AT&T and CSC team up to take on rivals in the cloud

Systems integrator CSC and service provider AT&T are combining forces in an effort to take on industry giants neither company would have been able to launch a formidable campaign against individually, and the union could foreshadow other partnerships of the like.

As part of the agreement announced this week, most new customers CSC migrate to the cloud-based services will be hosted in AT&T data centers, and AT&T will also be taking over management of CSC's communications network. CSC, meanwhile, will help AT&T migrate its internal applications to become cloud-hosted.

"These companies aren't going at it alone anymore," says Gartner analyst Eric Goodness, who tracks the communications outsourcing market. By relying on each other, each will be in a strong position to compete in their respective markets, he says.

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For customers, it means that CSC will now have preferred partners it works with in a variety of areas, including cloud outsourcing with AT&T, software-defined data center and storage with EMC and enterprise applications with SAP. CSC Executive Vice President of global infrastructure Gary Budzinski says CSC will still work with customers on whatever option is best for them, but they will lean toward working with partners whenever possible to offer competitive pricing.

Budzinksi says CSC's customers are increasingly looking to expand their cloud usage beyond just test and development trials and into more complex use cases.

Broader market dynamics are at play here as well though. The leading IaaS cloud providers in the market are significantly ahead of competitors. This summer, Google and Microsoft have been adding relatively basic functionality to their cloud products in an effort to catch up to the breadth and depth of offerings from Amazon Web Services. Companies like AT&T are even further behind, making their partnership more beneficial to them.

Agreements between integrators and carriers are nothing new, Goodness says. IBM and AT&T teamed up for a partnership dubbed Blue Sky about five years ago, which proved to be lackluster. MCI and EDS signed major agreements in the early 2000s. But the advent of cloud computing, and the ultra-competitive pricing models that come with it could spur additional partnerships. In the past few years NTT has bought Dimension Data, for example. Service providers like Vodafone and Telefonica could be looking to partner with integrators like Logicalis and others, Goodness says. In other words, this could be just the beginning of a wave of partnerships between integrators and providers.

Network World senior writer Brandon Butler covers cloud computing and social collaboration. He can be reached at BButler@nww.com and found on Twitter at @BButlerNWW.