One of the newer entrants to the IT lexicon is cloud computing, which enables a business to deliver applications, store data, or do computations (among over services) via the infrastructure of an external provider, i.e. a network of computers, instead of using internal resources. In the past, companies had to purchase computers for each employee, as well as buy individual software, software licenses, and servers to handle the networking aspect of connecting individual computers.
However, when applications and content are in the cloud, they can be accessed through the Internet, making the installation of software unnecessary. What’s more, companies that employ cloud computing reap the rewards of lower capital expenditures and a reduction in the physical space required to support their own technology infrastructure by using the resources of cloud computing providers who already possess large data centers with powerful servers.
Given its potential for growth—cloud computing is currently being utilized, or will be within the near future, by roughly 50% of all organizations—it comes as no surprise that Verizon (VZ - Free Verizon Stock Report), a diversified telecom company with a network that covers a population of approximately 290 million people and provides service to nearly 91.2 million, has focused on building out its global cloud strategy over the last few years. The company delivers integrated IT and communications solutions via its high-IQ global IP and mobility networks to enable businesses to securely access information, share content, and communicate.
Notably, in early April, the company closed on the acquisition of Terremark Worldwide, Inc., a global provider of managed IT infrastructure and cloud services, for $19.00 a share in cash, or total consideration of $1.4 billion. The transaction steps up Verizon’s “everything-as-a-service” cloud strategy by delivering a powerful portfolio of highly secure, scalable on-demand solutions to business and government customers globally though a unified enterprise IT platform and unique business cloud offerings.
Customers of both companies will now be able to access Verizon’s and Terremark’s respective IT services and cloud portfolio, including virtualization, managed hosting, application management, storage and cloud computing services, that help companies operate faster while taking advantage of better economics. Lastly, the new division is being run as a wholly owned subsidiary of Verizon.
Subsequently, in late August, Verizon completed the acquisition of CloudSwitch, an innovative provider of cloud software technology, in a transaction that will simplify Verizon’s move to the enterprise cloud and help boost industry adoption. Verizon is in the process merging CloudSwitch, previously a privately held company headquartered in Burlington, MA, with its Terremark subsidiary, which should further accelerate VZ’s global cloud strategy by enhancing its hybrid cloud and cloud-to-cloud capabilities.
Thanks to the acquisition, Verizon now has breakthrough software at its disposal that enables enterprises to more easily and securely move applications, or workloads, between company data centers and the cloud, without changing the application or the infrastructure layer, thereby eliminating a key barrier to widespread adoption of cloud computing.
Naturally, the full scope of cloud computing’s potential remains to be seen, but there is no denying that the concept is very appealing. Providing enterprises with the wherewithal to securely assemble, store, and deliver applications and information with maximum efficiency at much lower costs would quite clearly represent an evolution in business process. What’s more, Verizon seems to be focusing on strategic services and cloud type offerings, which, unlike its legacy enterprise businesses, are not as dependent on job creation to drive growth, a clear advantage given still record-high unemployment in the United States.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.