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Why the Cloud Computing Acquisition Parade Will Continue

NTT's Dimension Data Acquires OpSource

OpSource, a privately held, SAS 70 Type II, PCI DSS Level 1 Cloud Service Provider headquartered in Santa Clara, CA with 150 employees worldwide has been acquired by Dimension Data, a $4.7 billion ICT services and solutions provider and wholly owned subsidiary of NTT.

Like others before them (Verizon + Terremark; Time Warner + NaviSite; CenturyLink+Savvis), they too have “figured it out”. Cloud computing is a complex, capital-intensive business. Scaling is expensive. Other companies in the segment are likely to continue marching along this road, particularly as the executive management at companies wanting to play in the Cloud segment reach the same conclusion. Cloud computing is not hosting. Scale or go home.

According to Treb Ryan, OpSource CEO and co-founder, mapping a migration path and architectural design for the cloud is complex and requires in-depth understanding of an organisation’s entire IT infrastructure, architecture, and relative interdependencies and risks. An understanding of IT integration across disparate multi-technology, multi-geography, IT environments is critical to evolving toward cloud-based architectures.”

The acquisition announcement hit the wires this morning, and by noon I was on the phone with representatives from both companies. The meeting was originally intended to be with Treb Ryan, OpSource CEO, and Brett Dawson, Dimension Data CEO. Unfortunately, at the last minute they were unable to attend. I can’t imagine why they would be busy today. Fortunately for us,  Keao Caindec, SVP and CMO from OpSource, and Ettienne Reinecke, Global CTO from Dimension Data came to the rescue providing me a 15 minute reprieve. So I had the chance to fire off a few questions. What are the terms of the deal (sure, they’ll answer that one)? Any service offerings portfolio duplication? Geographic duplication?

At first glance it appears that the service portfolio offerings and geographic presence seem to be complementary. So who gets what in this deal?

OpSource gets:

  1. A bucket full of cash and stock? Who knows? Terms of the deal were undisclosed.
  2. Global reach for their offerings,
  3. NTT / Dimension Data backing, support, and resource leverage,
  4. Access to capital and enterprise clients who would like to build Private Cloud architectures, but don’t necessarily have the know how to do so according to Ettienne.

I tend to agree with that view. Cloud build out and integration is not an easy undertaking even for the industry experts that live and breathe cloud on a daily basis.

NTT / Dimension Data gets:

  1. A world-class business addition to their new Cloud Solution Business Unit,
  2. A complementary portfolio that extends their current private on-premise data center virtualization offering to include orchestration, automation and billing.
  3. The ability to extend the OpSource architecture for Service Provider peering, and
  4. Rapid ramp up to Public Cloud offerings.

Keao points out that not too many companies in this segment that can provide both private and public Cloud offerings.

Agreed.

So this puts the NTT / Dimension Data / OpSource team in a new competitive landscape with the likes of AT&T and IBM, particularly in emerging markets and mid-market segments.

Potential new geography / offering targets include:

  1. Off-shore disaster recovery offerings for the Asia-Pacific market,
  2. Fast path to public offerings in the AP marketplace,
  3. Public sector federal offerings for government that are partial to private Cloud with some elements of public Cloud for non-core workloads, and
  4. Data center in a box offerings for service providers.

Dimension Data’s Ettienne, a hybrid Cloud supporter, indicated that they will be well positioned to provide offerings at multiple points in the Cloud adoption curve from private to public and various degrees of enablement for the managed services construct.

Indeed.

-Tune The Future-

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More Stories By Ray DePena

Ray DePena worked at IBM for over 12 years in various senior global roles in managed hosting sales, services sales, global marketing programs (business innovation), marketing management, partner management, and global business development.
His background includes software development, computer networking, systems engineering, and IT project management. He holds an MBA in Information Systems, Marketing, and International Business from New York University’s Stern School of Business, and a BBA in Computer Systems from the City University of New York at Baruch College.

Named one of the World's 30 Most Influential Cloud Computing Bloggers in 2009, Top 50 Bloggers on Cloud Computing in 2010, and Top 100 Bloggers on Cloud Computing in 2011, he is the Founder and Editor of Amazon.com Journal,Competitive Business Innovation Journal,and Salesforce.com Journal.

He currently serves as an Industry Advisor for the Higher Education Sector on a National Science Foundation Initiative on Computational Thinking. Born and raised in New York City, Mr. DePena now lives in northern California. He can be followed on:

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