• “Cloud management” is a term that confuses the market. Smart cloud architects must figure what vendors using this term really mean: virtual server management, application management, infrastructure management, governance management, or some other function in a particular layer of the stack?
• PaaS has huge potential, but it’s struggling because people think they understand SaaS and IaaS better and hence focus their efforts there first.
• OpenStack’s rapid rise underscores how big the demand is for an open cloud environment that scales. The desire, however, is ahead of the technology, and there’s more smoke than fire in OpenStack at the moment. That’s changing fast, as companies like CloudScaling, Piston, and Nebula put OpenStack clouds into production.
• Cloud.com’s CloudStack is not truly OpenStack. Speculating that Citrix’s purchase of the company was largely defensive, Randy suggests that the bidding war to win Cloud.com might have led Citrix to look for ways to monetize its investment. Wrapping CloudStack in the OpenStack banner would be one way to get there.

Watch the video, and tell us what you think.

We’re hiring the devops dream team. Cloudscalers have built major IaaS, PaaS and SaaS systems. We need Senior Developers and System Administrators who recognize ‘Infrastructure is Code’ and embrace the fusion of development and operations.

Contact us if you:

• Have a background of shipping software in a team environment
• Are familiar with test-driven development, continuous integration/deployment
• Are lazy! Have a tendency to automate everything
• Have strong systems, network and storage experience
• Have experience automating infrastructure provisioning
• Are experienced with configuring an application runtime stack
• Are intimately familiar with Linux (Debian, RedHat)
• Have familiarity with existing public cloud computing platforms
• (AWS, Rackspace)

More about Cloudscalers—we love:

• Chef / Puppet
• Building APIs
• Linux Packaging
• Virtualization & hypervisors (Xen, ESX, KVM)
• VMWare APIs (specifically virtual infrastructure (VI) and virtual server)
• OpenSource Cloud tools like, Eucalyptus, OpenNebula, Abiquo
• Opensolaris

And tons of other nifty things. If building the next generation of cloud computing infrastructure interests you, please let us know! We’ll be listening to @cloudscaling on twitter and you can reach us at jobs@cloudscaling.com.

Happiness in Business

If you can’t be ‘best‘ or ‘cheapest‘, that only leaves being ‘first’ (see Pt. 1: Service Clouds and Pt. 2: Commodity Clouds).  Since Amazon Web Services (AWS) clinched the ‘first’ and ‘best’ titles for the general marketplace, your best bet is to pick a subset of the market to focus on.  Focused clouds find a sweet spot and exploit it.  This is really Business 101 for Startups.  A diagram I saw recently by Ben Caddell brought this into focus and provides a very simple to understand reminder for those of us who may have forgotten (see right).

Let’s look at some of today’s focused clouds.  I’ll mostly talk to Infrastructure-as-a-Service (IaaS), but also touch on Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) briefly.

Horizontally-Focused Clouds
By ‘horizontal’, people usually mean a longitudinal slice of the general market focusing on either a stakeholder (e.g. QA, IT, business management) or a business size (e.g. large enterprise, small/medium enterprise (SME), small/medium business (SMB), startups, or individuals).  A horizontal focus, by definition crosses multiple verticals  (e.g. financial services, health, etc. — see below).

We have some interesting examples of these available to us today.  I’ve picked just three to highlight my point: SkyTap, Terremark, and EngineYard.

SkyTap
Perhaps my personal favorite is SkyTap.  SkyTap focuses tightly on providing a unique experience for those in Quality Assurance (QA).  They allow a rich workflow experience that greatly facilitates deploying and saving the state of multi-server applications.  A QA person can find a bug that affects multiple servers in a complex application and literally save the entire system for reuse or re-play by the affected developer at any time.  Combined with easy replication of multi-server environments and other great features designed for this segment only, SkyTap, even though technically an Infrastructure-as-a-Service (IaaS) play is generally under the radar when folks talk about infrastructure clouds.

Terremark
A relatively new entrant into IaaS, Terremark is making it’s mark by focusing on the enterprise.  In fact, their offering is called simply The Enterprise Cloud, showing where they plan to focus.  Terremark uses VMware, which hasn’t had a lot of traction in the public clouds to date.  Presumably this is because they plan to offer some of the more advanced enterprise-class VMware features like HA and DRS.  From my sources at VMware I’ve heard that the Terremark cloud product is quite good and they have developed quite a bit of secret sauce on top of VMware. [1]

Regardless, by picking an area of the market that has been under-served by the heavyweights I think they have a good opportunity.

EngineYard
It’s quite a bit easier, as you move from Infrastructure to Platforms and Software to differentiate and focus on a particular target market.  EngineYard (and their close cousin Heroku who I have mentioned before) focuses on providing a fully managed and automated Ruby-on-Rails (RoR) stack to web startups.  This has already distinguished them amongst the platform crowd and allowed them to ramp up a very respectable business in less than 2 years time.

Vertically-Focused Clouds
If you can’t go horizontal, go vertical.  A vertical focus is an industry focus, be it financial services, health, construction, high-tech, life sciences, energy, or other.  A vertical focus tends to be more solutions-oriented.  When you put together a package that focuses on a single industry it is rarely transferrable, without major changes, to another industry.  However, this kind of focus can be very beneficial for a smaller cloud trying to make a mark early.  This also means it can be rather hard to build a vertical infrastructure cloud.  An example might be someone building a cloud that was highly secure and HIPAA compliant for the medical industry.  Or one that focused on PCI compliance for financial services companies.

Outside of infrastructure, many Software-as-a-Service (SaaS) businesses focus tightly on a given industry.  I don’t know of any current IaaS clouds who are vertically focused and the list of SaaS providers who are vertically focused is too long to list.  A couple of brief examples:

athenahealth
athenahealth provides doctor and patient management services online.

BankServ
BankServ provides online payment processing specifically for financial institutions.

Focus, Focus, Focus

As you can see, if the general market already has dominant players who are ‘first’, ‘best’, and ‘cheapest’, then picking a subset of the market that is not currently served and being ‘first’ there is a great strategy for any new cloud.  In the final part of this series I’ll talk about the particular importance of focus for those players currently in the general market who need to compete on value, not price to survive.  Ultimately, the best way to make money is to help your customers.  Don’t help them on price.  Provide value instead.

[1] If Terremark wants a full review, perhaps they could give me a trial account? <hint>

Enter … commodity clouds.

Infrastructure Commodity Clouds
Recently large providers like AT&T announced their entry into the Infrastructure-as-a-Service (IaaS) cloud computing market and some bigcos with a vision, like British Telecom  (BT), even tried to move early building upon 3tera’s technology to deliver on-demand hosting services.  Even Sun started to get in on the act with their Sun Cloud.  One could argue they led the whole charge with their early on-demand grid service, but by all accounts it wasn’t very successful.[1]

What’s common about these new entrants to the cloud computing space is that generally they are not technology & innovation businesses themselves with the obvious exception of Sun.  In particular, they don’t have track records in innovating in the large scale on-demand infrastructure and datacenter space.  But … they have name brand recognition, buying power, and the ability to price themselves competitively against large incumbents like Amazon and Google.

Without the ability to innovate their clouds the primary tool of differentiation for these entrants is pricing.  While I’m sure they would argue with me about this, the fact remains that we’re unlikely to see the next AppEngine, SimpleDB, or similar from most commodity clouds.[2]

An ecosystem play is just not in the cards.

Platform Commodity Clouds
We haven’t seen a Platform-as-a-Service (PaaS) commodity cloud and it’s unlikely we will in the short term given the relative technological complexity of building a scalable shared multi-tenant infrastructure that can host arbitrary code.  If it were easy, then AppEngine and Salesforce/Force.com would have a whole lot of competitors right now.

Bottom line is that PaaS doesn’t play as a commodity cloud.

Bringing it Back
Again, just a reminder that there are three ways to be a market leader: first, best, and cheapest.  Commodity clouds are focused on being cheapest or, at least, that’s primarily where they can play in terms of value.  This doesn’t necessarily mean that the list pricing will necessarily be cheapest.  Companies like AT&T and BT, at least, will deliver cloud computing as part of their product portfolio which means that businesses that pick them likely will do it because their overall costs or ROI are lower.  They will see cost savings either through discounted pricing when combined with other services or through non-obvious areas like avoiding bandwidth charges.  If you’re in an AT&T datacenter, have AT&T connectivity, then data transfer between ‘the cloud’ and your office will be ‘free’.

What do you want to be?  Best, first, or cheapest?  If service clouds are best, commodity clouds are cheapest, that only leaves being first.  If you can’t be first to the general market (Amazon wrapped that one up) then you need to be first to a smaller focused market.  More on that in Pt. 3.

—-

[1] Sun doesn’t have a reputation for delivering on-demand services as I’m sure even they would admit.

[2] You’ll notice I haven’t mentioned RackSpace.  The jury is still out there.  It seems clear that RackSpace has service cloud ambitions, but it’s unknown whether they can execute.  I’m going to lump them in the commodity cloud bucket for now until more time elapses.  Also their current pricing for the Cloud Servers product seems to reinforce the notion that they are largely a commodity play.

Service Clouds
I’m borrowing this notion from Alistair Croll (linkedin, twitter, blog), because it’s smart, can be bent to my needs, and makes the most sense in the end game.  By end game, I mean that eventually, most clouds will probably be service clouds.  Why?  Because service clouds offer the best opportunity to expand your market.  Let me explain.

Service clouds shy away from the notion that you must be either Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), or Software-as-a-Service (SaaS).  They provide a slice of on-demand services that include all of these as shown in this diagram:

The best examples of service clouds are Amazon, Google, and Microsoft.  All three either provide, or are in the process of providing, a complete ecosystem that includes elements of infrastructure, platform, and software (applications).  Service clouds are also ‘cloud platforms‘ (not to be confused with PaaS).  Platform in the same sense that an operating system is a ‘platform’.

Service clouds are the future.  All cloud computing providers will eventually converge towards this model … for the most part.

Market Evolution
I can’t locate the original blog posting, but I once read that there are essentially three ways to be #1 in a given market:

1. first
2. best
3. cheapest

I think everyone understands this at least on an intuitive level, which means that most cloud players are going to try and stake out a territory as either first, best, or cheapest.  If we assume for now that service clouds are the ‘best’ way to deliver cloud services, then surely it’s important to understand what ‘first’ and ‘cheapest’ might mean.  I’ll take a stab and say these are probably ‘targeted clouds’ and ‘commodity clouds’ respectively.

Targeted clouds are usually smaller cloud players who realize that since the Amazon’s and Google’s of the world are already ‘first’ to the general market they better be first to a specific market segment.

Commodity clouds are larger businesses that may not be able to compete with Amazon or a Google on innovation, but command enough buying power to shrink wrap solutions using best-of-breed software and price everyone else out of the market.  Think ‘utility computing’.

We’ll cover both targeted and commodity clouds in Pt. 2 & Pt. 3, and then wrap up some predictions in the final installment.