A big question about cloud computing — one that surfaced early and persists today — is how the provider market will shape up. Will there be only a handful of superpowers (e.g, Amazon, Google and Microsoft) that possess the knowledge and money to operate at such a large scale constantly engaged in cloud one-upsmanship? Or, will there be dozens of providers in the mix, specializing in dozens of different infrastructural areas and vertical markets, all trying to create a tightknit cloud community? Finally, it seems, we’re getting close to an answer.
The trend suggests large IaaS providers like Amazon Web Services and Terremark (probably Rackspace and Savvis, too) could end up serving as arms dealers for cloud specialists and and letting them deal directly with end-users. As IT consumers begin demanding increased automation of PaaS, and as demand for SaaS applications spreads beyond its current scope, providers of these services will need infrastructure to house them, and large providers have plenty to sell. Large IaaS providers don’t need to buy up smaller cloud providers in order to profit from them, and it might not be worth the effort trying to run them out of business.
Engine Yard provides a prime example of how the market might play. The company already hosted its Ruby on Rails PaaS offering, AppCloud, on Amazon Web Services, but last week it partnered with Terremark to roll out its enterprise-grade xCloud offering. AWS provides relatively cheap, hassle-free infrastructure on which to host cloud services, but it lacks in areas like compliance, reliability and certain architectural components. Terremark’s hosted infrastructure, on the other hand, gives users — including cloud providers — access to elements like SAN storage, SAS 70 and PCI audits and ironclad SLAs. The benefits it gets from each provider are passed on to customers, along with prices to match.
Of course, Engine Yard isn’t the first specialty cloud provider to rely on the big boys for infrastructure. Fellow Ruby PaaS Heroku also runs on AWS, and numerous enterprise- and consumer-focused storage services — Nasuni, for example — already store user data with large public-cloud providers. I’ve been adamant recently that AWS, in particular, needs to offer its own PaaS to compete with growing cloud competition from IT goliaths like Google, Microsoft and, to a lesser degree, Salesforce.com, but that doesn’t necessarily have to be the case. If it can undermine those companies by arming their competitors, as well as every other flavor of cloud service, with infrastructure, maybe that’s profit enough.
When all is said and done, Google, Microsoft and Salesforce.com might be battling it out for PaaS (and SaaS) dollars against a whole slew of smaller providers operating within the infrastructural confines of AWS, Rackspace, Terremark and Savvis. For the latter group, commoditization of bare VMs might not even be a concern; there will be plenty of business to go around, and everyone can compete based on their own unique features. I’m not making a prediction, but this does seem like a possibility.
(On a related note: What this could mean for provider lock-in is a question for another day, but dozens of services sharing the same backend resources and networks does pose some interesting possibilities.)