Since the inception of cloud computing, infrastructure as a service, or IaaS, has been positioned as a low-cost, utilitarian approach to obtaining computing resources, on demand. The benefits seemed clear and simple: pay only for the resources used; no need for extravagant capital outlay; and purchase more resources as consumption dictates.
Though the lure of the cloud sounds appealing to many enterprises, and most agree that it will be a part of their future IT plans, only 14 percent of U.S. businesses currently reaps the benefits of Infrastructure as a Service (IaaS), according to the 2013 Frost & Sullivan Cloud User Survey. Providers in the cloud space are caught in a living hamster wheel in which they chase an elusive cloud service that will accelerate enterprise adoption beyond the small percentage that has deployed IaaS to date.
Amazon Web Services, or AWS, has dominated the IaaS market from the outset; at present it earns just under 67 percent of the total IaaS U.S. market revenues. Verizon Terremark, the third-ranked IaaS provider, has been trailing AWS and second-ranked Rackspace since its acquisition of Terremark in 2011.
But recently, Verizon Terremark launched a new cloud architecture that solves some of the scaling and reliability issues inherent in other IaaS platforms. Poised to challenge market leader AWS, the new Verizon Cloud is a public cloud that has the potential to deliver on the promise of the cloud in a way that can attract skeptical enterprises, and take on market leader AWS, thus growing overall cloud adoption.
In this SPIE, Stratecast examines Verizon Terremark’s new cloud offering, and evaluates how it stacks up in the market.
Growth in the IaaS Market
The U.S. IaaS market reached $3 billion in revenues in 2012, according to Frost & Sullivan research, signaling an increase in acceptance of a hosted, on-demand model for IT service delivery. The cloud has finally pushed past the early adopter phase, and is entering a period of early growth. Though businesses still have trepidation about deploying a cloud model as their prime IT environment, many are trying IaaS for specific workloads, and adding new workloads to their cloud environment.
Compute as a Service, the earliest form of cloud computing, continues to grow steadily among enterprise users; while Storage as a Service gains exponential growth, thanks in part to the Big Data craze, and the desire—or need, for compliance reasons—of many organizations to retain more data for longer periods of time.
Cloud Infrastructure Marketplace: Chasing the Leader
When acquiring Terremark, in 2011, Verizon cited the ability to accelerate its “as a service” strategy, and put the company on a path to leadership in the cloud. Though it was the target of acquisition, the Terremark brand—appended with “a Verizon company”— was retained on most legacy data center and cloud services; and existing Verizon hosting and cloud services were migrated to the Terremark infrastructure. Because Terremark was known as a flexible, agile IT service company at the time of acquisition, the brand was retained in order to leverage this brand perception. As a result, the Verizon brand continued to be known primarily as a network provider; services like cloud computing were tertiary to its core network expertise.
Today, nearly three years after the completion of the acquisition, Verizon has captured approximately 5 percent of the Infrastructure as a Service (IaaS) market, making it the third largest provider in the U.S. IaaS market.
The market is poised for growth in future years. Revenues are expected to grow by more than 60 percent CAGR; and, although only 14 percent of enterprises are using IaaS today, 81 percent state that they are planning to deploy cloud in their future. With such great potential for growth, providers will seek a leadership position, though not necessarily on AWS’ terms. Serving enterprise needs will be paramount, but pinpointing those needs has proven difficult. As such, providers continue to re-tool their strategies and platforms to jockey for competitive position. Consider the recent acquisition of SoftLayer by IBM, or the partnerships AT&T has announced with CSC and others to help strengthen its own presence in the cloud market. Verizon’s re-engineering of its cloud service is another example of a provider seeking to fulfill enterprise IT needs.
The New Verizon Cloud Architecture
On October 3, 2013, Verizon Terremark announced the launch of its new cloud infrastructure as a service (IaaS) platform, which strives to deliver a service that is poised to both increase the adoption of enterprise cloud and challenge market leaders with a new type of public cloud.
Verizon’s new approach to the cloud appears to come from the perspective of the enterprise, which has very specific requirements. Consumption-based pricing works well with dynamic workloads like testing and development, but is not ideal for enterprise business workloads, which require application reliability, network bandwidth scaled to application usage, security, and compliance with corporate regulations.