The Verizon-Terremark deal: An uncertain way into the cloud

Verizon and other big telecom companies could find that getting to the cloud is a bit more difficult than just writing a big check

You may have heard that Verizon has bid $1.4 billion for "cloud provider" Terremark. You may ask, What is Terremark and why would Verizon want to buy it? Terremark is all about managed infrastructure services and cloud computing services delivered from 13 data centers in the United States, Europe, and Latin America -- that is, colocation and managed services, not cloud services in the sense of Amazon Web Services or Google Apps.

Like other managed services and colocation providers, Terremark has done a good deal of repositioning itself into the cloud computing space in the last few years. In fact, it's difficult to figure out where the traditional managed services business ends and the cloud begins. Still, Terremark has enough "cloud" in its business to attract a telco like Verizon that has an even less forward-looking business: provisioning communication infrastructure.

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Verizon has the same problem as many other telecommunications giants: It has fat pipes and knows how to move data, but it doesn't know how to turn its big honking networks into big honking cloud computing offerings. Indeed, Verizon had some disappointing starts in the last year or so, showing both a lack of focus and sophistication around what cloud computing means to both enterprises and government.

Will the Terremark deal change all that? It's a step in the right direction, but Verizon has many more moves to make before it really gets into the cloud market.

What this acquisition will do is put a comparable price on the other cloud computing providers, such a Rackspace, GoGrid, and Savvis, that are on the shopping list of AT&T and international telecommunication providers, I'm sure. I suspect we'll see two or three more megadeals this year, as others follow Verizon's lead.

Most large telecommunication companies are just too slow to make it to the cloud themselves by the time the market peaks, so buying their way into a market is always a safer choice. However, I suspect many big telecom companies moving to the cloud will find there is more to cloud computing than providing managed services that are just renamed "cloud services." The level of sophistication in true cloud services will rise quickly in the next year or so, and those just pushing infrastructure connected to big networks will find they are a commodity.

This article, "The Verizon-Terremark deal: An uncertain way into the cloud," originally appeared at Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at For the latest business technology news, follow on Twitter.

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