve the problems the enterprise has. But we can't just say, 'OK, throw everything away and do it this new way in this new world,'" Considine says.

Verizon isn't alone in this thinking. It has three main competitors in the enterprise cloud market -- AT&T Inc. (NYSE: T), BT Global Services , and Orange Business Services -- and they all have a similar ambition, Heavy Reading's Chappell says.

"They're all into ways they can go beyond infrastructure-as-a-service, but they do it on a custom basis," she says. They orchestrate the array of services enterprise customers need, which is how they differentiate from Amazon and companies like it, although Amazon is getting into that market as well, Chappell says.

Next page: Let's Not Talk About ObamaCare

Let's Not Talk About ObamaCare
Verizon's cloud platform has a black eye, adds Chappell. "I suppose it's uncharitable to mention the debacle over ObamaCare," she says.

A connectivity problem at a Verizon data center was one of the problems with the launch fiasco in October. (See Outage Scars Verizon Terremark.)

Considine declines to comment on the outages, saying Verizon doesn't discuss its customers' business. "Why would somebody do business with us if we're going to talk about their work?" he says.

But Verizon has many satisfied enterprise customers, Considine says. "We run a ton of the biggest retailers in the world. We run a lot of the financial institution workloads. We run some of the biggest airline infrastructure. We do things that have millions and billions of transactions a day." Verizon enterprise customers include Royal Caribbean Cruises Ltd., Shangri-La Hotels and Resorts, Synchronoss Technologies, the US Department of the Interior, and The Weather Company.

Freedom is a major focus for Verizon in its competition against Amazon and other IaaS providers. "Most of the clouds have taken the approach 'we built what we built and you conform to us,'" Considine says. "I look at that as an attempt at lock-in. And we've been taking the opposite approach, saying, 'You know what? We don't want you to have to change anything to come to our environment.' That's a big difference."

Considine declines to comment on cloud revenue for Verizon. "I'll say this -- we run a very healthy and very well-growing business in the cloud. Our new platforms and some of the latest work we've been doing here has attracted a signifiant spike in the number of users."

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected].

Considine is a featured panelst at Light Reading's Big Telecom Event (BTE), where you can learn more about SDN and the transport network, June 17-18 at the Sheraton Chicago Hotel and Towers. The event combines the educational power of interactive conference sessions devised and hosted by Heavy Reading's experienced industry analysts with multi-vendor interoperability and proof-of-concept networking and application showcases. For more on the event, the topics, and the stellar service provider speaker lineup, see Telecommunication Luminaries to Discuss the Hottest Industry Trends at Light Reading's Big Telecom Event in June.

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About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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