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Verizon enters the cloud market

The telecom giant makes a long-awaited move into cloud game with a soothing mix of closed infrastructure and open software.

Verizon launched its much-anticipated cloud computing service this week, offering virtualization in a self-service model. Verizon Computing as a Service (CaaS) will allow users to perform all the usual cloud computing tasks: Manage and deploy virtual servers in a Web-based user interface, scale computing power and storage up and down, and control private networks behind Verizon's walls.

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The offering is a mix of what is commonly considered cloud computing and managed hosting because users can choose virtual or physical servers in either Windows Server flavors or Red Hat Enterprise Linux (RHEL).

Joseph Crawford, the executive director of product management for IT at Verizon, said the company runs CaaS out of its Beltsville, Md., data center and that currently it is a small deployment. He estimated some thousands of virtual machines and several hundred physical machines, representing a small corner of the data center's 100.000-square-foot capacity.

Offering hybrid infrastructure
Verizon's facility also houses Verizon's other managed services. Crawford said that the company offers "100% uptime, calculated daily" in its service-level agreements (SLAs). The data center uses diskless HP blades for computing power and 3PAR SAN devices to hold the images. Verizon's virtual infrastructure is based on VMware, which might make the open source choice of Red Hat Enterprise Linux for the operating system seem a bit incongruous, analysts said.

 Verizon is obviously not Joe-blow cloud computing here.
Chris Alvord, CEO
COOP Systems

The networking and management capabilities are fully virtualized through Verizon's Advanced Workflow and Automated Resource Engine infrastructure architecture software. Crawford indicated that delivery and management are provided via Opsware. Verizon claims it can guarantee transparency for compliance-hungry customers, because it's the same technology it already uses for its traditional hosting offerings.

"We have a history of letting customers come [into the data center] to do audits," said Crawford. He said Verizon has the enterprise customer squarely in its sights. Security and compliance are two of the biggest concerns for enterprises evaluating cloud services. Verizon hopes that it can draw users that might have hosted, virtual front-end apps with valuable data tucked safely away in-house by offering both animals in the same "virtual farm." So by offering both infrastructure models, Verizon is banking on broadening its appeal.

But how much?
Verizon's pricing scheme will certainly keep the dilettantes away. Costs to use CaaS are comparable to Verizon's current hosting prices, but add a $500 joining charge, and a $250 per-month subscription fee. Crawford said users will see savings of "between 30% and 60%" because they'll be able to reduce redundancy and spare capacity.

Verizon plans to build up its CaaS portal to offer a range of targeted services such as database and messaging stacks, paralleling cloud leader Amazon's outgrowth of services from its infrastructure service. "We absolutely view [CaaS] as a platform in which we are going to layer" premium services over the infrastructure offerings, Crawford said.

Chris Alvord, CEO of Washington, D.C.-based COOP Systems, is a Verizon Business hosting customer and believes in Verizon's infrastructure, although he's not terribly interested in the new offerings. COOP provides disaster recovery planning for large private-sector companies, including hospitals and major New York financial firms, and he said instant-on computing isn't a draw for companies that like their data center's overengineered by 20 times of what's needed.

He already considers COOP a cloud consumer, since the firm uses Verizon's online backup services. Between backups and dedicated hosting purchased at Verizon, COOP has done its homework on Verizon's capabilities and the firm is comfortable offering "four nines," or 99.99%, uptime for its clients. Verizon is "obviously not Joe-blow cloud computing here," Alvord said.

But today, Alvord wouldn't choose Verizon CaaS for critical needs even though he trusts Verizon's SLAs. "For emergency response, [the infrastructure] has to already be there," he said.

Interesting choice of dance partners
Jay Lyman, an analyst at the technology analyst firm the 451 group, noted that Verizon is hedging its bets on the future of cloud computing and showing its muscle in the IT arena. The communications giant has $20 billion in revenue from its Business Services division and 86 million wireless customers and smart mobile devices, most based on open source software and exploding in popularity. The need for telecom infrastructure, computing power and storage has grown closer and closer together, he said.

Lyman said Verizon needs to show it's in tune with open source and the cloud. But he noted that its choice of partners suggests the company is hedging. "Open source is associated with a lack of [vendor] lock-in and cost reductions," he said, adding that the uncanny mix of Linux leader RHEL on fenced-in VMware is Verizon's way of showing that it has abilities in all departments.

He said that since the mobile platform market is so wide open, with Linux, Android and WinCE all jockeying for space on ever-more capable handhelds, Verizon wants a trusty provider of a wide array of technology. With more than 3,000 independent software vendors under its wing creating products, Red Hat Inc. is a decent bet.

Lyman compared Verizon's CaaS play to Cisco Systems Inc.'s move into the server and data center market. He said that Verizon has the muscle and the reliable infrastructure to set up a small corner of one of its data centers as a cloud just to prove it can, and let big consumers see its stamina in the young cloud market.


Carl Brooks is a Technology Writer for Write to him at And check out our Troposphere blog.

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