Verizon (VZ) And Amazon Team Up For Virtual Network Services

U.S. telecom behemoth, Verizon Communications Inc. (NYSE:VZ) , has teamed up with online retailing giant, Amazon.com, Inc. (NASDAQ:AMZN) to deliver virtual network services at a global scale. The partnership is aimed to help enterprises and government agencies manage the performance and security of their cloud-based transactions. Recently, Verizon unveiled its plans regarding the availability of its Virtual Network Services (VNS) on the Amazon Web Services (AWS) cloud platform, a subsidiary of Amazon.com.

AWS provides on-demand cloud computing platforms to individuals, companies and governments to run applications using compute, storage and database services on a pay-as-you-go basis. Verizon’s VNS, launched last year, virtualizes services like WAN routing, security and WAN optimization using network functions virtualization (NFV) and software-defined networking (SDN) technologies. NFV and SDN are two approaches to simplifying networks through virtualization.

We believe that the availability of VNS on AWS will complement Verizon’s vision and investment in the SDN and NFV ecosystem by enabling global enterprise customers to securely connect, deploy and manage virtual networks. Further, the offering will help the company’s enterprise customers to balance agility, performance, cost and security necessitated by the growth of mobile-to-cloud applications and the Internet of Things (IoT).

A Report from the telecommunications market research and consulting firm, Infonetics Research (now acquired by IHS Markit Ltd.) states that the NFV and SDN hardware and software market will expand from less than $500 million in 2013 to over $11 billion in 2018, globally.

Verizon’s venturing into the AWS cloud follows the selling of its cloud services businesses, Terremark (acquired in 2011) to International Business Machines Corporation (NYSE:IBM) in Mar 2017. Failure in achieving the status of a major cloud and data center player, led to this shift in focus.

Verizon isn’t the only telco provider to move away from the cloud space. AT&T Inc. (NYSE:T) , CenturyLink, Inc. (NYSE:T) and many others are making similar efforts. AWS’ dominance as the market leader in the data center and cloud services market, is a major player to compete with. Per a Synergy Research firm report, AWS holds around 33% of the worldwide market share. Other major cloud infrastructure service providers that are competing head-to-head with AWS include Microsoft Corp. (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), International Business Machines Corporation, Alibaba (NYSE:BABA) and Oracle (NYSE:ORCL).

Zacks Rank and Price Performance

Over the last three months, shares of Verizon have inched up 7.48%, outperforming the 2.48% gain of the industry it belongs to. Verizon currently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

One Simple Trading Idea

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today. Learn more >>