Partners Applaud Verizon's $3.6B Data Center Sale To Channel-Friendly Equinix

Verizon on Tuesday said it would sell its cloud hosting and data center business to global data center operator Equinix for $3.6 billion, following a year of speculation that the carrier was considering leaving the business of running data centers. Partners say that refocusing on its core offerings, while selling its data center assets to a channel-friendly, global data center provider is the right move.

Via the terms of the deal, Equinix will take over ownership and management of 24 Verizon data centers sites, including 22 sites in the U.S. and two in Latin America. By offloading the data center operations, Verizon could be freed up to double down on its connectivity services, said J.R. Vernick, co-founder of Clinton, N.J.-based RDS Solutions, a telecommunications solution provider who partners with both Verizon and Equinix.

"Equinix used to not be too channel-friendly, but they are now. As an Equinix partner, now they even have more availability, so we definitely don't see this as an option lost," Vernick said.

[Related: Verizon Gets Out Of Data Center Business, Sells Latin, North American Assets To Equinix For $3.6B]

Verizon's sale of its data centers to Equinox makes sense because data center services have not been core to Verizon's portfolio, said Michael Wolfington, vice president of sales for Kingcom, a Portland, Ore.-based national Verizon platinum partner.

Verizon's co-location services that it acquired when it bought Terremark in 2011 have struggled to gather traction within the channel community, Wolfington added.

"This will now free up further capital to invest in areas Verizon knows will excel. Particularly, the SMB marketplace with the emergence of 5G LTE coming down the pipe. Smart cities will [also] create a rapid revenue stream as business owners nationwide will have affordable, reliable and efficient options beyond cable," Wolfington said.

According to Verizon, the two companies are moving forward together and are working on a joint marketing agreement in which both providers will market each other’s services. Verizon and Equinix will offer solutions for business customers based on the newly-combined product portfolios, a Verizon spokesperson said.

"Verizon’s sale of its co-location data centers is consistent with the company’s strategic focus. The sale will enable Verizon to invest our resources in areas that will help drive digital transformation for enterprise customers," the spokesperson said.

Verizon is one of the last of the incumbent carriers to relinquish its cloud hosting and data center strategies. In November CenturyLink announced plans to sell off its data centers and co-location business for $2.15 billion to a group of investors advised by investment firm BC Partners. Little Rock, Ark.-based provider Windstream also sold off its data center operations to co-location provider TierPoint for $575 million in 2015.

While there's always uncertainly following an acquisition, RDS' Vernick doesn't believe the deal will create any issues for business customers using Verizon's co-location services.

The deal will also be beneficial for Equinix in solidifying its global leadership position in the data center space, according to Andrew Pryfogle, senior vice president of cloud transformation for Petaluma, Calif.-based Intelisys, a Verizon and Equinix partner.

The demand for data center services is growing as business customers move away from owning their own infrastructure and rely more on third-party providers, Pryfogle said.

"Because [Equinix] has one of the largest data center footprints in the world, and they have led the way with the concept of the interconnected cloud, this will even give more opportunity to the channel," he said. "I applaud the move and I think it's good news all around."