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CenturyLink cloud strategy hinges on hybrid, midmarket

Battling for its life against bigger cloud players, CenturyLink is repositioning to appeal to IT shops trying to manage a growing number of public and private cloud resources.

Striving to remain relevant as a cloud infrastructure provider, CenturyLink is swinging its gaze toward enterprise...

IT shops that need some hand-holding to keep pace with the rapid proliferation of public and private cloud resources.

Public cloud providers, such as Amazon Web Services (AWS) and Microsoft Azure, continue to expand their influence over enterprise IT spending at a breakneck pace, but most IT shops still rely on infrastructure from hosting facilities or inside their own data centers. That duality is where CenturyLink is trying to appeal, with a platform that covers private and public, and will soon manage other providers' public clouds -- because, otherwise, it risks further losing its toehold in the cloud infrastructure space.

CenturyLink has been praised in the past as a dark horse in the cloud infrastructure space. Well behind frontrunners Amazon and Microsoft, it's grouped into the next tier with the likes of Google and Rackspace in Gartner's 2015 IaaS magic quadrant rankings -- the most recent available -- and ahead of companies such as VMware and IBM.

Cloud was supposed to be the company's savior as it transitioned away from its legacy networking business, but changes in leadership and strategy have created confusion around its direction, said Chris Antlitz, senior telecom analyst at Technology Business Research, in Hampton, N.H. CenturyLink has tried to differentiate with professional services, but it's now perceived as an also-ran, as it loses market share and comes under increased pricing pressure.

They have an interesting story looking forward, but we've been down this path with Verizon and others.
Amy DeCarloprincipal analyst, Current Analysis

"They're going to be diversifying within the cloud space in an attempt to win in some areas, but they're really going to struggle no matter where they go in that space," Antlitz said.

The one area where CenturyLink Cloud could find success is in midmarket customers in rural and suburban areas, where it has existing relationships and less competition, away from the urban hubs where the major cloud vendors tend to focus, Antlitz said.

Aiming for the middle

Not all workloads belong on public clouds, nor do they all belong on private clouds. Intelisys, a Petaluma, Calif.-based cloud and networking reseller for more than 30 cloud providers including CenturyLink, rarely sells a pure public cloud deal or a pure private cloud deal anymore, said Andrew Pryfogle, senior vice president of cloud transformation. Its business now is mostly for hybrid cloud environments -- and CenturyLink, he said, excels at bridging that gap.

"There's a lot of demand for something that simplifies that complexity and there's a realization that they need an external team to manage it," he said.

Last month CenturyLink acquired ElasticBox, a multicloud application management startup, further underscoring its plan to fill the gaps for customers that lack the resources to manage these different environments or keep up with all the changes. ElasticBox handles orchestration across a dozen cloud providers, including AWS, IBM SoftLayer, Microsoft Azure and VMware, as well as recently added support for CenturyLink Cloud, Google Compute Engine and OpenStack.

Sysomos Inc., a Toronto-based social media analytics company, uses CenturyLink as its primary infrastructure provider, but it also uses Google Cloud Platform and IBM SoftLayer for specific projects and AWS for some non-production workloads. It previously looked at ElasticBox, but decided it didn't point to all the clouds it needed. As part of CenturyLink, however, it could be more attractive, if its capabilities are integrated and expanded, said Timothy Torres, Sysomos senior vice president of infrastructure. 

"We've had to build some of our own automation for this stuff, which is kind of a diversion from what we would like to do," Torres said. "When they add the capabilities and integrate it tightly to their cloud, it makes it much more compelling."

Public cloud a piece of the puzzle

CenturyLink has made several acquisitions in the past five years, including Savvis, Tier 3 and AppFog, to push deeper into the cloud market. The company doesn't have aspirations to build a hyper-scale platform to compete with the likes of AWS, but company officials insist they have no plans to scale back or shutter its public cloud, as have many other big-name vendors, including Dell, Hewlett Packard Enterprise (HPE) and Verizon.

CenturyLink's strategy is based on the idea that certain workloads will always remain on-premises for compliance, reliability or security, said Jonathan Steinberg, CenturyLink vice president of hybrid IT services. At the same time, being the IT interface for its users means continuing to provide and invest in public cloud capabilities, he added.

Sysomos outsources networking to CenturyLink and uses colocation and other managed service provided by the telco. CenturyLink also built what is essentially a private cloud inside its public cloud, with hardware specifications tailored to Sysomos' needs.

Sysomos uses custom algorithms to run trillions of ad hoc queries across billions of documents, and has begun bursting to CenturyLink Cloud for handling tasks such as tracking spiky social media traffic. Despite the growing number of big data offerings from the hyper-scale providers, CenturyLink remains the best option because all the workloads remain on the same network, Torres said.

"We've looked at these other tools periodically and none of them can offer the flexibility for the kind of things we need to do, and ... at a competitive price point, once you take into account transit, storage, backup and all that overhead," Torres said.

Hybrid IT services strategy

CenturyLink's cloud push comes at the same time it explores the potential sale of its massive global data center footprint, but customers should not be too concerned about any such move because owning less does not prevent the company from continuing to deliver and scale, said Amy DeCarlo, principal analyst at Current Analysis in Boston.

CenturyLink has "been relatively consistent since they acquired Tier 3 in that they wanted to build a more robust platform for cloud delivery, but they also wanted to help clients that want to operate or manage their own assets or go through a colocation facility," DeCarlo said.

CenturyLink is on the right path, but it needs to do more to show customers how to pull all its services together and it needs stronger vertical offerings to remain relevant, DeCarlo said.

"They have an interesting story looking forward, but we've been down this path with Verizon and others, where they had a great story, but the tech wasn't quite there, and eventually reality caught up with them and they couldn't compete," DeCarlo said.

Perception and framing play important roles as well. Despite its continued push around public cloud, CenturyLink's strategy isn't all that different from Verizon, HPE and others that have pulled back on those platforms, but have yet to decommission the servers that were at the heart of those initiatives, said Carl Brooks, an analyst at 451 Research.

"They've just said, 'OK, infrastructure matters less than we thought it did, so we're going to roll it up and tuck it into IT services businesses,'" Brooks said. "It's basically next-generation outsourcing."

Trevor Jones is a news writer with TechTarget's data center and virtualization media group. Contact him at tjones@techtarget.com.

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When would you consider using CenturyLink Cloud over a hyper-scale competitor like AWS?
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If they're selling their data center, what are they going to use for infrastructure for their cloud service? Yes, I know they insist they're not shutting it down, but of course they'd say that, right? Right up until the moment they do. IIRC the Verizon users didn't get a lot of time to migrate. If I were a CLink customer, I'd start building my exit strategy, just in case.
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CenturyLink supports Enterprise. Where is your data?
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