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Summary:

ProfitBricks, which goes head-to-head with Amazon for the IT budgets of startups with a new promotion, says the time is ripe to disrupt the disrupter.

AWS: Reinvent
photo: Barb Darrow

Every six months or so stories crop up about startup companies leaving Amazon Web Services in whole or in part. Heck, I’ve done a few of those stories myself. These defectors usually cite fear of vendor lock-in as their rationale. And smart competitors — OpenStack players like Rackspace as well as Joyent, SoftLayer et al — do their best to capitalize on this “Amazon-has-gotten-too-big-for-its-britches” meme.

Robert Rizika, CEO of ProfitBricks, USA

Robert Rizika, CEO of ProfitBricks, USA

Wanted: Startups to use our clouds

ProfitBricks USA is the latest to tout its ability to successfully woo startups — it claims 35 to 40 percent of 130 startups that have come aboard left AWS. And today it launched a nationwide program to convince more startups to “break up with Amazon on Valentine’s Day.” Qualified startups — those making less than $1 million in annual revenue — get a 20 percent discount on ProfitBricks IaaS services for a year. A limited version of the promotion rolled out in Boston five weeks ago.

CEO Robert Rizika, who explained ProfitBricks’ take on scale-up cloud computing, said the company offers a modern cloud for a modern era — one with a graphical dashboard to make it easier for mere mortals to deploy infrastructure with drag-and-drop ease. And it offers resources by the minute, not by the hour, which has been the AWS model. ProfitBricks pricing is here.

Some background; Since AWS launched in 2006, startups have flocked to its inexpensive compute and storage infrastructure. In essence, AWS decimated barriers to entry for dot.com boom startups. Until AWS showed up, those fledgling companies  pretty much had to turn a huge chunk of their VC money over to Oracle for database licenses and Sun Microsystems for hardware. Amazon was the only game in town when it came to reliable infrastructure for rent cheap.

Changing times mean changing clouds?

But things have changed. For one thing, a bunch of other very capable, albeit smaller, IaaS players have arrived. They may not be as huge as Amazon, but they’re plenty big for most purposes.

And, while startups were quite happy to rely on low-level Amazon services, many are less wild about moving up to higher-level and more complex AWS offerings like Simple Workflow Services, which make it difficult for them to back out of Amazon if they want to change cloud providers. Some see Amazon’s ever expanding list of services as competitive to their own plans. Many Amazon partners/customers, whether it’s due to fear of lock-in or fear of competition with their primary cloud provider, now run on multiple clouds.

They also find it hard to track the constant  pricing changes and tweaks that get posted to the AWS blog seemingly every other day.  A whole flock of startups has grown up around explaining AWS usage and pricing to AWS customers. So much for transparency. Dissidents also complain that to get the best AWS price, they have to lock into 1- or 3-year contracts for Reserved Instances.

“With us, you automatically get the lowest price, our menu is all graphical — you drag and drop — you don’t need to be an expert to order up your resources,” Rizika said.

Amazon’s enterprise shift

Others say Amazon’s growing focus on enterprise accounts,  a big theme at its inaugural AWS: Reinvent conference last November, is diluting its focus on startup customers.

Whatever the case, two things are certain: First, more credible IaaS players are coming online by the month. Second: Amazon has no intention of ceding ground to any of them. It’s gonna be an interesting year.

  1. How has using ProfitBricks helped our company? I’ll share because we care..

    * Development Team: The development team has saved days in server management. And the time saved in technical server conversation is even more. We no longer have intense meetings to discuss server configuration. With Profit Bricks Datacenter Designer, the conversation between other teams is visual. Something we did not get with our prior hosting provider.

    * Operations Team: The operations team has the flexibility to work from home, road, and mobile. We live in New England, there are times we don’t want our employees in the bad weather. With profit Bricks, the ability for our workforce to have all their tools, everywhere they are is a return you just can’t measure. Morale is high and our team works better.

    * Business Team: The business team has been able to reduce costs by nearly two-thirds under Profit Bricks pricing model. And when we can reduce our overhead by that much, our clients benefit from our ability to deliver great technology tools at prices competitors can’t match. Our clients appreciate knowing that we work on our own technology to better serve the

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  2. Pricing per minute or hour doesn’t matter – it’s still ‘pay per provisioned resources’ vs the real utility of model of ‘pay per usage’ – ie. cycles consumed.

    Amazon is the only IaaS of note right now because of their physical scale. IaaS is like manufacturing – scale wins. I’m sure in time HP, IBM etc will have a viable alternative … but I think the money for everyone else is in added value services (like the massive global SI and VAR community have done on top fo Dell/HP/IBM for 20 years instead of building their own hardware to compete), not in trying to compete based on selling access to infrastructure. It’s a dollars game no one without billion-dollar-deep pockets can win.

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  3. We (OnApp) think AWS has the upper hand currently because of the three advantages:

    - Scale (as Ed mentioned above)
    AWS seems to be in the lead of a small set of providers that are able to pretty much supply any amount of infrastructure, instantly – and with no long term commitments. Pretty much any other provider out there would require setup fee’s, long term commitments and days/weeks to deliver +100 servers.
    It’s hard for, even the larger, competitors to compete on scale.

    - Geographical reach
    AWS seems to light up a new location every quarter, and maintain a common set of API’s across them.
    The investment needed to do that is simply to steep for most of the other guys out there.

    - And finally, Product Breadth
    AWS used to be nothing but a glorified old school VPS server, but in the last 3 years they’ve rolled out an amazing product set, and new features seems to keep on coming from their army of developers. Again, most ‘old-school’ providers just can not afford this level of R&D.

    From our perspective, that’s why this ‘bookshop’ has taken over what is probably the largest commercial opportunity in the history of the service provider industry.

    Unfortunately, I don’t think that ProfitBricks are able to compete significantly on any of those 3 points…on their own.

    At OnApp we’ve tied together our clients (they are all service providers competing with AWS) and build a federation that allows our clients to deploy services across each others infrastructure. It’s all real time and api’d – We call it OnApp connect.

    We’ve got around 2000 service provider deployments, and across those there are more (or sufficient) Scale, Geographical Reach and Product Breadth than AWS would ever be able to deliver.

    We think federating is the only way to combat the AWS threat – and if service providers ignore this threat and try to go head to head with AWS on their own, they’ve already lost – and we’d be looking back at these years where the long tail of the service provider industry would disappear…

    :)
    Ditlev

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  4. James Malachowski Tuesday, February 19, 2013

    AWS and Rackspace collectively did about 1.5BN in “cloud infrastructure services” last year. After that, the next largest competitor is much smaller. Despite this spend and the increasing spend in cloud we still spent $55BN+ on X86 last year. Cloud computing infrastructure is still a nascent market and is in dire need of more competition (AWS represents the lion’s share of the market). Its great to see an up-and-comer like ProfitBricks get some press as a viable alternative to AWS aimed at startups.

    The advantage for ProfitBricks is that they will be presenting themselves the opportunity to find the next twitter/facebook/pinterest/dropbox by focusing on this community which will help them gain market share and become a player in this space.

    The interesting thing is in these discussions no one talks about all of the companies that are trying to get off of AWS not onto another cloud, but onto their own infrastructure. Once companies find themselves at a scale north of a few thousand servers the cost/operational benefits seize and it is actually more cost-effective to consider building out your own private infrastructure. This is especially important if the core of your business is delivering a web-based service as your competitive advantage and profitability over time will be dependent on lowering TCO as much as possible.

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