Enterprise cloud services chasm coming

Kate Gerwig
13 Jul 2011

In this two-part Q&A, we talk to Terremark president Kerry Bailey about changes he expects in the cloud provider market, the emergence of enterprise cloud services, Verizon's strategy to become an IT service company, and how 4G-enabled machine to machine (M2M) applications are a perfect match for the cloud.

Verizon may have acquired Terremark in 2010, but don't people still think of Verizon as a telecom company rather than a cloud provider?

Bailey: The evolution is important because the overall strategy had been that Verizon was a networking communication company with global data centers, and you built data centers to drive more traffic. In the time I've been here, that concept has changed dramatically. Because of virtualization technology, the amount of bandwidth available in private and public networks, and 4G, all of a sudden the market is moving in our direction—the network is the computer and the applications are now on the network.

When I was in the application service provider business, it was like using brute force to make the technology and the networks come together. We said even then that the network will ultimately be the way that IT is acquired. When I got here, we built out our professional services capabilities and vertical industry teams because if you're going to work with applications, the more of a touch point you have to have with the customer, and you have to understand the industries.

What is your background in networked applications that led to cloud services?

Bailey: I was at Digex [a managed services provider acquired by MCI], and at USinternetworking [USi, an early applications service provider acquired by AT&T], and then I started Cybertrust [a security services company acquired by Verizon Business]. My four-and-a-half years at Verizon have been based on the change in how services are going to be bought on the network.

Why did Verizon keep the Terremark brand for cloud services?

Bailey: Terremark is 100% owned by Verizon. Verizon is known as one of the best networks around the world for both wireless and wireline, and it has a very network-centric brand. Terremark had a very IT-centric brand, and Terremark was known for its speed and agility because it was built for this next generation of delivering IT services. With these strong IT-centric and network brands coming together, we wanted to make sure we're seen as an IT solutions business. Frankly, to go after this market, you have to make sure you're nimble and fast and have the agility you need.

Terremark was a big bet for us because we were going to use it to run our own business, our consumer cloud, an M2M cloud and our business cloud. We're using this as the model going forward for Verizon. It was almost blasphemy when we stood up at Verizon and said we're no longer a telco; we're an IT solutions company with one of the most powerful networks in the world. We started changing that culture and mindset and skill sets when hiring because we're an IT solutions company with a powerful wireless and wireline network.

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