AT&T Makes a Big On-demand Computing Play

| Nov 18, 2009 | Managed IT Services | Competitive Intelligence Report

| Analyst: Amy Larsen DeCarlo

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

November 16, 2009 -- AT&T announced AT&T Synaptic Compute as a Service, its latest global cloud-based service, designed to give companies of all sizes on-demand access to scalable computing capacity. Using technology from VMware and Sun Microsystems, AT&T’s Synaptic Compute as a Service provides companies with a self-service approach for using IT solutions that are delivered by AT&T, either via the public Web or through a private IP VPN.

Analytical Summary

• Current Perspective: Positive on AT&T’s Synaptic Compute as a Service launch, because the offer combines the provider’s global IP network with data center resources picked up from AT&T’s 2006 acquisition of application service provider (ASP) USinternetworking, to supply a platform that supports an enterprise-class pay-per-use computing solution. AT&T's Synaptic portfolio stands out from most rival infrastructure-as-a-service plays on the basis of its stability and reach. While the latest Synaptic service is available to both domestic and international customers, AT&T is initially supporting the service in only one U.S. data center. AT&T still needs to specify when it will add international hosting center support.

• Vendor Importance: High to AT&T, because the company has invested heavily in building out the infrastructure and the expertise to deliver its Synaptic portfolio of services. Through its Synaptic product line, AT&T has built a value proposition in the cloud services space that will help the provider capture customer demand for more cost-effective IT services. AT&T can use services such as Synaptic Compute as a Service to position itself as a provider of flexible and valuable business technology solutions that go well beyond its network.

• Market Impact: Moderate on the on-demand computing segment, because AT&T combines IP, content delivery network (CDN), security, and data center resources to attract mid-sized business and large enterprise that had been previously reticent about moving into the cloud. AT&T’s entrance into the elastic computing space adds a serious competitor that will help legitimize what is still perceived by most prospective customers as a nebulous segment.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Managed IT Services | More information

Recommended Competitor Actions

• Rivals in the on-demand computing space need to be proactive in adjusting their own pricing models and some of their messaging as AT&T enters their territory. All competitors should be prepared to defend the stability and security of their offers while using their pricing schemes to demonstrate that their own respective hosted services are a good value to business customers.

• Verizon Business should reexamine whether its monthly subscription might put it at a competitive disadvantage against AT&T. The company should also offer up case studies of how the service is being used by business clients today.

• Amazon should emphasize the flexibility and the longevity of its EC2 offering, noting its long history in the space and the way it has helped customers across industries by providing a very inexpensive and stable computing environment that supports a range of uses.

Recommended End User / Customer Actions

• Existing and prospective clients looking for a more dynamic alternative to existing hosted or on-premises computing solutions should consider AT&T Synaptic Compute as a Service. Business clients should ask for more detail around pricing and broader geographic availability to make a better comparison of the service against other offers on the market today.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Managed IT Services | More information

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