Verizon in the cloud?

Well I mean  Cloud Computing!

Verizon decided to join already crowded space of cloud computing service providers along with IBM, Cisco Systems, Hewlett-Packard and Amazon as well as their main rival AT&T.

In today's economy, most of the companies are very reluctant to make major capital investments and they are actively considering the cloud computing model which could provide them the flexibility along with significant cost savings.

AT&T in a partnership with EMC (EMC) is also going to provide cloud services. AT&T is using EMC's Atmos technology, which is designed to help service providers build and develop cloud storage systems.

The Computing-as-a-service (CaaS) is already gaining ground in the market place given the current economic environment. This model is going to be much more popular where there is a peak seasonal demand for data – for example retailers will like the service as this will free-up their capital investment in massive data center build out for peak seasonal demands. I also think that some non-core business critical application will be a perfect fit for this type of service.

This is more an strategic move for both Verizon and AT&T as they are experiencing erosion in their traditional fixed line telephony business. Both have made acquisitions that gave them technology to support the cloud services. In 2007, Verizon bought Cybertrust, which provided managed network security services. AT&T acquired USinternetworking, a Web hosting company, in 2006.

This is a purely commoditized market and there are very limited scope to differentiate the services between different service providers – Verizon will continue to pitch the reliability of its network along with added security and encryption features that it can provide by using Cybertrust technology.

This was an expected move on part of both Verizon and AT&T. It will be interesting to see how they are able to grow this business.