Sea Micro arose to meet the need, but until it became part of AMD ( AMD) it couldn't deliver what the new market demanded. Now, apparently, it has, and the first big orders have been placed by Verizon ( VZ) for its vCloud. The deal is important for two reasons. First, it shows that a server company can meet the economic demands of cloud by using a lot of low-power chips and designing around them. Second, it makes cloud a much easier business to get into. I wrote last month about how AT&T ( T) thinks it has cracked the sale side of cloud, through a network of re-sellers. Verizon now thinks it has cracked the delivery side of cloud with Sea Micro. Both telcos are trying to build what the former Qwest bought when it was acquired in 2011 by CenturyLink ( CTL). Since the merger CenturyLink is down about 20%, but that company lacks the mobile assets AT&T has and Verizon is acquiring. Their vision, of course, is the old "one throat to choke" idea, where you get all your computing and communications systems from a single source. Verizon, which got into cloud by buying Terramark a few months before the Qwest-CenturyLink deal was finalized, calls what it is creating a "hybrid cloud," delivering the economics of public cloud with the security of owning your own hardware. There is a danger in letting the telcos into this game, however. Verizon has been aggressively fighting FCC "net neutrality" rules, which some see as a direct attack against consumer Internet services such as Netflix ( NFLX).
But, in fact, what Verizon wants to do is offer Service Level Agreements or SLAs, guarantees of low-latency, high-bandwidth service, sold at a premium price to its business customers. The danger is that it could use the end of net neutrality not to kill consumer competitors, but to favor its own cloud customers, essentially forcing private cloud into its network. This is just one of many business issues that have to be thrashed out over the next weeks and months. But the trend at this point should be clear. Cloud is becoming "just another" computer architecture like mainframes, minicomputers, PCs and devices. More large companies are going to force their way into it, using every means they have at their disposal, since this is the future of both computing and communications. This means more choices for businesses. It means private clouds and hybrid clouds have a way into the market. It means more countries and more companies may be able to force cloud services to be hosted locally, to maintain control of data. It means more security, and old-fashioned Service Level Agreements, for cloud customers. Instead of looking at Hewlett-Packard ( HPQ) or Netflix as the victim of this coming trend, perhaps it's time we focused on what this means for Amazon.com ( AMZN). The company offers an undifferentiated public cloud at rock bottom pricing. But cloud is no longer just a commodity. There will be many ways to capture its savings. This business is about to get very interesting. At the time of publication, the author owned 20 shares of GOOG Follow @danafblankenhor This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.