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Verizon Bets on "Everything" With Terremark Cloud Computing Acquisition

Look Out for the Telco with the Mad Cloud Skillz

Sydney-based Verizon Business executive Ray McQuillan delivered a talk on the topic of "Everything as a Service" at a Cloud Computing event I hosted in September 2010 in Shanghai. His talk, at the time, seemed more theoretical than practical. But Ray assured his audience that Verizon was focused on delivering on this vision, globally.

Verizon's acquisition of Terremark validates what he was saying. It may also be only a first step by the New York-based company, which has said it will spend $17 billion in building out infrastructure as it begins to get real serious-like about the Cloud.

Other heavyweights are employing the "Everything" tag, notably HP and Microsoft, Salesforce, and Google. Verizon has gone ahead, spent some money, and made a bold move toward bringing "Everything" to everybody.

Global Implications
More specifically, its Verizon Business division will be the tip of the spear as the company goes on the attack in the 75-odd countries in which it is present. This unit, based on the outskirts of the Washington DC metro area, has more than $20 billion in revenue and 30,000 employees worldwide. It joins landline and wireless divisions to form a parent company with more than $100 billion in revenue and 200,000 employees.

The Terremark acquisition was sprung on the public (and potential competitive bidders) quickly, with Verizon offering a semi-aggressive 35% premium on Terremark's stock, resulting in a $1.4 billion deal.

This not an eye-popping number. But its implications should be huge, as it creates a telco with mad Cloud skillz. For example, one of Terremark's cooler toys is "The NAP of the Americas," a Network Access Point that the company describes as "fortress-like" and "one of the most significant telecommunications projects in the world."  The NAP is six stories high, has a footprint of 750,000 square feet (about 15 acres), and "can deliver (services) to millions of businesses and consumers virtually anywhere in the world."

Remember the Past?
Telephone companies in the US, particularly when it comes to their wireless services, evoke the sort of love that airlines, clowns, and journalists know all too well. A measure of their charm is rooted in their monopolistic roots, only slightly modified over the years.

Accusations that they turned over customer call records to the National Security Agency to defend our freedoms did not add to their luster. (Verizon denied doing so, and was mum about whether MCI did so.)

Besides that, who hasn't thrilled to shell-game usage plans, hideous overage charges, long-term contracts that only get longer if you (gasp) want to buy a new phone, and termination fees? Can you hear me now?

Verizon was originally created from the former Bell Atlantic and Nynex phone companies, a pair of beloved institutions in the Northeast region of the United States. Over the years, it acquired GTE for $50 billion-an enormous deal-as well as MCI for less than $8 billion.

(MCI was severely weakened by that time, having been previously acquired and almost put out of business by Bernard Ebbers, the Canadian-American criminal and Worldcom CEO, who makes his current home in a Louisiana prison.)

This is Different
But Verizon Business's Cloud pitch is not an upsale to some random angry guy with an ax to grind.

Rather, it's an integrated pitch to the enterprise--"everything" as a service-that entails a vast global communications network integrated with large datacenters and IT infrastructure skills.

Phone service was originally thought of as a utility, and today, computing power is also being sold as a utility by Cloud Computing companies such as Terremark--The Big Switch of Nicholas Carr's recent book.

This deal serves as the prototype for future PaaS/IaaS-and yes, EaaS-Cloud Computing providers.

Now, about your new iPhone deal with Apple...are you sure my calls won't be dropped if I become a Verizon customer again?

More Stories By Roger Strukhoff

Roger Strukhoff is Executive Director of the Tau Institute for Global IoT Research, (@IoT2040), with offices in Illinois and Manila. He is Conference Chair of @CloudExpo & @ThingsExpo. He is also Editor of SYS-CON Media's Cloud Computing Journal & IoT Journal & & writes for Computerworld Philippines. He has a BA from Knox College, Technical Writing Certificate from UC-Berkeley, and conducted MBA studies at CSU-East Bay.