Report: AT&T, Verizon retain dominant spots in cloud market

AT&T (NYSE: T) and Verizon (NYSE: VZ), according to Gartner's Magic Quadrant report on managed hosting providers in North America, have established themselves as key players in the segment.

Having built a broad presence in the U.S. and international markets with its set of private IaaS and colocation services, AT&T provides cloud and managed services out of 23 data centers in North America in addition to facilities in Europe and Asia.

The telco's depth and experience in providing managed hosting services continues to be a selling point for its large multinational corporation (MNC) customers that have complex enterprise application and hosting needs.

"AT&T is able to use its network as a differentiator for use cases where network access is a heavily weighted criterion, or where end-to-end service management with SLAs is required," Gartner wrote.

While AT&T won't release its Q1 earnings until next Tuesday, in Q4 2012  business services rose 0.6 sequentially from Q3 2012 to $9.1 billion with strong Ethernet, IP/VPN and hosting sales.

However, AT&T's one drawback, Gartner says, is that its operations processes "are heavyweight in nature."

"This level of operational rigor can be beneficial from the perspective of the long-term stability of environments and the management of the complexities of change and risk, but it quickly becomes burdensome when customers want to be more agile and to move more quickly," Gartner wrote.

Verizon, through the Terremark subsidiary it purchased in 2011, has also built a sizeable hosting, colocation and cloud business.

Like AT&T, it offers its set of public cloud IaaS and colocation services from 25 data centers located in North America, Europe, Asia, and Latin America.

Network depth and reach into key markets, particularly Latin America, is a key strength of Verizon and Terremark.

"Verizon Terremark is one of the few North American providers with strong Latin American capabilities, largely due to the company's NAP of the Americas peering hub in Florida, a key landing point for fiber routes from South America," Gartner wrote. "Verizon is able to use its network as a differentiator for use cases where network access is a heavily weighted criterion, and where end-to-end service management with SLAs is required."

Terremark has been a major revenue driver for Verizon at a time when its business revenues have suffered due to the economic issues taking place in both Europe and the United States.

In Q4 2012, Verizon reported that the sale of strategic services, including Terremark cloud and data center services, security and IT solutions, and Ethernet, increased 5.3 percent compared with Q4 2011 and represented 54 percent of global enterprise revenues.

But like AT&T, Verizon Terremark is not without its flaws.

"Although the integration of legacy services has been completed, Verizon Terremark has yet to consolidate all its service offerings in a single portal. This means users have to sign into different portals to manage different infrastructure stacks," wrote Gartner.

For more:
- see Gartner's report

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