Here’s why: As Amazon Web Services keeps churning out services, support offerings and certifications to appeal to corporate and government users (the latest being FedRAMP accreditation), other cloud vendors need to show that they offer value above and beyond AWS. Hybrid cloud, which pairs local processing power with outside cloud resources as needed, is one area that they see as a weakness for Amazon.

AWS versus everyone else

While none of these rivals refer to themselves as AWS killers (smart move), they all see Amazon as the #1 cloud player and the top threat to their own cloud ambitions. When pressed, VMwarez senior vice president Matthew Lodge acknowledged that “everyone is competing for the same IaaS dollars.” Everyone meaning Amazon and the rest of the cloud contenders.

VMware, which saw, um, limited uptake of the vCloud Director that it pushed service providers to use as the basis for their own clouds, said its new vCloud Hybrid Cloud Services will compete with AWS on price, at least in some cases, but offer other enterprise-worthy goodies.

Said Lodge: when you factor in “hidden costs” in Amazon’s dedicated instances, the playing field levels out. “They charge for I/O and we don’t. They charge for VPN endpoints, load balancers and firewalls and we don’t,” he said.

Rackspace president Lew Moorman has a similar message. “Now that public cloud is 3 to 4 years old in reality, applications are bigger and more complex and people are starting to see tradeoffs to using public cloud only,” Moorman told me Thursday.

Structure 2012: Lew Moorman – IT Cloud Lead, Intel Corporation

“When public cloud came out and you could suddenly provision a server in a minute when it used to take 3 months, those were intoxicating advances … you get drunk on them but when things settle in there are tradeoffs,” he said.

For examle, what’s great for test-and-dev environments is not always optimal for production workloads, where public cloud costs quickly add up.

Once someone hits the $25,000-a-month milestone, “it’s time to rethink all-public-cloud deployment,” he said.

Joyent trumpeted a similar message this week when it announced a raft of new compute instances it says will be  competitive with AWS.  Joyent, like Rackspace, offers public, private and hybrid cloud options.

Corporate cloud purchases are about more than price and technology

Having said all that, almost every cloud vendor alive will also add that price isn’t the compelling reason to move to cloud. Face it: when it comes to IT-sanctioned technology purchases, it’s not just about the price or the technology. IT departments have established procedures and guidelines for deployment and cloud providers will have to accommodate them.

“Most public clouds — AWS etc. — don’t offer enterprise-class security, compliance or performance SLAs to users,” said Rodney Rogers, CEO of Virtustream, which positions itself as an enterprise cloud provider. ”Some public clouds offer supplemental services that dedicate equipment to enterprises/government, but they are generally not multi-tenant  and so deliver less efficiency.”

That means they remain suited for test and dev, for backup, SaaS apps and apps with no performance criteria, Rogers said via email.

Is Amazon’s head start insurmountable?

Granted all of this is self serving talk, but having sat through a raft of CIO panels this week, it is clear to me that some of these points ring true with this constituency.  But, if we’ve learned anything from the past 6 years of its existence, AWS won’t stand still. It now offers several services of its own and through an alliance with Eucalyptus that break down some barriers between a customer data center and its cloud. But until you can run AWS instances on your own infrastructure, AWS will remain a public cloud provider in a world where more workloads could flow to a hybrid model.

Structure 2010: Werner Vogels – CTO and Vice President, Amazon

AWS has a huge head start and lots of customers. But we’re early in the cloud era. IDC says less than 5 percent of the world’s total IT budget is now devoted to public or private cloud. That leaves a lot of upside for Amazon and its competitors.

There’s time for Amazon to offer more hybrid options and for rivals to catch up. It’ll nothing if not an interesting market over the next few years.

Who wants to bet that this topic of hybrid vs. public cloud deployment will come up at Structure 2013 next month where both Moorman and Amazon CTO Werner Vogels will take the stage?

Pretty safe money, I’d say.

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Tools like CloudCheckr’s service can help in the government procurement process — a big deal given the U.S. government’s cloud-first mandate, which requires agencies not only to deploy a different sort of technology, but to readjust how they think about buying and paying for services.

“They have a hard time dealing with cloud costs because they’re so used to fixed-cost contracts,” said James Hirmas, COO of JHC Technology, an AWS consultancy specializing in government work and a prime contractor for the National Institute of Standards and Technology (NIST). JHC worked with CloudCheckr to integrate its service with GovCloud.

With that integration, a customer can see if it’s underutilizing compute instances for a certain task and, if so, advise that the work be moved to a smaller, cheaper instance, for example. CloudCheckr performs compliance checks and best practice analysis for GovCloud environments.

Aaron Klein, COO of Rochester, N.Y.-based CloudCheckr, said the GovCloud service does 90 percent of what it does on the commercial side. “GovCloud is architected differently from other AWS regions,” he said. “First you need access, then you need to delve in and adapt what you have to work best in that environment.” He also pointed out that not all of AWS’s own services are running on GovCloud so far.

Since GovCloud is compliant  with the International Traffic in Arms Regulations  (ITAR) – only U.S.-born personnel can work there or access it. Its help desk is U.S.-only. Background checks are also required.

Amazon itself is clearly gearing up for more government work, having received its FedRAMP certification early this week. That accreditation  should make it easier for more government entities to use GovCloud (or other U.S. regions depending on the workload) without having to go through a lot of redundant testing and paperwork.

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Amazon Web Services VP Adam Selipsky.

FedRAMP, which stands for the Federal Risk and Authorization Management Program, “is a U.S. government-wide standardized approach to security assessment, authorization and monitoring,” said Adam Selipsky, VP of AWS. If a service gets certified by FedRAMP for use by one agency, it will be easier for other government organizations to adopt it as well, he said.

In government parlance, Amazon now has a three-year “Authority to Operate,” or ATO. That certifies that a range of government data can be stored or processed on Amazon infrastructure. Companies seeking FedRAMP certification typically work with a sponsor agency, which in Amazon’s case was the Department of Health and Human Services.

HHS has used AWS to run for the Centers of Disease Control’s BioSense program for tracking health problems in the U.S. and for the National Database for Autism Research. 

FedRAMP blessing greases the skids for more government use

AWS now has both a FISMA (Federal Information Security Management Act) Moderate and a FedRAMP Moderate ranking.The latter designation means that ”sensitive data” can be stored and managed on AWS infrastructure.

“This is a journey, a sliding scale. Sensitive data is a term of art used in government. Even more top secret categories of data require additional certifications,” Selipsky said.

To date, exactly two cloud providers — Autonomic Resources and CGI Federal -- had earned the FedRAMP seal of approval from the General Services Administration. Now AWS is in the mix, but the three companies won’t have the arena to themselves for very long. Up to 15 providers are expected to clear FedRAMP hurdles this year with double that number expected to do so in 2014 when FedRAMP certification becomes mandatory, according to Federal Computer Week,

AWS is the kingpin in public cloud infrastructure where it’s had a 6 year head start. But now enterprise-focused rivals — VMware will announce its AWS response on Tuesday, HP and Rackspace have rolled out their own public clouds. An early FedRAMP certification which should make government IT types feel better about deploying work on AWS, may well be another early-mover advantage.

Amazon CTO Werner Vogels may well talk about the importance of public sector workloads when he speaks at GigaOM Structure next month in San Francisco.

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“Every story I read about Google is us versus some other company or some stupid thing. Being negative is not how we make progress. The most important things are not zero sum.” Page said Google struggles “with people like Microsoft,” he said. As for Oracle, which is suing Google over Android’s use of Java, Google has “a difficult relationship with Oracle, including having to appear in court … Money is obviously more important to them than any collaboration.”

In comments emailed to CIO.com, Microsoft responded:

“It’s ironic that Larry is lending his voice to the discussion of interoperability considering his company’s decision — today — to file a cease and desist order to remove the YouTube app from Windows Phone, let alone the recent decision to make it more difficult for our customers to connect their Gmail accounts to their Windows experience.”

Page’s words came a few days after Microsoft announced interoperability between its Outlook.com email service and Gmail and just after word came out that Google demanded that Microsoft rip its home-built YouTube app from the Windows store (and remove the app off the Windows Phones that were already running it.) So, who’s the winner in this melee? Neither vendor comes out looking good. For Microsoft to complain about Google’s business practices is laughable given its own track record. But for Google to claim it’s not evil while restricting consumer choice is also awful. Consumers might just say a pox on both their houses.

IBM spreads Watson around …

Watson, the natural-language-understanding software that played (and won) at Jeopardy, will be made more broadly available to third-party software makers, IBM CEO Ginny Rometty said last week. Thus Watson technology could be used perhaps even by IBM competitors, to build self-teaching computer systems, according to Bloomberg News. IBM has made the most possible PR use of Watson capabilities, working to embed that intelligence in medical and other applications. Last week, IBM took its show on the road to Washington D.C. last week to show Congress the progress Watson has made in healthcare applications.

… as SAP doubles down on HANA

German enterprise software giant SAP, in a move you could see coming miles away, said this week that HANA, it’s in-memory analytical database, will be the brains of its ERP software going forward, according to InformationWeek and other  outlets. Running do-or-die ERP and CRM applications on HANA is a big step up from data warehouses because ERP and CRM cannot go down for hours or a day without severe blowback. And yet at the annual SAPPHIRE conference last week SAP announced general availability of its core Business Suite applications on HANA. Or, as CRN put it, it “bet the farm” on HANA.

From around the interwebs:

Top 5 data center stories of the week, from Data Center Knowledge.

AWS is the McDonalds of cloud, who’s the Burger King? from GigaOM.

Tableau, Marketo software IPOs soar to cloud from Business Recorder.

Windows 8 is an enterprise non-starter because IT sees no value in changes from ComputerWorld.

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The Microsoft that produced the Windows-Office monopoly let its products get fat, dumb and happy. The Microsoft that must contend with the Oracle database juggernaut puts out a pretty good database. That’s why the sudden influx of new public cloud riches exemplified by this week’s official launch of the Google Compute Engine, coming a few weeks after Microsoft launched its Windows Azure IaaS options, may be tough on the competitors but could be very good for smart IT consumers.

Look for price cuts to continue, along with a flow of new services, and better APIs to access those services.

While I haven’t parsed the instance-by-instance price comparison between GCE and AWS, Google’s decision to sell compute instances in sub-hour increments could lead to cost savings vs. Amazon, which prices by the full hour. Don’t be surprised if Amazon responds, however.

We’ve already seen several price skirmishes in cloud including five or six price cuts in cloud storage in the span of a few weeks late last year between Google, AWS and Microsoft. Heck, even Rackspace, which touts its fanatical support rather than low prices, got into the act a little bit later.

Look for this sort of one-upsmanship (one-downsmanship?) to continue as these extremely well-funded and highly motivated competitors angle to get your workloads on their respective clouds. For the discerning IT buyer, whether she’s at a startup or a Fortune 100 company, that is only good news.

Photo courtesy of  Flickr user Official U.S. Navy Imagery

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Amazon CTO Werner Vogels and CEO Jeff Bezos on stage at AWS: Reinvent

Here are a few things AWS (which after all, remains the cloud to beat) could do to shore up its defenses as GCE, Windows Azure and soon VMware’s AWS competitor (to be re-announced May 21) come online.

1: Get more granular in pricing

One headline item Wednesday was Google’s decision to rent cloud instances by the minute instead of by the hour (well, you have to buy a minimum of 10 minutes with incremental charges for each additional minute.) AWS rents by the hour, which is something it could well change. Both companies are late to this particular feature however: Both Cloud Sigma and Profitbricks have offered sub-hour models for some time.

2: Keep pounding on enterprise support …

And management options like Trusted Advisor, which instructs AWS users on how to deploy their workloads more efficiently and more securely.  The knock on Google remains that it (let alone its cloud) doesn’t “get” the enterprise — millions of  Google Apps and Gmail business users notwithstanding. A CIO might ask herself: “Gee, do I want to trust my workloads to a search and advertising company? I still can’t believe I’m trusting some of them to a book seller! “

If enterprise is a key business, you have to keep earning it.

3: Prove that AWS is an Amazon corporate priority

The perception that Amazon.com, Jeff Bezos and corporate don’t care that much about AWS continues to dog the cloud services arm. It was a big deal that Bezos showed up at AWS: Reinvent last year, but he really doesn’t talk about the cloud business all that much. What might help there? BREAKING OUT AWS REVENUE! If AWS is a $2 billion-a-year-plus business, get transparent about it. And talk profitability, not just revenue. Come on guys, it’s time.

4: Keep the services coming

Much was made of Google’s brand new NoSQL database service, which, as my colleague Derrick Harris pointed out, is “eerily similar” to Amazon’s DynamoDB. Google SVP Urs Hölzle noted that Google, 11 months after announcing GCE, rolled out 10TB persistent disk, something that an “unnamed competitor” hadn’t done in its 7 years. That may be, but AWS has lots of other services and perks and maturity counts — especially among corporate buyers.

So, Amazon. It’s your move.

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The theory behind tools like these is basically this: sure, public cloud computing is billed as cheap, but too often it turns into a wasteland of dormant instances and other fallow resources. So as inexpensive as it can be, it’s not necessarily efficient or as cheap as it could be. Companies like Newvem, Cloudability, Cloudyn, CloudVertical et al say they can help you optimize all that and save more.

Newvem for Windows Azure covers many of the same core usage and cost metrics as the AWS version. A “heat map” helps users visualize their workloads as they move from on-premise implementations to the cloud, according to Newvem VP of marketing Cameron Peron. The free beta is available now to all Azure users. Newvem’s AWS version started out free as well, and a base level of capabilities remain free, but as of late last year, the company started charging for higher-level services.

Newvem said it sees Azure — which launched its AWS-like Infrastructure-as-a-Service  capabilities last month — gaining traction.

“The size of the Azure installed base is probably one of [Microsoft's] best-kept secrets,” Peron noted. Well, not that secret since Microsoft recently said Azure is a $1 billion-a-year business – a claim that some find difficult to swallow. Newvem would not comment when asked if Microsoft helped fund its Azure tool, but given that Microsoft wants to build the Azure ecosystem and compete better with AWS (as well as the spanking new Google Compute Engine), I’d say it’s a safe bet.

It’s also true that companies like Newvem, which built services around AWS, have been perplexed to see AWS adding richer and deeper monitoring and management services like Trusted Advisor. Given that, it makes sense that these companies offer multi-cloud capabilities.

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My money’s on Google taking the GA plunge but then again the company is known for fielding “preview” products for years. Still, Urs Hölzle, SVP of technical infrastructure and Greg DeMichillie, director of product management for Google’s Cloud Platform, will host a session Wednesday afternoon on the next-generation of cloud computing which will feature “announcements and demo important new features of the Platform.” Hmmm, smells like a GA announcement to me.

A Google spokeswoman said she had nothing to share at this time but referred users to the above-mentioned session. One of the things Google is expected to do is drive use of its cloud platform via its Google Drive and Apps franchises and right on cue, Google on Monday said customers will get 15 GB of unified storage across Google Apps, Drive and Google +. According to the Google Drive blog post:

“So, instead of  having 10 GB for Gmail and another 5 GB for Drive and Google+ Photos, you’ll now get 15 GB of unified storage for free to use as you like between Drive, Gmail, and Google+ Photos.”

While that’s not really tripling the amount of storage for Google users, as some have reported — it actually spreads it across Google properties. But 15GB is still more than what competitive free services offer. Dropbox offers 2GB for free; Microsoft SkyDrive starts users at 7GB for free while Apple iCloud and Amazon Cloud Storage provide 5GB before charges apply.

GA or not, here it comes

But getting back to GCE, here’s the thing:  even some AWS cronies say that GCE is the cloud infrastructure to watch in the upcoming year given Google’s experience in scale-out computing. It would also make sense for Google to roll out a for-real load balancer service, which one AWS partner said is a huge hole in Google’s platform strategy compared to both AWS and Rackspace. Google has also been working to beef up Google App Engine capabilities, something that Snapchat co-founder Bobby Murphy will doubtless address at GigaOM’s Structure event next month. The popular Snapchat photo sharing service runs on GAE. Google telegraphed (by virtue of its Google I/O agenda) that it will add a new language to the fold for its Google App Engine Platform as a Service (PaaS). GAE now supports Java, Python, and Go. Speculation at Reddit is that PHP will get the nod . Thomas Clayburn over at InformationWeek would prefer to see Google add Node.js or JavaScript first, so we’ll see. Some also say Google needs better integrate its Cloud SQL database service into its cloud platform

Battle for public cloud workloads ratchets up

Whatever Google’s official roll-out plans, GCE is already considered a contender in a hard-fought battle for public cloud infrastructure dominance by virtue of Google’s size and expertise.  AWS, launched in 2006, has a prodigious head start, but now with Microsoft’s Windows Azure  and GCE coming on line, AWS faces two extremely well-funded and tech-savvy rivals, both of which seem  determined to carve out a healthy chunk of this market. And then there are all the OpenStack-based public cloud options from Rackspace, HP and others. It’s still very early on in the cloud deployment game so things should get very interest in the race to add services — and cut prices. It could be a very good time to be a buyer of cloud services over the next few years.

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But there is nagging worry, sparked anew by Rackspace’s laggard Q1 cloud growth, that the appetite for cloud services may not be unlimited after all. For its first quarter ending March 31, Rackspacelogged $91 million in public cloud revenue, up 4 percent sequentially and 40 percent year over year. It is the quarter-over-quarter number that has people spooked; given that Rackspace has been touting its new OpenStack public cloud, folks expected much better numbers.

To be fair there are nuances about the Rackspace quarter to be examined. First, it blamed some of the inertia on price cuts on some services during the quarter. And the newer OpenStack-based public cloud business was up 75 percent sequentially, CEO Lanham Napier told analysts on the company earnings call Thursday night. The problem is demand for the older Slicehost-based cloud technology evaporated and bookings for the new cloud haven’t taken up the slack. New customers are being directed to the OpenStack option.

RAX data by YCharts

There are Rackspace-specific issues but there are more macro concerns, which I’ll get to in a minute.

Bryan McGrath, Rackspace’s director of finance, acknowledged that there may be vendor consolidation, just as there has been in other areas when technology matures.

“There are lots of versions of Linux out there but only a few are widely adopted,” he noted. But his point is that even with consolidation, Rackspace is well positioned to prevail. After all, he noted, he company was able to build a $300 million business on its older cloud technology, which was admittedly less scalable and capable than giant Amazon Web Services.

“People bought that because of our support and service. Now we have a new, much better cloud based on OpenStack with new features and functions,” he said. “We’ll marry that with our dedicated business to offer customers what they need.”

Now for the macro cloud problem

Of perhaps greater concern is that so many vendors are jumping into the cloud services game that there may not be enough customers to support them all. IBM will doubtless sell its OpenStack options as they come online to its typical Fortune 500 accounts, the biggest of the big companies. That leaves other smaller — yet still big companies — with OpenStack options from Hewlett-Packard, Red Hat, Rackspace and perhaps Dell, Cloudscaling, Nebula and other players going forward. Or they’ll go with CloudStack or Eucalyptus or OpenNebula clouds.

Telcos, carriers and hosting companies are gearing up their own cloud services based on their own or partnering with aforementioned OpenStack or Joyent. Microsoft just last month came online with its Azure IaaS option, which will probably get traction among the zillions of Windows shops. While Google Compute Engine, which will probably become generally available next week at Google I/O, is not really seen as a business class public cloud, you’d be foolish to rule it out completely. And then there is the big, bad incumbent, AWS, which continues to churn out new services, price cuts and service options by the week.

No matter what we make of Rackspace’s quarter, if you thought the cloud wars were hot before, you better gear up for the next round. The big question is whether there really is enough cloud work to support all these players going forward.

My best bet? Nope.

Amazon.com CTO Werner Vogels, Rackspace President Lew Moorman and other cloud luminaries will no doubt map out this competitive landscape at GigaOM’s Structure event next month.

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The company provides a graphical visualization of the architecture and resources used by a given application, not just a spreadsheet-like list of all the AWS instances on one page and all the databases on another, said CEO Daniel O’Prey via email. MadeiraCloud got its start in Beijing and now has an office in San Francisco.

That funding comes atop about $160,000 in seed funding, and will be used to beef up the development team and to market the product. The 11-person shop has done no marketing to date.

There are a raft of companies that provide AWS monitoring and management capabilities, but O’Prey said Madeira’s simple, self-service interface probably competes most directly with the AWS Console itself. Longer term, he sees MadeiraCloud taking on companies like RightScale and Enstratrius, just acquired by Dell.

Those are some pretty big rivals to contend with but the company most of these contenders have to watch is Amazon itself, which is rolling out more and more of its own management and monitoring tools, including OpsWorks. 

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