November 19, 2013, 1:55 PM — Telecommunications giant CenturyLink has made another acquisition in the cloud computing market, this time of innovative public IaaS provider Tier 3. It adds to the company's arsenal of cloud computing offerings and shows the dynamic nature of companies jostling for position in the market.
CenturyLink's cloud platform is already built on Savvis, another IaaS provider the company bought for a reported $2.5 billion in 2011. Earlier this year CenturyLink also bought AppFog, a platform as a service (PaaS) vendor. The purchase of Tier 3 makes it clear that CenturyLink wants to not only host virtual machines and storage, but be a platform for application development.
The move also represents the latest consolidation in this market: IBM bought SoftLayer earlier this year, while in the past couple of years Verizon has bought Terremark and other companies like Rackspace have snapped up a plethora of startups.
[MORE M&As:Top tech deals of 2013]
Tier 3 is a small and nimble IaaS cloud provider that offers some PaaS services as well, which are based off of the Cloud Foundry open source project. AppFog, which was more of a pure-play PaaS offering, is also based on Cloud Foundry. The combined IaaS/PaaS platform from both companies has the potential to fit together nicely.
Tier 3's offering has some innovative features that make it stand out in the crowded cloud market. According to Gartner's most recent Magic Quadrant report for the IaaS market, Tier 3 has the ability to auto-scale virtual machines without shutting them down and the option to automatically replicate virtual machine images across data centers for backup. Tier 3, according to Gartner, is also the leading backer of Iron Foundry, the .Net extension of Cloud Foundry, giving the company's integrated PaaS an enterprise-aimed application development framework for Windows apps.
Gartner noted that Tier 3 was being held back because it was not big enough to devote the marketing and outreach resources to attract users to its platform compared to some of the industry heavyweights. Being bought by CenturyLink could help fix that though.
Jared Wray, the founder and CTO for Tier 3, will serve as CTO for a new group within CenturyLink called the Cloud Development Center. Terms of the transaction were not disclosed.