Let me tell you a little secret about the “cloud.” It’s that
right now in the enterprise, it’s a local game.
A few options come to mind when we think of enterprise, like
the predominate force of AWS in test and development environments. Then you
have providers like, HP-ES, IBM/SL, RackSpace, Teremark, and Google that are
all trying to play enterprise production load catch-up.
For the meantime, I think it’s safe to call the enterprise
private cloud a local game.
Take KIO Networks in Mexico City, or LGCNS in South Korea,
or T-Systems in Germany; the strength that these local service providers have
is that they are entrenched into the local economy. They are tied in with the
governmental entities either with contracts, investment tax incentives, or in
some cases, board relationships.
Governments encourage these types of business, as they are clean,
provide local jobs, and are a good high-tech face for the country.
The key characteristics of these service providers are that
they have the local connections and the P&L margin expectations for the
long-tail economics of a service provider business.
In the case of KIO Networks, their margins are so tight that
they build their data centers in cooler zones in Mexico City or bury them into
the side of a mountain; because not running their chillers for several months
out of the year is a competitive differentiator. Coming from a world of plump
enterprise software/systems deployments, margins like this seemed like a
foreign concept to me.
Just like our friends at AWS, service providers don’t write
the books, they just sell them and are perfectly happy living with the retail
economics.
But in this never ending quest for margin, service providers
need to standardize on control layers to manage each plane, like, computing,
networking, storing, provisioning, and managing chargeback across these
heterogeneous, at times customer dictated, and other times, commodity resource
pools is vital.
This long-term platform migration, which is primarily driven
by the evolution of the service provider, is what’s posing a sea changing
threat to the legacy of major profit pools from the likes of: IBM, HP, EMC,
NetApp, etc.
In the early stages of a customer’s journey into the
private/public cloud, they generally dictate the same legacy platforms they
have run on for decades with these environments lifted and shifted into the
services provider data center. In other words, let’s move my expensive
proprietary boxes off of my data center floor and onto yours.
This is precisely where the market is now. But this phenomenon is just a hosting/colo
way station on the way to the true public cloud.
Going forward, the confluence of software driven
reliability, fault tolerance, and compliance are being delivered on top of
commodity infrastructure selected by the service providers will be a way of
life.
Service provider’s margins will never tolerate the
proprietary stacks of today.
These
business models are too far out of synch. AWS’s cloud doesn’t run on proprietary
gear, why should yours?
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