Soon the battle may well be between generalist and specialist public clouds.
Many pundits will be offering safe, but obvious cloud market predictions. I wanted to offer a few that challenge current thinking in much of the market: 1) the private cloud bubble will finally burst, 2) without private cloud, hybrid cloud strategies will be brought into question, 3) public cloud will become the norm, but the big players won’t get it all their own way and finally 5) specialist public cloud services will emerge to challenge the global generalist. I may be a contrarian, but I believe that we will see all of this come true in 2017. Here’s why ….
It is incredible to see how widely cloud is now accepted as the future of IT, while at the same time there is so little agreement on what kind of cloud is best. Whereas once the big question was whether to move to the cloud, the question now appears to be how to move to the cloud and what type of cloud to move to – private, hybrid, community or public cloud?
I have long argued that the ultimate destination is public cloud and that private and hybrid are simply transitional technologies promoted largely by vendors that are scrambling to catch up – see my earlier musings here – “What exactly is hybrid cloud: A stepping stone, a sanctuary for regulated industries or a rampart for old tech vendors?”
It is refreshing to find that there are other leading experts (far smarter people than me) that are speaking out on this topic as well. UBS Managing Director Steven Milunovich, a notable luminary, recently commented that there is a general consensus that: “private cloud implementations generally are not working, and many companies that begin on a private cloud path end up going down a public cloud path.” In addition, one of the top cloud pundits, David Linthicum, also called this issue out, saying: “Wake up! The private cloud fantasy is over.” Bernard Golden also wrote that The long, slow death of private cloud continues, saying that “At some point the economic unviability of private clouds will become clear. Math will win out.” Furthermore, Subbu Allamaraju, VP Cloud at Expedia, recently wrote a blog entitled simply: “Don’t Build Private Clouds.”
So where did all the private cloud hype come from?
Some question the motivation of the traditional vendors that are pushing private and hybrid cloud. Indeed in their efforts to catch up on the cloud front, some of the traditional vendors attempted to co-opt OpenStack for their own ends. Mark Shuttleworth, Founder of Canonical, recently claimed that the motivation for many was to create a private cloud framework where they could sell their legacy goods. “That bubble is now bursting,” he claims. “We’ve seen a number of retractions from the OpenStack market for whom that strategy didn’t work – it was never going to work but there was a sort of bubble around OpenStack. The smart ones are now coming to the market with genuinely cloud native solutions.” [NB: Here at UKCloud we use Red Hat’s version of OpenStack to provide our clients with a Cloud Native Platform on our public cloud]
If private cloud is a fantasy, then so is hybrid cloud!
Personally I find that one of the most frequent indicators of a bubble is when people start telling you that the economics are different this time – just what we were told with the internet bubble and the debt/property bubble that followed it. The fundamental rules of economics rarely change. Indeed 451 Group recently made just this point. Their research sought to provide transparency across the range of complex cloud pricing models to take into consideration the major factors impacting total cost of ownership (TCO), including salaries and workload requirements. They found that OpenStack and commercial private clouds can compete with and even beat public cloud on cost – but only at scale.
Unfortunately, very few private clouds achieve adequate scale. Even companies of the size of BP are turning their backs on hybrid cloud. BP found that private cloud looked, and smelled, too much like on-premise and it has chosen to go all in on public cloud.
Where does this leave us? Are the global generalists going to get it all their own way? I think not.
Again economics offers the answer. As 451 outlined, economies of scale mean that you need to achieve scale in order to be cost competitive, but this only applies up until the point that scale is achieved. Beyond this tipping point additional scale provides diminishing returns. Eventually the increasing cost of complexity faced by all large organisations comes into play.
In any market, be it retail or automotive or whatever there tends to be a split between generalists that are larger in size and cater for general needs and specialists that are smaller and more focused on the specific aspects of the requirements of individual market segments. You see this with firms like Peugeot Citroen that caters for the general market and Jaguar Landrover that caters for more specialist needs, or with retail outlets like Sports Direct selling general sports goods versus specialists like Snow & Rock that focus on winter sports alone.
This article first appeared on Informa’s Cloud Enterprise Technology Series blog http://bit.ly/2i3CTq9