IBM, AT&T Forge Network Deal For Cloud Services

International Business Machines Corp. (NYSE: IBM), the No. 2 computer company, and AT&T Inc. (NYSE: T), the No. 1 telecommunications carrier, said they’ll jointly offer secure network communications over the cloud for businesses.

Financial terms weren’t disclosed.

Starting next year, the partners said they’ll offer Fortune 1000 companies data communications over AT&T’s virtual private network that will be connected to IBM’s global computer centers over the cloud.

Erich Clementi, senior VP for global technology services for IBM, of Armonk, N.Y., said the arrangement shows that cloud computing, the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server, “will quickly evolve as a tool for innovation rather than just for infrastructure.”

AT&T, based in Dallas, said all of the target customers are already AT&T customers. Andy Geisse, CEO of AT&T Business Solutions, said the AT&T network will benefit from the “control and management capabilities of IBM’s enterprise cloud.”

The new deal "broadens the reach" of AT&T's network customers who now want to tap into the cloud on a pay-as-you-go basis," explained Dennis Quan, IBM VP for Smart Cloud Infrastructure. Now employees will be able to tap into the cloud securely from anywhere in the world, he said.

From the IBM side, customers will pay for cloud usage as a service, rather than a fixed contract, Quan said. The partners will "go to market together" but determine which is the lead on a particular contract.

The joint venture will rely on technology from AT&T Labs to add security and functionality, the companies said. The enterprise services will have more than 70 automated security functions built in as well as extensions to wireless devices that are authorized to work with the network.

The latter point is a key problem for enterprises, whose employees are tapping into networks outside of the office, using mobile phones or tablets that need to be secure.

IBM's Quan said enterprises have long adjusted to the security of communications with employees with BlackBerry phones from Research in Motion (Nasdaq: RIMM). But the proliferatiion of competing devices raises new issues about mobility and security which the joint-venture can ensure

AT&T and IBM have worked together before on infrastructure and other services.

In an earlier era, AT&T acquired NCR Corp. (NYSE: NCR), one of the first top computer makers, to get into high-level computing, while IBM was an investor in Satellite Business Systems, then in MCI Communications, a competitor to AT&T that was ultimately acquired by Verizon Communications Inc. (NYSE: VZ).

Shares of IBM fell $1.58 to cents to $208.24 in late Tuesday trading, while AT&T shares fell 41 cents to $37.25.