Why IBM Is the Best Fit for Verizon's Enterprise Cloud Business

Ray Le Maistre
2/15/2017
50%
50%

IBM looks best placed to pick up Verizon's enterprise cloud services business, which the major US operator has decided is now surplus to requirements.

Light Reading reported earlier this month that Verizon has agreed to a deal to sell that business, and there are a number of reasons why it would make sense for IBM to be the buyer. (See Verizon on Verge of Enterprise Cloud Sale – Source.)

The acquisition of Verizon's enterprise cloud services business would make sense for IBM Corp. (NYSE: IBM) for a number of reasons: Cloud is one of the IT giant's earnings bright spots and it has a strategic imperative to grow that business -- revenues from its cloud services and related activities totaled $13.7 billion for the full year 2016, up an impressive 35%. Further scale could only help as IBM seeks to gain market share and edge closer to market leader Amazon Web Services Inc. (AWS). (See AWS Maintains Its Public Cloud Dominance and IBM: AI Needs More Than Just Technology.)

IBM previously splashed out about $2 billion in 2013 to acquire SoftLayer for its cloud infrastructure business, and today the company highlights growth in cloud services as a counterpoint to financial declines in its more traditional business units. (See AT&T Tightens NetBond to IBM SoftLayer and The Myth That Telcos Can't Do Cloud.)

In addition (and here's the "people" angle, folks!), the team at IBM will have a very good understanding of what they'd be getting: The former CTO of Verizon's cloud business, John Considine, now heads up IBM's Cloud Infrastructure Services business, and the former CTO of Verizon's cloud platform engineering group, Kevin Clarke, is now IBM's Director Cloud Innovation Lab. Considine left Verizon in September 2014 and reemerged at IBM in September 2015. Clarke left Verizon in March of 2015 and turned up at IBM a year later. (See Verizon: Cloud Security Is Often an Excuse to Avoid Change.)

So there's a good fit and business justification for such a move and while there is nothing solid linking IBM to such a deal currently, the smart money is on Big Blue.

IBM did not respond to requests for comment on this matter, while Verizon Communications Inc. (NYSE: VZ) previously declined to comment on any impending sale.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading


CALLING ALL CLOUD, NFV AND SDN COMPANIES:
Make sure your company and services are listed free of charge at Virtuapedia, the comprehensive set of searchable databases covering the companies, products, industry organizations and people that are directly involved in defining and shaping the virtualization industry.


(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
2/27/2017 | 9:05:31 AM
Re: Sense
Yep, the machine part of the IBM certainly has changed dramatically! Interesting how "former CTO of Verizon's cloud business, John Considine, now heads up IBM's Cloud Infrastructure Services business," making it pretty much connect the dots with getting going to the cloud business that Verizon doesn't want anymore.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
2/16/2017 | 5:47:41 PM
Sense
This makes a lot of sense to me. Verizon obviously wants to move on to other things, and IBM has been really focused on the services side after completely getting out of hardware. There's not much machine in International Business Machines anymore. 
More Blogs from Shades of Ray
Various reports suggest there has been a relaxation on the trade position being taken by the US authorities with regards to Huawei, but the situation for US vendors is no clearer.
No matter what the US and China agree from now on, the dynamics of the global telecoms technology supply chain have changed forever.
The optical components specialist had its world turned upside down by the US ban on selling tech to Huawei. Can it regain its feet? Might it even get swallowed up in further components sector consolidation?
Colt, Filament, Mobileum and Synchronoss Technologies all submitted standout entries for most innovative blockchain for telecoms strategy in this year's Leading Lights contest.
The big noise in Barcelona was, of course, anything and everything to do with 5G, but in the background there were signs that some companies are embracing the potential of the public cloud as they determine their next-generation technology and services strategies.
Featured Video
Upcoming Live Events
September 17-19, 2019, Dallas, Texas
October 1-2, 2019, New Orleans, Louisiana
October 10, 2019, New York, New York
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events