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Verizon Kills Public Cloud IaaS Amid Falling Revenues

Verizon’s long-rumored retreat from public IaaS cloud services apparently has arrived. Verizon announced it will stop offering its public cloud services this month, indicating that it will focus instead on expanding its value-added cloud services portfolio, according to a research note from Molly Gallaher Boddy, a research analyst at TBR.

According to the note, In 1Q16, Verizon’s:

  • Total cloud revenue declined 1% year-to-year to $137 million, with public cloud growth declining 3.5% from the year-ago-quarter.
  • Cloud professional services revenue grew 3% year-to-year, and is expected to sustain growth throughout CY2016. The growth of Verizon’s professional services segment indicates important progress, with professional services expected to play a larger role in Verizon’s cloud business as revenue contributions from public cloud cease.

Boddy added:

“With its move out of public cloud IaaS, Verizon will pivot to using its Virtual Private Cloud and secure connectivity solutions to enable customers’ hybrid IT environments. TBR believes Verizon’s updated go-to-market strategy will be driven in part by alliances with public infrastructure cloud providers, with Verizon adding networking and security services.”

Translation: Watch for Verizon to promote secure interconnect links to IBM SoftLayer and Microsoft Azure. Verizon may also develop open source PaaS and Database as a Service capabilities, the researcher said.

Verizon had been mulling cloud data center sales as well, according to late 2015 rumors. But speculation about such a move has quieted down in recent months.

Growing momentum for Amazon Web Services and Microsoft Azure has forced multiple companies to rethink their public cloud strategies. Rackspace has pushed hard into managed services for AWS. Hewlett Packard Enterprise killed its own public cloud and now offers hybrid services for a range of clouds. And CenturyLink has been rethinking whether it wants to own its data centers in the cloud age.

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2 Comments

Comments

    Charles Houser:

    Private cloud instances is where most corporate environments are moving. Public clouds lack the control IT administrators are looking for. The market is undergoing a shift. We are in the 1st inning of this shift.

      Joe Panettieri:

      Hey Charles: Thanks for your readership and the comment. But I’ll respectfully disagree in terms of a “shift” from public clouds to private clouds. Frankly, I think the public wave is gaining major momentum.
      -jp

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