Amazon Faces Commodity Cloud Competition

Until recently, Amazon Web Services stood alone among commodity cloud service providers. Then Microsoft and Google stepped in. The world will never be the same, columnist Bernard Golden says.

By Bernard Golden
Mon, July 23, 2012

CIO — Over the past year, the cloud service provider (CSP) marketplace has been primarily Amazon Web Services vs. the world. AWS avowedly pursues a commodity strategy—offering publicly posted, rock-bottom prices in a low-touch fashion. AWS is close-mouthed about its infrastructure and, in the past, didn't provide much by way of sales and service. The AWS offering is cheap and cheerful, starting at mere pennies per hour, and offered to savvy tech folks like the developers who flocked to it.

Most of AWS's competition—companies such as Terremark, Savvis, Bluelock and their global brethren—pursue an enterprise strategy. Enterprise CSPs implement "enterprise-grade" infrastructure from Cisco, EMC, HP and their top-end competitors, and they boast about it, implying that its reliability outstrips AWS.

Generally speaking, these CSPs implement a VMware-based software infrastructure. In terms of the customer-facing offering, the vast majority eschew direct signup in favor of a high-touch sales approach. In contrast to AWS publicly available, rock-bottom pricing, enterprise cloud service providers typically pursue large-scale, multi-year deals that can run into seven figures. It's no secret that they dismiss AWS rather sniffily, implying that a mere bookseller can't really be viewed as a serious technology provider.

Commentary: CIOs' Cloud Strategy Must Include Public Cloud Services

As of the end of May, it was AWS, the commodity cloud provider, vs. the rest of the CSP world, the enterprise crowd.

Without examining the merits of these two perspectives, the past 30 days have seen developments certain to shake this established dynamic and bring enormous change to it. Competition has come to the commodity end of the market, and it's going to disrupt every participant in the market—CSPs, software vendors and users alike.

Google, Microsoft Announce IaaS Initiatives

Both Google and Microsoft announced a strategy change in June. Where once they had provided only PaaS services, now they are planning to roll out IaaS services.

This is obviously a big shift for Microsoft, which previously offered a .NET Framework-flavored set of interfaces. For Google, however, how big a change this shift represents cannot be overstated.

Unlike Microsoft, Google has no history of offering virtualization or operating system-based services. It previously implied that forcing developers to work at the OS level and self-manage scale and elasticity was an obsolescent approach that could now be relegated to the ash heap of computing history. For Google to shift gears and offer a virtualization-based IaaS service is enormous. Given Google's technical certainty (arrogance, some might say), it probably was the result of a soul-searching decision—although given that it's Google, it was probably a metrics-driven soul search.

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