Weekly Update

How AT&T can catch Amazon Web Services

AT&T has thrown its hat in the OpenStack ring, announcing this week that its “developer cloud” will run on the open-source community platform. In this one press release the telecom giant has already shared more about its cloud infrastructure operation than Amazon Web Services has done in over five years of operation (I’m exaggerating, but not much). If AT&T executes on building out its OpenStack cloud globally, openness and transparency will be a key measure of how it catches Amazon.

Location, location, location

When it comes to the locations of its data centers, AWS talks about its availability zones (e.g., U.S. East and U.S. West) and regions but is rarely willing to say exactly where its data centers are located. The company’s defense for doing so has been something along the lines of “security by obscurity.” Meanwhile, its record of communication with customers when its systems are compromised has been poor to pretty terrible.

And in many cases, this lack of transparency has been a turnoff for enterprises interested in moving to the cloud. A recent example is health care provider WoundVision’s decision to go with Bluelock’s cloud services over AWS’, citing “better security reporting and response.”

AT&T, on the other hand, has already said it has deployed OpenStack on dedicated infrastructure in its Dallas, San Diego and Secaucus, N.J., data centers — with plans to double that number in 2012. Disclosing the exact location of its data centers provides potential customers with assurances of where their data will be located, which is a sensitive issue for companies under regulations that dictate where and how they should store their data.

The importance of being transparent

AT&T’s decision to go with OpenStack as the IaaS software to power its service is also a commitment to a more open, transparent approach to the market. OpenStack has the support of more than 140 different technology companies, in theory giving cloud consumers a wide choice of compatible cloud services to switch between if they wish to. For example, HP and Dell are both building OpenStack-based cloud services. Because OpenStack is an open-source initiative, anyone can look into the code, see how it works and build upon it. That gives enormous power to cloud developers building on the AT&T platform. Amazon’s APIs, meanwhile, are proprietary, and the company has said it has no plans to open them up anytime soon.

Openness, of course, has it downsides, too. If the good guys can see into the code, so can the bad guys, which raises security questions.

But AT&T has done a pretty good job of securing its phone network, which brings up an interesting notion around whom companies will ultimately trust with their mission-critical cloud-based apps. Amazon doesn’t appear to have had much trouble attracting customers thus far. Wall Street firms estimate AWS revenue this year at anywhere from $500 million to $1 billion, but that’s because AWS is really the only game in town right now. How might this change when a giant telco like AT&T has a comparable offering?

It won’t be easy to catch AWS. The company has set a blindingly fast pace of innovation in terms of features, functionality, service levels, security and pricing. But if anyone can do it, a large telco like AT&T has a great shot.

More on AT&T’s cloud service will be posted at CloudArchitect.ATT.com soon, the company said.

Question of the week

Will AT&T catch AWS?