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With HP now in the game, the enterprise cloud fray gets more interesting

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As expected, Hewlett-Packard(S hpq) will announce general availability of its OpenStack compute cloud this week. And with that, the whole enterprise cloud picture gets more interesting.

It’s easy to discount HP given its long-running troubles, but the IT giant still has lots of customers — the types of customers that make major IT decisions at the CIO level. Amazon(s amzn) Web Services, on the other hand, has been a lower-level developer sale, although that’s starting to change. C-level execs at big companies may not be comfortable using AWS, which after all, is a sideline business offered by an online reseller. (Sorry, AWS, but you won’t even tell us what your revenue is.)

Enterprises buy a different cloud story

“Enterprises are looking for more traditional, full-service relationship and aren’t sure about Google and Amazon,” said Dana Gardner, principal analyst at Interarbor Solutions. “HP could capitalize on that.”

The enterprise IT vendors — Dell(s dell), HP, IBM(s ibm), Oracle(s orcl), et al are playing catchup to Amazon(s amzn) in public cloud deployments. They want to move their existing hardware, software and services customers to their own clouds. And AWS is working hard to siphon those customers away with higher level enterprise-class services. That’s what I mean about more interesting.

HP claims SLA advantage in cloud

HP COO Bill Veghte (pictured) will unveil HP Cloud Compute at the HP Discover event on Wednesday. Prices start at $0.04 per hour with a service level agreement (SLA) of at least 99.95 percent — or fewer than 30 minutes downtime per month. AWS offers an SLA of 99.95 percent per year but requires very specific configurations to meet its bar for reimbursement. Gartner analyst Lydia Leong has said that Amazon’s SLAs are “narrowly defined” and don’t cover Elastic Block Storage (EBS), which most customers use.

That’s a difference HP hopes will attract customers. “HP customers want an HP cloud,” HP cloud chief Zorawar Biri Singh told me recently.

IBM says the same thing. As does Rackspace — which touts “fanatical support” as its drawing card. On the other side of the aisle, AWS is recruiting enterprise sales and support engineers from big IT companies to build sales coverage and customer rapport. Last week at AWS: Reinvent it named 15  premier consulting partners — 2nd Watch, 8K Miles, Aquilent, Booz Allen Hamilton, Capgemini, CSS, CITYTECH, Cognizant, Datapipe, Dedalus, MarketShare, Razorfish, Smartronix, Full 360, and Wipro — to help with enterprise accounts. No one is standing still in this important battle for cloud credibility and customers.

Here’s the thing: AWS is by far the leader in cloud now, but it’s also true that we are very early in the game when it comes to enterprise cloud deployments. Anything can happen.

13 Responses to “With HP now in the game, the enterprise cloud fray gets more interesting”

  1. I agree with Eddie, love the AWS barb!

    The real questions are whether HP can concentrate its RND resources to building a credible Cloud platform and convert its sales teams and partners over to selling Cloud into its customer base.

  2. Excellent article Barb. One of the best written sentences to come out of Gigaom in years, from this article, is this one:

    > Sorry, AWS, but you won’t even tell us what your revenue is.

    Its good to keep Bezos in check.

  3. I took a look at HP’s website and it looks nice. They don’t have all of the features of AWS, but the foundation is there. I like that they are using OpenStack. I hope more public clouds come out using it, so that it becomes somewhat of a standard. I could easily see OpenStack becoming the “linux of public cloud.”

    One thing I found interesting is that there PaaS offering is using ActiveState’s Stackato. I wonder if HP will end up buying ActiveState.

  4. The bottom line is if companies are willing to give their data to another company to manage. Amazon, MS, and Google have not sold this well due to their limited automation options for security, encryption, and data integrity assurances.

    Until the US Government/Military commits to giving their data to another business to manage, I do not see major corporations committing. Once they do though, the flood gates will open.

    AWS, MS, and Google should shift their focus to the gov’t and then the enterprise.

  5. When I have tried to find out what the revenue is on AWS I have generally seen it estimated as $1.5 billion for 2012.

    That is nothing. Seriously, in terms of IT markets, $1.5 billion is microscopic.

    So, I question how much of a lead AWS really has. They do have a lot of functionality that the other players don’t have yet, but I don’t see why those other players can’t catch up quickly.

    At the same time AWS is lacking in some big ways. They don’t have the hardware, software, and services capabilities that you find with IBM and HP. They don’t have the type of huge global channel partners that these two companies have, and they don’t have the long term relationships with customers.

    As you said, AWS is a small side business for AMZN. I think that is a very accurate statement.

    Perhaps most worrisome for AMZN is that they have microscopic margins in their main business. Their margins are less than 1%. How is AMZN going to have the cash needed to take IBM, and HP head on, while at the same time fighting it out with APPL, and GOOG in the mobile and digitial media retail space?

    It seems to me that AMZN’s low prices are a boon to customers but a problem for AMZN.

    • i agree on the margin of their main business. And given that more states will require sales tax on amazon purchsaes, Amazon will be under pressure there as well. We’re entering an interseting era. The HP-specific question is whether HP can get out of HP’s way. It can’t compete w/ Amazon, IBM, Google, Rackspace AND its own self.

    • Simon Abrahams

      Maybe not such a differentiator – Rackspace Cloud Files (the creators of OpenStack object storage aka swift) has been providing Akamai CDN on all public content since Spring 2011…