ChannelTrends: It's a Cloudy Spring in the Channel

The change of seasons may be upon us finally, with a cold and snowy winter breaking into a warm and turbulent spring. No, I’m not revisiting my Earth Day column from last Friday, but the change of seasons seems to revitalize the business community, from solution providers and their customers to the vendors and distributors. A legion of new product and service offerings are rolled out at a number of conferences and events, while many companies put their business expansion plans into action.

It is definitely spring in the IT channel, and this year the clouds seem to be gathering at an alarming rate. Well, to be perfectly clear, a significant number of cloud service vendors have BEEN gathered by other companies over the past few weeks, including the acquisition of Savvis by telecommunications giant CenturyLink.

Will this level of activity continue over time, or is it just a dot com windfall for the vendors that found (or put) themselves in the right position at the right time? In most cases, the acquisition seems to provide a piece of the puzzle the purchaser was missing, such as data center capacity or a specialized service offering.

For example, just yesterday VMware purchased SlideRocket, an online presentation tool that could complement the e-mail collaboration suite (Zimbra) they acquired earlier this year. That gives them the foundation for a business productivity portfolio to take on Google Docs and Microsoft Office 365. With a large number of entrepreneurs building everything from cloud-based tools to complete SaaS platforms, vendors have a plethora of options to select from when building out their own cloud program. Should be an interesting year if this is how the spring plays out.

Telco Takes on Managed Hosting

The biggest cloud deal of the year is the Savvis acquisition this week, valued at approximately $2.5 billion (a tidy 53-percent premium over the company’s stock close from January). What did CenturyLink get for that sum? The organization now has global managed hosting and collocation capabilities, and can provide a number of cloud services to its business customers.

According to Savvis chairman and CEO James Ousley, “We believe that combining our proven capabilities in cloud infrastructure and managed hosting with CenturyLink's hosting assets and large base of business customers will create powerful opportunities to accelerate growth. We also look forward to making the full resources of a much larger network infrastructure available to our customers." That sounds like a challenge to solution providers and channel vendors, who continue to see the telecommunications and cable companies come after their customers.

That news sounds eerily familiar, like the sale of Terremark to Verizon that closed April 11^th, giving the telecom giant its own play in the global managed IT infrastructure and cloud services market. It’s expected that Terremark will fit nicely in Verizon’s "everything-as-a-service" goal, intended to offer a number of cloud services to its global business and government customers.

In addition to acknowledging the shift taking place toward integrated and interconnected infrastructures, Verizon Business president  Robert Toohey notes, “We'll leverage our collective strengths to roll out a differentiated portfolio of secure, on-demand cloud computing solutions to be delivered through a unified enterprise IT platform."

The combined business portfolio includes virtualization, managed hosting, application management, storage and cloud computing services, which will strengthen Verizon’s position with several key markets and clients. Once again, it also gives a telecommunications giant another tool in its cloud quiver, butting heads with additional segments of the channel. Even though the enterprise clients will be best suited for the new Verizon suite, expect to see them drive down market rapidly with similar offerings. That means MSPs of all size better keep these players in their potential threat category.

Not to Be Left Out

As if that weren’t enough, Time Warner has the cloud clearly in site with its purchase (and April 21^st close) of NaviSite. The hosting, managed application, messaging and cloud services company will complement the cable provider’s extensive business service portfolio, significantly boosting the combined organization’s worldwide service capabilities. With nine data centers in the U.S. and U.K., Time Warner is poised to compete with the previously mentioned telecommunications companies and a number of the largest solution providers.

With all these recent high-end cloud acquisitions should solution providers be concerned? Perhaps it will cause some indigestion in the largest MSP businesses and could threaten the margins on some services, but the typical VAR may not see a lot of changes right now. As a matter of fact, I expect some of the telecommunications companies to continue partnering with channel companies to gain a foothold in the SMB space, bringing the value and relationship management skills that they may never be able to develop on their own. At this rate, it may be a “cloudy” summer and fall as well!    

Brian Sherman is founder of Tech Success Communications, specializing in editorial content and consulting for the IT channel. His previous roles include chief editor at Business Solutions magazine and industry alliances director with Autotask. Contact Brian at Bsherman@techsuccesscommunications.com.