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CenturyLink buys Savvis

By Lydia Leong | April 27, 2011 | 0 Comments


Ever since Verizon bought Terremark, and Time Warner Cable bought NaviSite earlier this year, people have speculated about the fate of Savvis. Well, today we know: CenturyLink is buying Savvis.

CenturyLink is a carrier, which rolled up a lot of rural telco assets before going on to digest Qwest. Acquiring Savvis signals its cloud computing ambitions — few carriers can afford to be without a cloud strategy, and apparently CenturyLink has decided to buy one rather than to build one. CenturyLink didn’t have much in the way of hosting assets pre-Qwest, and Qwest’s hosting assets were weak; with the exception of pure-plays like Amazon, nearly everyone in the cloud IaaS business has a hosting background. Moreover, while Qwest has been trying to get into the cloud, they are not a player to speak of.

With the Savvis buy, if CenturyLink is smart, Savvis gets largely left alone to continue what’s been a pretty successful colocation, hosting, and cloud IaaS business, Savvis incorporates the Qwest data center assets and kicks their hosting business to the curb (migrating the customers onto Savvis managed hosting), and Savvis stops fooling with a networking business save for what’s necessary to deliver proximity hosting. CenturyLink has announced that they’ll be consolidating their hosting assets with Savvis and having their current CEO run the unit, so that’s a good sign, at least.

I do believe that early industry consolidation may be bad for cloud innovation, but there’s a certain inevitability to the big network operators picking up leading cloud IaaS providers.

The really interesting question now is if Rackspace is a target. Their model doesn’t fit anywhere near as well into a carrier, given their focus on customer service — arguably their culture would be annihiiated in just about any merger with a likely buyer. Moreover, they have focused upon commodity cloud, while carriers are typically far more interested in enterprise cloud. But that doesn’t mean they’re not a takeover target anyway.

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