Verizon buys CloudSwitch to give itself a software play

Verizon is buying cloud computing startup CloudSwitch in a move that will give Verizon,(s vz) as well as its cloud subsidiary Terremark, a software-development edge to complement its service-provider expertise. Terms of the deal were undisclosed, but CloudSwitch had raised $15.4 million prior to the acquisition, from Atlas Venture, Matrix Partners and Commonwealth Capital Ventures. CloudSwitch Co-founder and VP of Products Ellen Rubin told me the company was going to raise another round when the acquisition opportunity arose.

CloudSwitch, which launched at our Structure 2010 event, makes software that makes it easy for customers to move their applications to the cloud. It gives customers an interface to port applications to the Amazon Web Services,(s amzn) Terremark and Microsoft (s msft) Windows Azure clouds while maintaining their corporate security policies, and it also protects data as it traverses the network. This will give Terremark customers another option for network security and control instead of leasing a dedicated pipe.

Rubin said the product’s multicloud support will remain intact and will continue to evolve, although CloudSwitch will have an inside track in terms of optimizing for Terremark’s collection of cloud and managed service offerings. That will help Terremark capitalize on customers’ desires to use multiple clouds for different applications, because it gets paid regardless of where CloudSwitch users are running their applications.

However, Rubin said, the ultimate benefit for Terremark, and parent company Verizon, might be CloudSwitch’s software expertise. CloudSwitch will lead software development within the company beyond its core product, which will give the traditionally service-oriented Verizon and Terremark additional software capabilities and intellectual property. If the CloudSwitch team wasn’t given an expanded software-development role, she said, “We would have been less excited [about the deal].”

The CloudSwitch team will report to Terremark President Kerry Bailey. For more on CloudSwitch’s business, check out this video interview I did with Rubin at Structure 2011: