Verizon cloud sale follows on sale of data centers to Equinix
Verizon has agreed to sell its cloud and managed hosting operations to IBM and plans to “work with IBM on a number of strategic initiatives involving networking and cloud services,” according to a posting by Verizon Enterprise Solutions SVP and Group President George Fischer. Financial terms of the deal were not disclosed.
Fischer called the move “a unique cooperation between two tech leaders to support global organizations as they look to fully realize the benefits of their cloud computing investments” and said that Verizon and IBM agreed to “a number of strategic initiatives involving networking and cloud services.”
He went on to say that the move is part of Verizon’s “ongoing IT strategy” with a goal of becoming a leading managed service provider as part of an ecosystem of Verizon solutions and third-party providers.
Another part of that strategy fell into place this week with the closing of Verizon’s $3.6 billion sale of 29 data center in the U.S. and Latin America to Equinix. That deal gives Equinix access to 600 new customers, according to Equinix’s Stephen Smith on the company’s most recent quarterly call with analysts, and Equinix will bring on more than 250 Verizon employees as part of the transition. Smith noted that Verizon and Equinix also expanded their relationship through a new, global reseller agreement under which Equinix will provide Verizon with colocation and interconnection services. Verizon Enterprise Services, meanwhile, noted in its first quarter highlights that “the reseller agreement enables Verizon to pair colocation and interconnection services in Equinix International Business Exchange data centers around the globe with Verizon’s security, network and advanced communications services to enable enterprises to build hybrid cloud solutions and gain quick access to a multi-cloud environment.”
As ZDNet reported, Verizon made a foray into public cloud services starting in 2013, but by last February it was shutting them down and telling customers to switch to the virtual private cloud option that will be sold to IBM.
Even as it has been investing in network infrastructure such as its $1.8 billion acquisition of XO Communications, which closed during the first quarter and included access to spectrum in the 28 GHz and 39 GHz bands, and reportedly is trying to break up AT&T’s acquisition of Straight Path and its spectrum holdings with an competing offer, Verizon is moving away from owning cloud-related assets and shifting that task to established companies within the cloud ecosystem while it focuses on providing services. AT&T made a similar move in 2015 when it announced plans to transition its managed application and hosting services unit to IBM as well as offload equipment and access to floor space in AT&T data centers currently supporting those operations; AT&T has in the meantime struck deals for deeper integration with Amazon Web Services and IBM to target enterprise customers. AT&T announced this week that it is also making a major migration of its existing large Oracle databases to the cloud.
John Stratton, EVP and president of operations for Verizon, asked about wireline service and Verizon’s data center divestment during a March session at a Deutsche Bank conference, responded that “the way we think about gaining assets and some of the things we’ve invested in, shedding assets for us, it’s sort of a natural part of stewardship available of our business.” He added that while legacy copper-based wireline business has been in decline for Verizon, “underneath that you have the strategic next-generation services, IP-based services, Ethernet or Fios. … Some of the advanced services [in]Â our enterprise group …Â are actually growing pretty nicely.”
Customers affected by the IBM transaction will be notified directly and Verizon said that it does not expect any immediate impacts to their services. Verizon said that it expects the transaction to close later this year.
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