2011 has been an extraordinary year for cloud computing so far. Amazon Web Services (AWS) set the pace with an aggressive roll-out of products such as Elastic Beanstalk, CloudFormation, Amazon Cloud Player and Amazon Cloud Drive. Just when AWS seemed poised to consolidate its first mover advantage with respect to cloud computing market share, the landscape exploded with a veritable feast of product offerings, business partnerships and acquisitions. Every month another Fortune 500 IT or telecommunications company throws its hat into the cloud computing ring: Dell’s vStart, Dell’s recent partnership with SAP, IBM’s SmartCloud, Apple’s iCloud and HP’s BladeSystem Matrix mark just some of the big names and brands that have entered the cloud computing dohyo, or sumo circle. The cast of new actors has rendered the cloud computing space painfully difficult for analysts to quantify for the purpose of understanding relative market share and growth within the industry. But within this bewildering sea of change, three industry trends have emerged that deserve attention:
1. Outages across the industry signal demand outweighs supply
Demand for cloud computing services has begun to outstrip supply to the point where vendor processes for guaranteeing system uptime have become increasingly challenged. The Amazon Web Services outage of 2011 was the most glaring example of a lack of effective, scalable processes for one of the world’s premier IaaS vendors, but 2011 has witnessed notable outages specific to Sony PlayStation, Twitter, Gmail and Google’s Blogger as well. Expect more outages and service disruptions until the industry fathoms the time to develop processes for delivering on 99.99% SLAs as opposed to merely promising them.
2. Early Consolidation vs. the Proliferation of New Entrants to the Market
The past five months have witnessed Verizon’s acquisition of Terremark, Time Warner Cable’s acquisition of NaviSite, CenturyLink’s acquisition of Savvis and rife speculation that Rackspace lies next on the totem pole of potential buyouts. In tandem with the finalization of these acquistions, a slew of other companies such as Appistry, CA Technologies, Engine Yard, Flexiant, GigaSpaces, RightScale and ThinkGrid have emerged on the landscape and promise to collectively cobble together a non-trivial slice of the market while potentially transforming into significant niche players themselves. Expect new entrants on the scene, particularly in the open source space that will increasingly complicate the IaaS market share dominance of AWS, Eucalyptus, Rackspace, GoGrid and Joyent. Consolidations will continue but the market is unlikely to congeal into a few dominant players for quite some time.
3. The Rise of Open Source Cloud Computing Solutions
Rackspace, Dell and Equinux’s launch of a demonstration environment of OpenStack promises to change the industry by enticing customers to consider toying with its open source platform for free while paying for consultative support services associated with cloud design and management. Meanwhile, Canonical’s decision to change the cloud computing provider for its Ubuntu Enterprise Cloud (UEC) offering from Eucalyptus to OpenStack testifies to the strength of OpenStack and conversely, underscores Eucalyptus’s challenge in defining its value proposition as an Amazon EC2 compatible open source IaaS platform. RedHat’s open source PaaS product called OpenShift marks another leading contender in the open source ring by virtue of its deployment flexibility across the Java, Python, PHP and Ruby environments. Expect that open source IaaS and PaaS offerings will become increasingly robust and scalable. If open source solutions can demonstrate reliable, high quality portability across platforms, the market for less portable, private sector IaaS and PaaS solutions is likely to shrink dramatically. The fortunes of OpenStack, OpenShift and the recently formed Open Virtualization Alliance merit a close watch, in particular.