After a couple less-than-home-runs in the cloud game, it looks like CenturyLink might just have a real contender. The US midwestern telecommunications leader pulled the trigger on yet another acquisition this morning – Tier 3, a legitimate cloud platform provider. The real question is whether this is the latest in a long string of acquisitions that have failed to hit the mark, or a sign that they finally got it right.
CenturyLink is a Lego company built through a string of acquisitions all bolted together. It rolled up several telecom players to get to its current size and presence in that market. And it has bought now three cloud companies.
The first of its cloud moves was Savvis, a managed services specialist out of St. Louis who had good success with large enterprises. Savvis provided CenturyLink with a legitimate enterprise services offering and sales team, where CenturyLink had mostly succeeded with midsized firms and consumers selling traditional telecommunications services. However, Savvis leadership mostly viewed cloud platforms as a linear extension of virtualization and the managed services business. Its Savvis Symphony fell short on true developer enablement and was really more palatable to IT Ops. Savvis built Symphony atop traditional data center infrastructure (Cisco UCS and Dell storage) and VMware vSphere. It was an early partner on the vCloud DataCenter program that had hoped to cement VMware vCloud as the de facto Infrastructure as a Service (IaaS) cloud framework.
As this approach failed to gain CenturyLink the kind of cloud credibility and revenues it was seeking in the wake of AWS and a fast rising Rackspace, CenturyLink took cloud into its own hands in 2012 by creating and launching SavvisDirect, a SaaS and IaaS self-provisioning offering based on commodity hardware and the Xen hypervisor that was meant to slot in below Savvis' more enterprise-grade cloud offering. But SavvisDirect serves more as in-house competition. It's far more developer friendly than Savvis VPDC and is likely to became the victim, in our assessment, of internal politics.
Next up was AppFog, a Platform as a Service solution based on VMware Cloud Foundry. It was bought earlier this year and would purportedly sit atop a refreshed enterprise IaaS offering, due in debut in 2014. The VPDC do-over was still based on – no surprise – VMware vCloud, but this time would evolve off of the vCloud Hybrid Service – a much more service provider-friendly version of VMware's IaaS framework. While a better foundation, still one that was more IT Ops oriented than developer-focused.
Cloud platforms are a developer-driven market today and will be for at least the next 2-3 years. This doesn't mean an IT Ops-centric cloud can't succeed; just that the growth rate and revenue potential for it is on a less attractive trajectory. Savvis has the ear of IT Ops and thus its vCloud-based offering best fits that market. If I asked this buyer what they wanted in a cloud, that's what I would build too.
Tier 3 is another story. Built in 2006 with a focus on developer enablement, this cloud platform is fully automated, scales elastically and empowers developers at both the DevOps and Coder levels. Tier 3's IaaS is a good compliment to Savvis as it too is based on the VMware hypervisor and enterprise-grade infrastructure and boasts high infrastructure SLAs. But above that is a legitimate developer-enabling, self-service platform. Through RESTful APIs and a very intuitive user interface, Tier 3 makes it easy for DevOps users to deploy, configure and manage modern workloads. It was an early partner with NewRelic for performance management and has built out a legitimate ecosystem of cloud-centric partners. Atop this, Tier 3 built IronFoundry a C# implementation of the Cloud Foundry PaaS. It also created it's own database as a service and other discrete web services. Add in AppFog and they now have a significant portfolio of developer-oriented tools.
CenturyLink seems to understand now that cloud is a different market than managed services and, as such, stated that the Tier 3 management team will run cloud for the company. There will surely be some tension between Savvis and Tier 3 as they sell into the same companies and affect each other's revenues. But hopefully they will learn that their services can compliment each other as Dev and Ops in the customer base learn how to work together in this new era.
For a company that has grown into a market leader, mostly through acquisition, it can certainly be said that some of its acquisitions haven't lived up to their promise or hype but collectively, it now appears CenturyLink has all the components necessary to truly compete on the global stage. Let's just see if a collection of parts can truly learn how to align around a singular strategy and row in the same direction.