Cloud services is probably the most-hyped technology sector today, even while providers and customers struggle to grasp just what the term really means. Last year, Gartner Inc. pegged cloud services to hit $150.1 billion by 2013, from an estimated $46.4 billion in 2009.
What’s unclear is who will get the biggest slices of that cloud service pie. Among the contenders are the country’s largest carriers — AT&T Inc., Verizon Business, Sprint Nextel Corp., and Qwest Communications International Inc. These players are of special importance in the cloud-services space because they provide the networking piece of the puzzle (plus the servers and storage) required to run these services from a provider, customer or third-party data center. Although each will need to partner with app developers, systems integrators and solution providers to assemble a complete cloud-services package, they deliver the crucial infrastructure for these hosted and managed services. Most other hosted service providers simply can’t deliver the same blend of national/international networking and IT assets, market clout, solution set and customer support across so many of the elements that make up cloud computing. Even premier solution providers like HP and IBM can’t match the full scope of these carriers, although their managed service and application integration expertise are critical parts of any cloud service implementation.
Carriers’ Cloud Service Offerings
As you might expect, the two largest carriers — in terms of network footprint and reach, depth of portfolio and market clout — generally lead the pack, offering the fullest solution set for IaaS, SaaS and PaaS services. Both AT&T and Verizon Business leverage their core competencies in network footprint and their extensive data center buildout to stand out from their competitors. As the only two carriers with comparable reach and IT assets around the world, both carriers can compete head-to-head for the large enterprise and smaller businesses.
Much as size matters here, it’s not enough. Verizon is positioning itself as more of an IT player than a purveyor of dumb pipes, but both are partnering extensively with systems integrators and solution providers to establish greater credibility with their enterprise clients, who are already familiar with big names like Accenture, CSC, HP and IBM.
In addition to its global reach and more than 200 data centers worldwide, Verizon can cite a strong multilayer security focus, courtesy of its CyberTrust acquisition and ongoing co-development relationships with key security vendors such as McAfee and Novell. But the company suffers from a general market perception that it lacks expertise in business applications, as well as professional services in general, according to Amy DeCarlo, principal analyst at Current Analysis. Since introducing its flagship cloud services programs over the last year to six months, the carrier has attempted to articulate a more refined and nuanced marketing message.
AT&T, meanwhile, was the first of the large carriers to enter what we now think of as the cloud services market. AT&T has deep expertise in application and server hosting, thanks to its acquisition of USinternetworking (one of the former leading ASPs) and boasts a robust menu of managed application services, including on-demand computing and storage services from 38 data centers distributed around the world.
In 2008, the carrier unleashed its Synaptic line of cloud services, including AT&T Synaptic Hosting, Snyaptic Compute As a Service (CaaS) and Synaptic Storage As a Service (StaaS). Synaptic is a global utility computing platform that includes provisioning, storage, connectivity, load-balancing, firewall services and other user-defined network resources that can be provisioned on the fly through a customer portal. The biggest brand in telecom also is investing heavily in a content delivery network overlay to better support faster cloud-based service delivery. But its strong pedigree in voice can overshadow its abilities in managed application services, and the provider can sometimes be seen as a generalist without the necessary specialized know-how required to make all the pieces fit in a cloud solution, DeCarlo observed.
Both are still struggling to hit their sales stride in the early going. “Both AT&T and Verizon are building up solid customer bases for their IaaS offers but at this point, neither has achieved critical mass,” said DeCarlo, pointing to the economy as a prime factor for such slow growth. “Both are adding customers on a weekly basis but neither is dominating.”
This may be due in part to a general reliance on direct sales for their IaaS services, working primarily with select integrator partners; but that could change as the carriers look further down market.
