Verizon Communications announced its plan to acquire Terremark, an Infrastructure-as-a-service (IaaS) provider for $1.4 billion in cash to bulwark its everything-as-a-service cloud strategy.
While Verizon has set the industry abuzz with Apple's upcoming launch of iPhone on its network, the acquisition of Terremark confirms that Verizon has more on its mind than just telecommunications.
Verizon is shelling out $19 per share in cash which translates to 35 percent premium to the stock's closing price of $14.05 a share. However, the premium offered gives it control over a network of 13 data centers managed by Terremark. The data centers are located across U.S., South America and Europe.
Terremark will be operated as a wholly owned subsidiary.
Lowell McAdam, president and chief operating officer of Verizon said: Cloud computing continues to fundamentally alter the way enterprises procure, deploy and manage IT resources, and this combination helps create a tipping point for 'everything-as-a-service.'
Verizon launched its Computing-as-as-Service (CaaS) in June 2009 which offered customers a choice between use of virtual infrastructure and physical infrastructure - a combination of managed hosting and cloud computing. Verizon positioned its pricing based on servers used unlike Amazon EC2 charges based on the type of Instance. Verizon's pricing model is subscription based while Amazon's is based on pay for what you use model.
With the acquisition of Terremark, Verizon will be able to jack-up its offerings to tackle Amazon's EC2. Terremark has a cloud-offering called vCloud Express that provides compute power based on pay for what you use pricing. Also Terremark is also into managed hosting which will complement Verizon's CaaS offering. It will also bring Collocation offering into Verizon's portfolio.
AT&T is also in the cloud-computing domain with its service Synaptic Compute which it launched in November 2009. However, AT&T also followed the pattern of pay-as-you-go model unlike Verizon's upfront charge that user had to pay.