The topic arose at the clouderati-filled Cloud 2020 meetup in Las Vegas last week (where someone suggested we’ll have a cloud duopoly of Amazon Web Services and Google) and it’s back in the public eye again this week with the general availability of Google Compute Engine. I think we might get an idea how the cloud computing market will play out by looking at the fast-food industry.

The analogy goes like this: Fast food restaurants offer their consumers essentially the same things as public clouds offer their customers – convenience, speed, standardization, flexibility and everything else that comes with not having to prepare a meal from scratch or deploy applications on physical gear. And if all anyone wanted was fast, cheap hamburgers, fries and maybe some sort of chicken sandwich, the more than 33,000 McDonald’s across the world would probably do the trick.

However, when I come to any major intersection in a big city (and even in some small towns), I usually see no less than two national fast food chains taking up corner real estate. If I drive a little down the road, I’ll likely see a few more, and possibly some regional chains thrown in, as well.

Not all hamburgers are created equal, it seems.

Why should cloud computing be any different? If all anyone wanted was a virtual server, they’d probably go with the omnipresent Amazon Web Services. But when features, price, security, network connectivity and related services come into play, it becomes easy to see why there’s such an appetite for more options.

Amazon is to McDonald’s as Google is to …

Amazon Web Services = McDonald’s and Yum Brands rolled into one: AWS is to the cloud what McDonald’s is to fast food. It was the first, it’s the biggest and it’s the best known. All things being equal, there would be no reason for anyone to go anywhere else for cloud computing because AWS delivers reasonable services at a fair price (sometimes downright cheap), is omnipresent and can pretty much handle whatever scale you throw at it.

Only, if we consider the virtual server the hamburger of public cloud, the object store the French fries and the cloud database a chicken sandwich, AWS starts to look like a lot more than just a McDonald’s. You might look at it more like Yum Brands, the parent company of Taco Bell, KFC and Pizza Hut. The Amazon platform is about far more than just machine images and some standard storage and database features. It has myriad services covering everything from configuration to big data, and they’re all designed to integrate tightly with one another — like one of those KFC/Taco Bell combination restaurants that dot the urban landscape.

AWS, like McDonald’s, is the undisputed champion. Source: Wikipedia Commons

Rackspace = Wendy’s: Wendy’s is the No. 2 fast-food franchise in the United States, a title I think Rackspace probably holds in the cloud space (although assessing cloud market share is a little more difficult than assessing fast-food market share). And much like Wendy’s places a premium on the quality of its products, Rackspace places a premium on the quality of its service. CEO Lanham Napier has gone so far as to say it’s “playing a different game” than Amazon.

What he means is that Rackspace doesn’t need to compete with AWS by constantly driving down prices because Rackspace customers value service and will pay for it. Maybe, but the company might take a hint from what’s happening with Wendy’s as it struggles to maintain its No. 2 status against a feisty Burger King that’s largely following the McDonald’s playbook. If market share is important, higher prices aren’t often the best recipe for maintaining it.

The Angry Whopper, like App Engine, probably isn’t for everyone.

Google = Burger King: That cloud version of Burger King nipping at Rackspace’s heels is Google. It already has all the standard fare in servers, storage and databases, but it’s also hipper than the rest (or at least it tries to be), it takes some chances on product design (sometimes to the love-it-or-hate-it extreme) and, like Burger King with the Whopper, what it does well, it does really well. In Google’s case, that’s perform at scale.

If Google keeps adding services and cutting the costs of everything, there’s no reason it can’t become the world’s No. 2 cloud provider — some have already bestowed that honor upon it — and maybe challenge AWS a decade down the road.

Microsoft = Arby’s: Despite Microsoft’s best efforts to market it otherwise, Windows Azure is still largely viewed as a cloud platform for running .NET applications and generally doing all things Windows. Not that that’s a bad thing — a lot of people really like Windows and, by many accounts, Windows Azure is a fine platform. It’s like going to Arby’s: the menu offers a lot of things, but you go for the roast beef.

Joyent, Virtustream, CloudSigma et al = In-N-Out Burger, Culvers, Five Guys et al: These cloud providers, like their analogous restaurant chains, are damn good at what they do and their patrons are loyal. They’re typically designed for maximum performance, maybe security, too, and will play around with new infrastructural or programming components in order to maintain their edge. They might even be the best at certain things and have some major customers (I’ve seen Maseratis leaving the In-N-Out drive-thru), but cost, geography or the desire to get a chicken sandwich, too, limit the number of users they can attract.

Yes, In-N-Out is delicious — and that’s about the entire menu.

VMware = Del Taco: According to my colleage Barb Darrow, VMware’s new VMware vCloud Hybrid Service will “be run from partner data centers and sold by VMware’s channel but managed by VMware.” Del Taco sounds like a Mexican place but also has hamburgers, fries, shakes and even iced coffee. And I don’t know anyone who eats there.

OpenStack = Frozen French fries, or cheeseburger-flavored Doritos: It really depends on who you ask (some would even say it’s like kale). If you’re grilling burgers and cooking fries, you’re essentially trying to recreate the fast-food experience at home. On the bright side, when you’re making the hamburger patties and cooking the fries, you can control how much salt you add and ensure everyone who handles them washes their hands. It might turn out great, but it’s never really the same.

Perhaps I’m being overly pessimistic, but I’m beginning to suspect that OpenStack-based public clouds (of the non-Rackspace( rax) variety) will end up being a lot like cheeseburger-flavored Doritos. In name, they’re like cheeseburgers, but after a few bites you’re left saying, “Hey, Doritos doesn’t make cheeseburgers …”

Everyone else = everyone else: Even after all this, we’re still left a bunch of different cloud providers and a bunch of different fast food chains. You might compare the telcos to Jack in the Box, Carl’s Jr. and Hardees in that they’re big and make money, but they’re pretty much non-factors in the grand scheme of things. Then there are your various web hosts and others, which might compare with some local chain restaurants. And different countries will certainly have their own cloud providers just like they have their own takes on fast food.

In the end, though, it’s just hard to see how cloud computing becomes a two-horse race any more than the fast-food industry is a two-horse race. Sure, there are three clear leaders (with No. 1 having a big lead), but there’s plenty of business to go around because aside from some core similarities, no two providers are the same. And as long as more applications are developed and need a cloud to call home, there will be developers and CIOs with very different ideas of what makes a cloud platform great.

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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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“There’s so much happening in Austin, it was place we had been wanting to expand to, and especially with the cloud program in San Antonio we had a lot of visibility because of proximity,” said Jason Seats, the managing director of TechStars Austin. “It was always a matter of when and not if.”

Seats, who was the former managing director of TechStars cloud, is moving about 90 miles up I-35 to take over the Austin class of startups. He told me that TechStars will, “keep the cloud program basically as it is. I’ll be involved with it but we are working on filling the director role.”

The Austin program won’t have an explicit theme and joins programs in Boston, Boulder, Chicago, New York City, Seattle, Wash. and London. TechStars Austin will provide $18,000 in financing and the option of a $100,000 convertible debt, but the most valuable aspect for most will be mentoring from establish entrepreneurs and other program participants.

In an interview with me, Seats said he is looking for about 10 companies for the first class that will run from August 5 to Nov. 1. TechStars looks for founding teams with an idea who want to take that idea to the next level. Generally that means companies seeking outside financing, but as the head of a former boot-strapped startup (SliceHost, which sold to Rackspace) Seats is happy to bring those in as well.

As for connecting with the Austin entrepreneurial community, including the existing Capital Factory incubator, Seats has laid the groundwork. He notes the Capital Factory founders Joshua Baer and Bill Boebel are already TechStars Austin investors and mentors, and both Seats and Baer are planning to work together, despite both running accelerator programs. “The last thing we want to do is cleave the ecosystem,” Seats said.

Seats has also reached out to support from the venture community in Austin, notably Austin Ventures, but also to Silverton Partners and local angels. He expects to see a lot of enterprise software deals given that Austin has a track record of building and then selling or taking such companies public. That’s a plus from his perspective since he views enterprise software as “the first cousin of the cloud,”

“I’ve spent the last two weeks canvassing the city and meeting the CEOs and founders and operators and investors, and the depth of talent and expertise is excellent,” Seats told me. “I have one data point of experience building and running a company, but I’ve met with so many people in Austin who have run and sold their companies and are on their third or fourth of fifth thing.”

That experience, plus more visibility provided by TechStars, should only help Austin and its entrepreneurs get even more experience.

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Cloudant CEO Derek Schoettle

The money will mostly flow to add staff and infrastructure partners.  ”First, we need to invest in operational expertise around the world — we’re building an office in San Francisco, we’re based in Boston, and now we have presence in the U.K. and will open one in Hong Kong probably in the next 120 days — we need to staff that,” Cloudant CEO Derek Schoettle said in an interview.

Current staffing is at about 60 people, with plans to hit maybe 100 within the next year.

Cloudant’s NoSQL database service runs on Rackspace, Softlayer, Joyent, Microsoft Azure, and Amazon cloud infrastructure so Rackspace’s stake could raise eyebrows although  Schoettle was quick to say that won’t make Rackspace the first among equals. “They see an advantage to partnering with us more closely than just reselling hardware to us. they’ll more tightly integrate our service with their infrastructure offerings,” he said.

This is a case of the coopetition fever that’s gripping cloud companies. I. Another example is Dell and Intel took a stake in Mirantis, self-proclaimed vendor agnostic OpenStack integrator.

While Rackspace now owns a piece of Cloudant, it also fields several database services. In February, for example, it bought a seat at the MongoDB table with its acquisition of ObjectRocket.

Last month, Xeround, another database service provider, pulled the plug in a move that causes some to question whether there’s enough business for umpteen different players. Schoettle said Xeround’s woes were company specific. “Xeround had two issues. First, MySQL is not ideal for next-gen mobile web apps and that’s where the lion’s share of opportunity is. Second, it’s tough to start in 2005 with $30 million and then change course a number of times.”

Cloudant has raised a total of about $16 million to date. Earlier investors including Avalon Ventures, In-Q-tel, and Samsung Venture Investment also participated in this round. How companies are adopting cloud services — including databases — will be on the agenda at next month’s Structure event in San Francisco.

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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 cloud technology providers are banking that these legacy players have tried to build their own cloud services and realized that it’s easier and more productive to base those services on a cloud expert’s technology. So they’re rolling out bundles and packages tailored for that constituency.

Case in point: On Wednesday Tier 3  announced the “Reseller Edition” of its Enterprise Cloud Services.  The Bellevue, Wash.-based company built its own management, controls and services atop VMware vSsphere and packaged all that up for third-party providers from VARs to  telcos.

And Thursday, Dell and OnApp announced joint offerings that are pre-tested to enable service providers, MSPs and telcos ro roll out cloud services as fast as possible.Last month, Rackspace pitched its own cloud infrastructure as a short cut for telcos, MSPS – the usual suspects — to build their own clouds.

Pivotal CEO Paul Maritz has repeatedly used wireless carriers as a key target market for the big data-oriented cloud platform his company is building.

So if carriers are gearing up to build clouds atop third-party IP, why is it happening now versus say, six or nine months ago? Tier 3 CEO Jared Wray thinks it’s because they see the market maturing. “Before recently it just wasn’t defined and there wasn’t a huge de facto open source initiative going on,” Wray said. Now, with OpenStack, in particular, that has happened.

“OpenStack has the fanfare and momentum, so the telcos see a defined, evolved ecosystem and it’s looking like they understand what the key components are,” Wray said. “The idea now is to use the colos and wires they already have and layer value added services atop all that.”

Wray attended last month’s OpenStack Summit to see for himself. As to whether Tier 3 will add OpenStack support he was noncommittal.

This is, of course, all very self-interested by these cloud providers to say. But there is evidence that hosting companies, data center providers and telcos really are getting pressure from their customers for the sorts of cloud services that come from Amazon Web Services and others, said Carl Brooks, cloud analyst at The 451 Group.

To be fair, not all the old line companies have given up on building their own technology for the cloud era. Thirty-year old MetaSwitch is open sourcing it’s new IMS core software to ease cloud development.

But whoever’s technology ends up in the mix, as raw connectivity and compute get ever more commoditized, the secret to profitability — and happy customers — is truly useful services and cloud seems the deployment model of choice.

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That the new release of Ceph, dubbed Cuttlefish, focuses on Red Hat is interesting since Red Hat bought Gluster for its scale-out storage capabilities in 2011 and declared Gluster to be “OpenStack Ready” last month.

The consensus at OpenStack Summit was that Ceph has advanced faster than the Swift storage module that came out of Rackspace and which handles object storage only. But the promised appeal of OpenStack is that users can swap in and out compliant plug-ins as needed for different functionality.

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According to the mail (and subsequent blog post):

“It is with genuine sadness that we inform you that Xeround’s service will be terminated in the course of the coming weeks, across all of our currently active data centers.”

Xeround’s free and paid service options run on Amazon Web Services; Rackspace, AppFog, Heroku and HP Cloud. The company could not be reached for comment but rivals are circling — ClearDB and Cloudant posted tweets to woo Xeround users.

This news has to be sobering given the number of cloud-based database services dotting the landscape. The company had raised more than $30 million in funding starting in 2005.  Xeround investors include Benchmark Capital, Giza Venture Capital, Ignition Partners and Trilogy Partnership.

This story was updated at 4:38 a.m. PST to add the closing date of the paid service, a link to the Xeround blog post, and information on Xeround funding and investors.

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The company said the service, which supports Amazon Web Services and Rackspace Cloud, already manages nearly 100,000 cloud resources and processes more than 125 million datapoints daily. Beta customers include Edmodo, Yellowhammer, Exablox, Atomwise and Webkite, according to a press release announcing the beta.

Co-founded by VMware veterans Belcher and Izzy Azeri, Stackdriver got $5 million in Series A funding from Bain Capital and others last August to pursue its plan put eyes on cloud workloads.

Early competitors include Datadog and Boundary but old line network management vendors like IBM Tivoli; BMC and CA Technologies are also in the mix. As more business workloads flow to cloud infrastructure, the need for reliable, real-time tools to monitor performance and flag trouble spots will play a critical role.

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While helping users host applications on five public clouds was one of Appfog’s main selling points, “it’s also become increasingly resource-intensive to maintain so many instances of our infrastructure,” AppFog CEO Lucas Carlson wrote in the email. He referred users to the AppFog Console, which will enable them to clone their application onto new target infrastructure.

Carlson could not be reached for comment Monday morning, but, Generally speaking, PaaS adoption by business users has been sketchy at best. Many developers love PaaS because it makes development and testing very easy, but once the applications are built, many companies prefer to run them in-house (i.e., not on a public cloud). And, more specifically, there have been rumors  that AppFog was seeking investment or even a potential buyout.

AppFog tried to end-run that argument by allowing deployment on private clouds as well, but it’s unclear how well that effort has gone. There has also been angst among companies, including AppFog, that built their PaaS offerings atop the Cloud Foundry framework. That was true when Cloud Foundry resided under VMware, and remains true since it was spun off to Pivotal, which is now selling its own Cloud Foundry PaaS that competes with third-party options.

I’ve reached out to Carlson for comment and will update this story when he responds.

Update: Carlson would not comment on rationale for dropping Rackspace but did say that AppFog has hundreds of paying customers and that his goal is to “build a big company in a big space.” AppFog still supports Amazon Web Services in three regions — North America, Europe and Asia as well as HP’s cloud.

This story was updated at 7:25 a.m. PST with Carlson’s comment.

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