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Summary:

The Deutsche Boerse Cloud Exchange, which will launch in Frankfurt, New York and Singapore in 2014, aims to make it as easy to trade compute and storage capacity as it is to trade stocks.

stock exchange

Financial services giant the Deutsche Boerse Group, which runs the Frankfurt Stock Exchange among other things, is about to make a pretty serious leap into the cloud computing space. The German company said on Tuesday that it will launch a global, vendor-neutral marketplace for compute and storage capacity in 2014.

The idea of a cloud marketplace is not new, but there aren’t many serious players out there yet. Deutsche Boerse’s take is very much aimed at the corporate and medium-to-large enterprise market, as well as the public sector, and it uses infrastructure-as-a-service (IaaS) cloud management software from Berlin-based Zimory to connect buyers and sellers through open APIs (the two companies are treating this as a joint venture).

Zimory CEO Rüdiger Baumann, who discussed cloud trading markets at our Structure:Europe conference last year, told me today that the Deutsche Boerse Cloud Exchange would make it as easy to trade IaaS capacity as it is to trade energy or securities:

“It’s a marketplace where all providers of compute and storage capacity could show their available services and capacities in product groups, in a standardized way… We are installing on every buyer and seller side a small orchestration interface which, after the trade has happened, will connect both.”

Zimory has already worked with a user group of 5 buyers and sellers to establish interfaces for the buyer side, and will work next on a “southbound interface to things like vCloud Director, OpenStack and HyperV to connect typical cloud management instruments in data centers,” Baumann said. Due to the nature of the exchange, an organization might be a buyer or a seller, depending on their need or surplus at the time.

Deutsche Telekom’s T-Systems division is already lined up for the supply side, as are players such as CloudSigma. T-Systems cloud chief Frank Strecker said in a statement that the exchange would “enable us to supply existing and new customer groups such as SaaS providers with globally standardized IaaS products” in a way that makes it easier to offer tailor-made packages. The exchange’s categories currently extend to size of storage or compute capacity, but other categories such as service level agreement (SLA) class and territory – down to country-level for those with stringent data protection requirements – will be added.

Both buyers and sellers will need to go through an admission process, with sellers needing to demonstrate that their data centers conform to certain standards. Crucially though, Baumann noted that sellers can be on just about any cloud platform, because of the standardization provided through Zimory’s orchestration layer.

Like any exchange, a fee will be involved for both buyers and sellers. However, Baumann argued that this will still prove cost-effective and efficient for large buyers:

“A certain percentage goes to trade, but this is 10 times better than current procurement processes in cloud computing, which take one to one-and-a-half years. Procurement costs are enormous and time-to-market is very enormous.”

The Deutsche Boerse Cloud Exchange will begin operations in Frankfurt and New York around February or March next year, before adding Singapore for the Asian market 4-5 months later. “It will be a global play by the end of 2014,” Baumann claimed.

Virtustream, which bought SpotCloud company Enomaly in late 2011, is supposed to launch its xStream Exchange at some point soon, so it will be interesting to see how this idea pans out – and how the introduction of big-time cloud brokerage affects the supply side as a whole.

For more discussion around this topic, do make sure you attend our GigaOM Structure:Europe 2013 conference on 18-19 September in London, where Baumann will be one of the speakers.

    1. David Meyer Tuesday, July 2, 2013

      Thanks Stefan – interesting take. Although DBCE is only talking spot capacity for now, the idea of cloud capacity futures is fascinating (and somewhat mindbending).

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  1. With people moving so quickly these days, I’m surprised conglomerates aren’t jumping into the market to create a few serious players.

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  2. Xalman Xhan Tuesday, July 2, 2013

    Well, I don’t think this concept will work that effectively (just an opinion). Do you think they would be able to attract giants like AWS, RackSpace, IBM, dinCloud, and Azure to this market? These big players may not feel comfortable in such environment.

    Your thoughts?

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    1. David Meyer Tuesday, July 2, 2013

      They may not be the first in, but if the platform takes off to the benefit of CloudSigma, T-Systems et al, then I bet you they’ll take notice.

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  3. Sharon Wagner Wednesday, July 3, 2013

    Brokerage (Arbitrage brokerage to be more precise) can work only if there is a reasonable balance between buyers and sellers.

    You can’t build a brokerage when AWS, Rackspace et al dominates the market.

    Therefore, I don’t see a reason for them to join.

    We will see many 2nd tier IaaS providers joining the party and offer capacity in competitive prices. This will lead to min-price-war and profitability reduction. Not quite sure that this is what the participating providers wants.

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  4. PrincetonAl Monday, July 8, 2013

    Part of the financialization of everything to create money for brokers under the illusion of “liquidity” while shaving a few bucks off the top of people doing the real work. Reminds me sort of like Enron and energy generation trading, water rights trading, carbon trading, etc. which are trading against much more fixed asset infrastructure (electric grid, water is not a commodity market the way oil is, etc.) … vs. stocks or commodities, which seem to more balanced markets vs. something created by financiers for financiers to profit.

    – Is this really a market that needs to exist?
    – Do participants really need to lock in the supply or demand for spot utilization of computing resources in a 6 month contract?

    This is not a market with the same level of uncertainty as corn or wheat harvests near as I can tell if I plot the annual cost of memory, CPU, storage on a 10-year basis, it sure as heck seems to have one fairly uniform direction.

    I struggle to see anyone winning besides the financiers in this model, assuming there is enough demand for them to even win.

    I dunno …

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