NFV Strategies

Rackspace Could Help CenturyLink's Cloud, NFV Efforts – Analyst

The acquisition of Rackspace by CenturyLink, if it was ever to happen, could give the network operator's cloud and virtualization efforts a significant helping hand, according to a Heavy Reading analyst.

Caroline Chappell, Principal Analyst, Cloud and NFV at Heavy Reading and long-time specialist in all things service provider IT-related, was intrigued this week by speculation that CenturyLink Inc. (NYSE: CTL) has had takeover conversations with cloud computing services specialist Rackspace . (See Is Rackspace the Best Next Move for CenturyLink?.)

She believes that if CenturyLink was to buy Rackspace, it would benefit the carrier in a number of ways. CenturyLink would "increase scale, and scale is important in the cloud services business," notes Chappell in comments emailed to Light Reading.

In addition, CenturyLink would gain "considerable OpenStack expertise… Rackspace is an industry leader here," and that would be "good for CenturyLink's NFV strategy," says the analyst. It would also "deepen its cloud/software skills base," and that's an important point, because, as Rackspace's cloud architect Troy Toman noted at the Atlanta OpenStack Summit in May this year, the top five global cloud providers will spend $25 billion on cloud R&D in 2014. That means the telcos have a lot of work to do to catch up with those levels of investments, so "acquisitions can help" them make up some ground, notes Chappell.

Need to know more about network functions virtualization and the cloud? Then check out the agenda for NFV and the Data Center, September 16 at the Santa Clara Marriott, Calif.

But the telcos might need to get a move on if they're looking to pump up their cloud capabilities through M&A. "The top independent cloud services providers are gradually being snapped up," notes Chappell, citing the acquisition of SoftLayer by IBM.

And CenturyLink won't be alone in thinking about cloud M&A, believes Chappell. "Other telcos may be eyeing up what's left," such as GoGrid Cloud Hosting . (See GoGrid Puts Cloud at Touch of a Button.)

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

kq4ym 9/12/2014 | 6:24:21 PM
Re: The value of OpenStack But, if ""The top independent cloud services providers are gradually being snapped up," this might be an expensive propostition. And because of the demand maybe there's too many competing for this avenue and it may be better to look at another business?
CChappell 9/11/2014 | 5:03:26 AM
Re: The value of OpenStack As anyone working with OpenStack will tell you, the cost of acquiring people with this still-rare skillset is astronomical. Certainly the acquisition of Rackspace would bring scale and OpenStack expertise to bear on CenturyLink's enterprise cloud capabilities but enterprise cloud services and NFV are closely entwined in B2B service providers. Cloud providers - and not just telcos - want to offer virtual firewalls, load balancers, CDNs and L4-7 network functions in general as part of an overall IaaS offer. Enterprise cloud services are not just about compute servers and storage. 
cnwedit 9/10/2014 | 5:12:27 PM
Re: The value of OpenStack Sam,

This would be a challenging merger, but not unlike what CenturyLink did with Tier 3. And you are right, Rackspace brings a lot of expertise, particularly in helping enterprises migrate to the cloud. 
sam masud 9/10/2014 | 2:43:22 PM
Re: The value of OpenStack Carol,

I think equally if not more important is that Rackspace has experience in the enterprise cloud space--surely something that would hugely benefit CenturyLink. But wonder how customers would feel about telco also being the cloud provider. Also, this would be a marriage of two very different types of businesses, which would have its own challenges.

cnwedit 9/10/2014 | 1:47:03 PM
The value of OpenStack Interesting point being made here about OpenStack expertise. That's something that is surely not to be underestimated with the coming of NFV. 
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