Partners Expect Potential Fallout From Verizon's $4.83B Yahoo Acquisition

Solution providers said Verizon’s $4.83 billion acquisition of Yahoo could have a negative ripple effect as the telecom giant attempts to integrate the web company's consumer content business.

"I do think that this acquisition will distract them from their core services. It may only be a temporary distraction, but it could impact things for them," said one Verizon partner who requested anonymity.

[Related: It's Official: Verizon To Acquire Yahoo For $4.83 Billion]

The acquisition comes at a time in which service providers should be focusing their attention and resources on cloud solutions and next-generation technologies, as well as the digital business development. But instead, Verizon will be focusing on "the integration of all this consumer activity," the Verizon partner said.

"I see Verizon potentially having issues keeping up with their competitors who are not spending as much time in the consumer space," the partner said.

Basking Ridge, N.J.-based Verizon officially announced Monday it plans to acquire ailing internet giant Yahoo's operating business -- its media, search and communications assets -- in an all-cash deal.

Verizon Chairman and CEO Lowell McAdam said that the acquisition will help Verizon become a global mobile media company, and help accelerate the carrier’s digital advertising revenue stream. A spokesperson for Verizon told CRN that the most recent transaction "has no effect on our continuing commitment to our business customers."

Because of the slow-moving nature of the telecom industry, Verizon might not be well positioned to properly leverage struggling Yahoo's assets, said Michael Bremmer, CEO of TelecomQuotes.com, a telecom consultancy firm.

"My thought is that Yahoo, sadly, will end up on the scrap heap of history because of their failure to evolve," Bremmer said. "Verizon still thinks like your grandfather's phone company. … [Verizon] isn't known for innovation, and I doubt they'll be able to turn Yahoo around either."

Allen Falcon, founder and CEO of Cumulus Global, a 12-year-old Westborough, Mass., cloud solution provider, said the disruption from the deal opens the door to move Yahoo mail customers to competitors such as Microsoft Office 365 or Google Gmail. "There is a significant opportunity to capture small and midsize email customers from Yahoo in the wake of the Verizon acquisition," he said. "We are hoping businesses will want to move from Yahoo mail to Office 365 or Google Apps, which provide much broader services than just email."

Falcon’s message to Yahoo email customers: "With the Verizon acquisition of Yahoo and the Verizon focus on content, the future of Yahoo email is uncertain. Now may be a good time to start looking at alternatives that deliver more than just email with communication, collaboration, document and cloud storage services."

Falcon said he is getting ready to initiate an email and phone outbound marketing campaign targeting the some 6,000 Yahoo mail domains.

Cumulus Global has moved some two dozen Yahoo mail customers to Office 365 and Google over the past several years. ’Whenever there is an acquisition of this size there is an opportunity to grab share from the company that is being acquired,’ he said.

Jack Gold, founder and principal analyst at J.Gold Associates, a Northborough, Mass.-based IT analyst firm, said in an email to CRN that Verizon's recent emphasis on becoming a content provider, per its acquisitions of internet providers AOL in 2015 and Yahoo on Monday would help the carrier pick up a significant number of Yahoo users that could become buyers of Verizon’s paid services, such as its wireless and Fios services.

Verizon could be trying to stay a step ahead of Google, which has been working on its own carrier and connectivity services, Gold said.

"Google offers a number of free services that they then leverage for revenues, and [Verizon] is trying to make sure Google doesn’t undercut them with customers," he said.

Quy "Q" Nguyen, CEO of Allyance Communications, a telecommunications and hosting solution provider based in Irvine, Calif., said being able to better compete with Google is a viable reason to buy Yahoo. "If you look down the road at potential competitors, you want to get into their space before they get into your space," he said.

Nguyen believes that Verizon is trying to enhance its overall value to both businesses and consumers.

"I don't believe that what they are doing in the content space is taking away from the business side, which is a big revenue driver for them," Nguyen said. "As a solution provider, this is something that is overall positive."