IBM is a global technology and innovation company with the largest technology and consulting service in the world while Verizon Communications is a broadband and telecommunications company that operates 4G LTE and 3G networks as well as provides information and entertainment services. The company was looking to expand data center and cloud hosting market but seems is no longer possible as it has made sales of some of its business to Equinox and now IBM.
Only a few days after announcing that it was selling 29 of its data centers to Equinix, Verizon announced that it is selling its cloud and managed hosting business to IBM. The acquisition is expected to close later this year.
Verizon’s yearning to broaden its business in the cloud an area it started pursuing in earnest back in 2011 when it acquired Terremark. With Terremark, it acquired both some of the most valuable data centers it then sold to Equinix as well as the foundation for its private cloud businesses.
In its announcement, George Fischer, SVP and group president of Verizon Enterprise Solutions, noted that , IBM and Verizon will join hands on a number of unspecified “strategic initiatives” that will involve networking and cloud services. “This agreement presents a great opportunity for Verizon Enterprise Solutions (VES) and our customers,” Fischer writes. “It is the latest development in an ongoing IT strategy aimed at allowing us to focus on helping our customers securely and reliably connect to their cloud resources and utilize cloud-enabled applications.”
Verizon also shut down its public cloud service last year. Verizon, it seems, never reached the scale to compete with the likes of Amazon, Google and Microsoft in the public cloud and it also wasn’t quite able to scale its private cloud business to the point where it was worth pursuing this strategy in the long run, especially given the strong competition there, too.
On the other hand, IBM’s cloud business is growing quickly (unlike other parts of its business). With this move, it’s bolstering its position in the private cloud and managed hosting space for Verizon’s enterprise customers. Although according to Verizon, its current customers won’t experience any instant change from this move, though it’s probably a plausible happening that they will be contacted from IBM will be reaching out to them soon.