AWS is the overwhelming market share leader, with more than five times the compute capacity in use than the aggregate total of the other fourteen providers in this Magic Quadrant. It is a thought leader; it is extraordinarily innovative, exceptionally agile and very responsive to the market. It has the richest IaaS product portfolio, and is constantly expanding its service offerings and reducing its prices. It has by far the largest pool of capacity, which makes its service one of the few suitable for batch computing, especially for workloads that require short-term provisioning of hundreds of servers at a time.
Gartner Magic Quadrant for Cloud Infrastructure as a Service, August 2013
With this sort of gushing praise and resounding affirmation from the world’s leading information technology and advisory company, you may as well think the rest of the cloud industry is better off packing up, closing shop and going home.
But they haven’t. Whilst Amazon doesn’t break out AWS revenues, various unofficial sources reckon its exceeded the $3bn revenue mark this year and has in excess of 450,000 servers across its 7 data centres.
So we have to wonder on what basis the rest of the cloud infrastructure-as-a-Service industry is currently – and plans – to compete on? Rather than pontificating and airing our own views, we felt it was best to draft in some expert commentary from a selection of other IaaS competitors – and invite them to tell us in what areas they can compete and win.
First up, one of only a handful of operators that can square up to AWS in terms of scale and financial muscle is SoftLayer – recently purchased by IBM:
“What sets IBM SoftLayer apart from Amazon Web Services? Well, by bringing IBM and SoftLayer together we believe we now have the strongest IaaS offering in the market, exceeding that offered by Amazon for every target user group. To cite some examples: Through bare metal options our cloud delivers better speed, performance and consistency. From an integration perspective, IBM SoftLayer has 1600 APIs versus 60 of AWS. From an expertise and global reach perspective, IBM SoftLayer has 37000 experts and 25 global cloud centers. And from a research and investment persepective, IBM invests $6billion in R&D and is the holder of 14,000 patents in the cloud computing space. And finally moving up the stack, IBM SoftLayer has 100+ SaaS offerings, as well as seamless and integrated enterprise-grade integration for public and private, hybrid cloud services.”
Jonathan Wisler, General Manager EMEA, SoftLayer, an IBM Company
So SoftLayer’s approach is multi-layered and designed to provide all types of user a direct alternative to AWS. SoftLayer is leading the charge with its bare metal cloud offering (which AWS don’t currently offer) and aiming to secure business from users who are finding the performance of virtual cloud servers to be inconsistent or insufficient. Now in the IBM fold, it’s bolstered both financially and technically with a large library of PaaS and SaaS solutions available.
Next up is UK-based Techgate plc, an enterprise-focussed MSP who have built their cloud around a core service focus of backup and disaster recovery (DR) solutions:
Flexiant’s Tony Lucas says: “Certainly, none of our customers are ever going to out-market Amazon in terms of cost of capital. What they can do is build niche businesses that are unique from AWS and provide flexibility that Amazon can’t…” and we at Techgate couldn’t agree more. Our positioning against AWS, Rackspace and all the global, “high-volume”, commodity offerings out there, is… none really, as we simply do not position ourselves and rarely have to compete against them.
Our core business model is built on flexibility and this is how the business is ran from top to bottom. From the actual solutions being customised (combination of physical, virtual, hybrid clouds most of the times with Disaster Recovery elements) and delivered to the customer, to the flexibility in meeting SLA requirements, meeting project deadlines or supporting bids for our channel partners. One of the most important pillars for us is the time we spend with the customer before the deal to understand and provide guidance with regards to what they are trying to achieve. And in the midmarket where our focus is on, this is the most important differentiator and positioning pillar at the same time, as our customers won’t have to spend a fortune in engaging with the enterprise sales/consulting teams of the vendors and the AWS/Rackspace etc offerings are most of the times not relevant for them, as they are asking for a customised solution with different components or specific architecture. In terms of the actual offerings/technologies and if we were to compare the components (“building blocks”) of our solutions, I guess our Enterprise Public Cloud (vCloud Powered) platform could be compared to AWS’s EC2, as they are both Virtual Private Cloud offerings, but the similarities stop right there.
As with all our offerings, the main differentiator is that everything is hosted only in the UK, in high-end server and storage infrastructure with a specific SLA and network infrastructure that is wholly managed by us. Last but not least, as our main focus and expertise is Disaster Recovery, by nature our solutions and their positioning are different, as it is the way we approach the Cloud paradigm in general.”
Martin Wright, Managing Director, Techgate plc
Techgate has identified its target market (mid-sized enterprises) and has formulated its cloud solutions to target specific business functions and SLAs. There’s no intention to compete head-on with AWS, instead the approach is to utilise cloud to strengthen core services. The focus is delivering “business solutions” rather than any form of “commoditised computing”.
virtualDCS is a business also born out of delivering enterprise-grade hosting solutions:
With reference to data sovereignty, virtualDCS make a valuable and more general point that demonstrable and accountable location of data should be a key issue for most enterprises, and to that extent IaaS providers who can offer this stand to benefit.
“The only way to compete with Amazon is on items such a personal service and data sovereignty. The cloud concept of putting everything out there somewhere is fine to a point, but when your data is regulated, or very personal do you trust somewhere.”
Richard May, Managing Director, virtualDCS
Next up, Peer 1 Hosting:
“Competing with someone who has 90% market share? Go big or go niche. The fast growth and profitable niche for Peer 1 Hosting is our Mission Critical Cloud offerings, that’s our VMware public and private cloud solutions – in summary different technology, different geography and better customer experience including better technical support. Enterprises are taking advantage of the instant provisioning in a secure high availability stack – dual data centre, HA firewalls and load balances are all standard as part of the stacks deployed in England, Canada, Germany and soon the USA.”
Dominic Monkhouse, SVP Customer Experience, PEER1 Hosting
Evolving from a web(site) hosting and perhaps a more developer-oriented focus, Peer 1 has extended into offering IaaS with the enterprise squarely in its sights. From what’s said it appears that Peer 1’s strategy is to deliver specifically engineered enterprise-grade packages, rather than expect customers to build their own – and risk doing it wrong. This could be the assurance that enterprises want, and private cloud is also a key differentiation to AWS (CIA contract excepted) that most of the companies mentioned here can offer.
“Amazon certainly are still making themselves a formidable opponent in the play for the cloud market. Previous gaps in their services e.g. private connectivity in and virtual data centre have been closed and additional functionality just keeps coming. Amazon have created a brilliant product but it only wins when playing their own game. If you want to work the Amazon way all is good but if you want Amazon to work your way you’ll struggle.
The opportunity for service providers to steal share from Amazon by providing tailored services is huge especially in combination with a more consultative, relationship lead engagement that Amazon still rarely provide. Pulsant is equipping itself will all the tools it needs to provide customers with tailored combinations of services that integrate fully and are all provided with a single, accessible managed service wrap. Building platforms to various specifications to achieve targeted outcomes is often the easy part of service provision but presenting the customer with a disparate array of loosely related services doesn’t provide the Enterprise feel most businesses are looking for. Pulsant is ideally placed to provide an accessible, managed service covering functionality provided by market leaders such as Amazon provide but also combining in services tailored to individual needs, traditional services such as colocation and telecoms as well more in depth application support and consultancy.”
Rob Davies, Sales & Marketing Director, Pulsant
Pulsant are one of fairly small selection of IaaS providers that can strip your cloud journey back to bricks and mortar, through their ownership of a substantial UK data centre footprint. The emphasis here is tailoring to specific needs and being more consultative. If IaaS isn’t right for you or you want to build and manage your own IaaS/PaaS/SaaS cloud, then Pulsant have a product and service for you whichever path you go down. Diversity of service offerings is certainly one way to out-manouver the competition in your back yard.
Easynet Global Services:
“I guess the key things are:You have to respect amazon for what they do well. They have been successful as they have executed a functional capability and created a new service category by unbundling and simplifying support structures implicit in traditional managed services.Plenty of respect to Verizon for their attempt to re-visit what Amazon have done and try to do it better with improved performance and control of infrastructure. For the rest of us I guess the way forward is not to compete directly but to focus on the areas where Amazon is weak.
These would be:
- Customer service and support
- Ability to customise and build integrated solutions – including leveraging best of private, multi-tenant and public cloud capabilities
- GeographySecurity and accreditationWorkload focus
- Application focus.
Plenty of areas there for new cloud models to emerge without going directly toe to toe with AWS.
It is now time for the GM era of cloud post Fordist AWS approach.
Vive la difference!”
Eoin Jennings, General Manager UK Hosting, Easynet Global Services
Easynet set out a number of areas through which providers can focus and compete, and suggest the global landscape of cloud solutions has plenty of room to evolve. Workloads and applications suggest PaaS and SaaS solutions are a key part of this evolution, and again the ability to customise around (enterprise) customer requirements.
“Looking at the overall cloud market, many cloud vendors are simply pushing the same solutions in different boxes. Their bids to take on AWS are all strikingly similar, revolving around various combinations and pricing of compute and storage.So, where is true competitive edge that can take on AWS coming from? Well, without a network behind their cloud, most cloud providers – including AWS – charge you the second you turn on your machines even if you are on a “free” tier. Bandwidth and inbound/outbound charges and overpriced virtual routing are how non-network integrated cloud providers cope with the fact that they cannot help you get to or from their computing power without someone else’s network covering the ground.”
Nelson Tavares, European Director Channel & Alliances, Interoute
As one may expect, Interoute are keen to highlight the advantages to be had from owning a network. Users often underestimate the cost of bandwidth (data in / data out) when configuring IaaS solutions – and depending on the nature of your business, low ‘headline’ service charges can escalate dramatically once you flick the virtual switch. Its also key to remember that cloud is not much without connectivity, so steps you can take to ensure low latency and consistent bandwidth to your IaaS cloud will help your application delivery, plus: your private cloud should really have a private connection.
“We believe in simplicity and localization. We want to be seen as the world’s local cloud provider in IaaS and PaaS: easy to understand, easy to use, easy to deal with. And close to customers in all aspects, like a local provider must be. A simple service delivered through an efficient backend. Competitiveness is a lot more than just economies of scale.”
António Miguel Ferreira, Chief Executive Officer, Lunacloud
Ease of use and localisation is key for Lunacloud. With growing operations across the European continent and aiming to cater for European diversity in language and culture, being a cloud that’s easy to understand – and engage with – across sales and support functions certainly has its merits, and this is often an area where major multinationals can fall short.
“Employ coopetition as appropriate in order to leverage the momentum behind Amazon and continue to provide complementary capabilities and services.
Amazon is the clear leader in the public cloud infrastructure space for certain scenarios as demonstrated by their current market share. Their procurement model is attractive to developers and it provides that demographic with a platform and set of capabilities that they can use to meet many of their nascent self-managed development and test requirements.As we all know, however, in most cases, the ultimate goal of hosting infrastructure is to deploy in a more stable and managed production environment. Some key requirements that are typical of a production implementation or more specifically an enterprise production environment are as follows:
- High SLA’s at the virtual machine level. Companies want the highest degree of assurance possible such that their implementations are highly available and will experience minimal downtime, accompanied by service credits commensurate with a true production environment.
- Easy Access to skilled resources and management of infrastructure as needed. Companies are already operating in Hybrid IT infrastructure environments which introduces tremendous complexity with various legacy technologies and business drivers. As such many companies are seeking a vendor that they can partner with not just to provide the underlying infrastructure but to also walk through the implementation life-cycle and be available to help as appropriate.
- An understanding of Legacy IT with a path to a hybrid IT environment. Companies often have one foot in legacy IT infrastructure and typically maintain in-house or collocated servers for their business critical services. By adding additional services or extending existing implementations often requires an understanding of more than just cloud, a deep understanding of legacy IT architecture and infrastructure is required.
- Change Management & Provisioning: As workloads move into production, enterprises require rigorous change management processes and project-oriented provisioning.
- Migration services. As more and more companies move workloads in to the cloud they often turn to managed services providers for migration services and practices
By virtue of managing more complex environments and providing enterprise-grade services, managed services providers will also continue to maintain and grow their relationships with customers that provide insight into the ever-evolving business drivers influencing the path customers are taking.
Amazon will continue to enjoy success for some of the more homogeneous workloads, especially in the development and test environments. But in today’s highly complex enterprise arena, businesses demand more than just Cloud; they want solutions. Those solutions need to be built to accommodate specific performance and availability requirements, and come bundled with services and expertise that help customers transition to the Cloud that works best for them.
The most savvy and resilient cloud infrastructure providers don’t want to compete head-to-head with Amazon , but rather will continue to provide the best overall solutions that their customers are demanding. The most successful managed services providers and system integrators will provide solutions to access the AWS infrastructure and add complementary managed services.”
Simon Withers, Vice President of Global Cloud Product, Sungard Availability Services
‘Coopetition’ through providing complementary capabilities is an interesting theme as Sungard is one provider who actually allows you to manage AWS instances through its own cloud service interface. To that extent Sungard will welcome AWS use by their customers – but up to a point. Beyond that point competition kicks in and it becomes a story of enterprise-grade solutions, rather than ‘cloud for kicks’.
“For inspiration, the strategists and innovators at FireHost look to our end users needs, before we look to a competitor. Our goal is not to compete directly with any cloud or infrastructure provider for share of and end user’s “IT wallet” but to help as many businesses as possible secure and handle regulated data such as payment card details and healthcare data responsibly. Our goal is to help global companies optimize business continuity plans, uphold data sovereignty mandates, reduce their risk profiles, and dodge hackers all while keeping auditors and their end users happy and productive.
To do this, we focus on four areas of expertise and ensure that our product and service offerings surpass Amazon (or anyone else for that matter’s) capabilities. Security. Compliance. Performance. Managed Service.”
Chris Drake, CEO and Founder, FireHost
With the tagline “Secure Cloud Hosting” – Firehost is unequivocal about the ground upon which it competes on. With security being everyone’s favorite cloud bugbear, it seems like a solid strategy – as is targeting verticals who have to have high levels of security: online stores handling credit cards, and healthcare data handlers.
“Why would you want to compete? The facts speak for themselves, Amazon have developed something that customers need and want. Amazon certainly is not right for all, but for many it has enabled organisations to get their products and services globally accessible overnight. Softcat has taken a very open mind to what Amazon have on offer and actively trained their engineers to Architect level on the AWS platform. By doing this Softcat are able to give customers the best advice on what approach to take. This in turn allows Softcat to support and lead our customers to the solution that best fits their requirements this maybe on Amazon, Azure, HPCS, OpenStack or of course Cloud Softcat!”
Simon Walker, Managed Services Director, Cloud Softcat / Softcat
Last but not least, Softcat take an approach to cover all bases, and a degree of ‘coopertition’ – ensuring their engineers know AWS thoroughly. “Know your enemy” perhaps, but any approach that puts customer’s needs first is a convincing one.
So what can we learn from these valuable insights? Certainly there is a high degree of respect for what AWS has achieved, however there’s also great optimism that the rest of the industry can benefit from the lead Amazon has taken. Amazon has ‘made’ a market and were first to offer the right type of service to a global audience. It’s even fair to say that AWS have (‘single-handedly’) sold the concept of the IaaS cloud to the business world, so now its a refinement process – and one which our commentators involved believe they can play an important part in.
What do you think?