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Summary:

Is it better for hosting providers to band together to take on Amazon Web Services or to focus on what each service provider does best?

Ditlev Bredahl OnApp Tony Lucas Flexiant Structure:Europe 2013
photo: Anna Gordon/GigaOM

OnApp CEO Ditlev Bredahl has a message for the current community of hosting providers: “If we don’t [band together and take on Amazon Web Services], we will look back on these years as the  years when the long tail of our industry disappeared.”

It sounds hyperbolic, sure, but Bredahl is a true believer — something he made clear during a Thursday discussion at Structure:Europe. OnApp has built an entire business around doing just that. It has 2,000 service provider customers spanning 84 countries, all sharing resources among each other and outside customers via a standard user interface and tooling. He thinks this federated approach gives the OnApp community a leg up against a provider like AWS that has a much smaller global footprint and set of capabilities.

Tony Lucas, founder and SVP or product at Flexiant, isn’t so sure that’s a bright idea. Lucas’s company also counts service providers among its customers, but its goal is to let each one focus on what they do best. “Viable scale” is actually much smaller than most people think, he said, but it doesn’t take dozens of your own data centers across the world to compete with the cloud behemoths.

“Certainly, none of our customers are ever going to out-market Amazon in terms of cost of capital,” Lucas noted. What they can do is build niche businesses that are unique from AWS and provide flexibility that Amazon can’t. If scale were such a concern, he added, AWS could easily add more data centers in Europe aside from its one Dublin, Ireland. But customers aren’t showing much hesitation to use that one.

It’s hard to say who’s right, but Bredahl says he once lost a customer to AWS in a previous life because, without a one-year contract, he couldn’t justify the expense of bringing on 1,000 new servers. With the OnApp federation, he’s confident other service providers don’t need to suffer that fate.

Check out the rest of our Structure:Europe 2013 coverage here, and a video embed of the session follows below:


A transcription of the video follows on the next page

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  1. I think it’s important to sometimes look at what has happened in other industries. Walmart took the USA by storm in the 80’s and 90’s. It served everyone — and with their plan, there was always one nearby. All the mom & pop shops quickly went out of business, even if each of those places had their own strategic advantages, whether it be customer service, product … etc.

    In cloud hosting, it’s without question that Amazon is Walmart, and every other cloud host are the mom & pop stores. Ditlev is absolutely right; unless cloud hosting companies work together, the same thing is going to happen.

    1. Terry,

      Think you might need a disclaimer on there on who you work for… :)

      (Ditlev/Onapp for anyone wondering).

      Regards,

      Tony (Disclaimer, yes I work for Flexiant)

  2. Lars-Bo Sølvquist Friday, September 20, 2013

    Nice speach Ditlev and i totally agree.. Look at UPS!!! haha.. you have used that before and i totally agree!!!

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