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Why Verizon Needed a Cloud Reboot

Carol Wilson
10/8/2013

Last week wasn't the first time Verizon took on Amazon in the cloud -- that actually happened three years ago, when Verizon launched an on-demand cloud service for small businesses designed to be as easy to deploy as Amazon Web Services (AWS). (See Verizon Takes On Amazon With SMB Cloud Offer.)

What Verizon Enterprise Solutions has just announced, however, was a surprising remake of its enterprise cloud offer into the new Verizon Cloud, addressing what the company has admitted are issues that slowed cloud adoption by the full range of potential business customers, from SMBs right up through to large enterprises. And this time around, the operator may well be putting itself in position to challenge Amazon Web Services Inc. . (See Enterprises Not Rushing to Embrace Cloud.)

I say the move was a bit surprising because Verizon has been selling cloud services since even before it acquired Terremark in early 2011, after which it became even more aggressive in the cloud services market, buying Cloudswitch and continuing to develop its portfolio. (See Verizon Taps Terremark for $1.4B and Verizon to Buy CloudSwitch.)

So this almost seems to be late in the game for a complete overhaul, yet that is what Verizon has done, though it describes it as a "re-invent" rather than overhaul.

So why the need to re-invent at this stage?

Because, as Troy Garrison, VP-Cloud Experience, tells me, Verizon was still losing business to AWS, and it was still seeing some of its enterprise customers reluctant to move certain apps/IT processes into the cloud because of ongoing uncertainties. By re-inventing its cloud services and adding a cloud storage product and predictable cloud computing results based on the level of performance chosen by the customer, Verizon is able to go head-to-head with AWS. And by adding software-defined networking (SDN) for flexible customer self-provisioning of network resources, Verizon hopes to differentiate itself substantially from the admitted pioneer and still dominant cloud player.

"The problem people have with cloud is not being able to predict performance of network and storage," Garrison says. "Our enterprise customers told us they couldn't put critical workloads out where they couldn't predict the performance. We are now guaranteeing that."

The SDN capabilities will allow Verizon's cloud customers to set up networks in "whatever IT scheme they want," Garrison adds. "We do not provision the network for them -- we allow them to do it themselves."

That's important because IT departments did not like being told they had to change their approach to buying network resources in order to buy cloud services, Garrison says.

Verizon is rolling out these new capabilities beginning in the fourth quarter of this year.

Another notable aspect of Verizon's re-invention of its cloud services is that it was done in-house. Verizon developed its own software that is running on Advanced Micro Devices Inc. (NYSE: AMD) chips and micro-servers. Garrison says that happened in part because Verizon couldn't find what it was looking for among its commercial suppliers. But he also admits the company wants to be in control of its cloud services and offers, and developing those capabilities in-house means Verizon isn't at the mercy of any other company's development schedules or processes.

Given the investment Verizon made in both Terremark and Cloudswitch, the in-house approach shouldn't be a surprise -- Verizon has acquired substantial expertise in this space. And clearly, given the essential role that cloud services are expected to play in Verizon's future, the company is enjoying the ability to control its own destiny.

Speaking of control, I'm wondering what the mobile cloud might look like, once Verizon is in full control of its wireless offshoot and in position to more tightly link its now-separate organizations.

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

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Gabriel Brown
Gabriel Brown
10/9/2013 | 4:30:24 AM
Re: Verizon Cloud Strategy
Thanks dwx. I don't know enough about what Verizon is doing first hand to comment here. But my sense, relative to lots of other operators I talk with, is that VZ wants to do a lot more of the heavy lifting itself -- i.e. in terms of development, integration, tools, and so forth. This is gutsy.

Most operators tend to talk more in terms of influencing vendors to develop interoperable systems/tools (based around open source) that meet their needs.

 
dwx
dwx
10/8/2013 | 3:25:51 PM
Re: Verizon Cloud Strategy
Verizon is using Xen (although not likely off-the-shelf exactly) for the compute side.  So for the most part they are mainly writing the parts to manage, provision, and operate the different moving pieces which connect into the compute side like network and storage.  There really aren't a whole lot of good tools available on the service provider side for doing that.  
Gabriel Brown
Gabriel Brown
10/8/2013 | 12:27:10 PM
Verizon Cloud Strategy
It's interesting (that's understatement) that Verizon is developing and maintaining its own stack. Over the long-term this gives it a lot of control, and perhaps a competitive advantage.

It's a big, ambitous bet. Virtually all other telcos are wary of in-house development because, I think, they're scared either that they'll mess it up, or that the ongoing development and support costs will spiral.
Carol Wilson
Carol Wilson
10/8/2013 | 12:26:48 PM
Re: Talking past each other...
First, you aren't going to find anything about Verizon Cloud available today on their website -- it doens't launch until later this year.

Second, I don't think it's too late for any better cloud offer - everyone I've talked to says it's still very early days for cloud.

I'm not going to get into defending Verizon's approach here -- maybe someone from Verizon wants to do that - but I do think this is a more credible offer and, as our Heavy Reading analyst Caroline Chappell noted last week, puts Verizon ahead of the telco cloud providers: http://www.lightreading.com/author.asp?section_id=193&doc_id=705944

Call me hard-headed, but I also still believe there is a play for bundling on-demand network with on-demand compute and storage. 

 

Carol
brookseven
brookseven
10/8/2013 | 11:01:01 AM
Talking past each other...
 

Carol,

How do I start?  Let me say that there is nothing wrong with the offering.  But it goes right into the face of the competitors at their commodity product.  What Verizon does NOT compete with is the high value part of the AWS business.  If you are a business, running applications on a Cloud Server using VMware is not greatly different than running one on a hard server.  IT folks are right at home in that environment.

What AWS has done is separate itself with differentiation.  Verizon might be able to do this as well, but at least what is on their website does not show it.  If you are building an E-Commerce site (for example), look at ALL the tools available from Amazon.  You can do as little (have Amazon sell your product and you just fulfill it) or as much as you want.

As I have tried to describe in the past, this is just a way for Amazon to monetize the $100s of Millions in R&D that they put into their infrastructure for themselves.  Verizon is competing with Amazon's base business in AWS from 5 years ago.  

I am not saying that Verizon won't win business, but I think we need to turn a greatly critical eye to somebody who is introducing a product that somebody else has already turned into a cash cow.

Let's look at the following PR posted on this site (and scrolling across my screen as I post).

http://www.lightreading.com/savvis-study-sees-cloud-dominance-of-it-by-2018/d/d-id/705990

Uh...if that is true - kinda late to get to the party with a me too offering?

seven

 
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