Virtualization and Cloud executives share their predictions for 2013. Read them in this VMblog.com series exclusive.
Contributed article by Sharon Wagner, CEO and Co-Founder of Cloudyn
unClouded Predictions for 2013
Danish physicist, Niels Bohr
reportedly quipped that "prediction is very difficult, especially about the
future." With that being said, I'd like to share some of my personal thoughts
on five important cloud computing trends and developments we can expect to see
in 2013 and beyond.
1. The Cloud Condensed
If the past couple years can be summed up as an
explosion in cloud-based platforms and service offerings catering to a steady
increase in cloud deployments, 2013 will be a year of maturity and
Currently there are dozens
of vendors - from giant AWS to specialized CloudSigma or ProfitBricks - all
offering up various flavors of public, private and hybrid IaaS. Third-party
vendors such as Scalr, New Relic and Cloudyn (where I just so happen to be
employed) respectively fill in the service gaps with deployment automation,
performance monitoring, utilization analysis and cost optimization. System
integrators with virtualization expertise design and build data-centers (on and
off-site) for custom cloud deployments.
But like the B2B and B2C
internet marketplaces that quickly ballooned and then burst at the turn of this
century, there will be some serious cloud contractions with many players being
acquired or going out of business. Without a question, the bigger players like
Amazon will buy out competitors and complementary service providers, or just
push the smaller players out of the market with their economies of scale.
2. Localized Cloud
This past October I had the pleasure of being on
several panels at both the GigaOM Structure conference in Amsterdam and The
Next Web's Web Summit in Dublin. Talking with an array of European companies
and executives made it clear to me that people still prefer dealing with local
service providers. Whether this is due to language, culture or even if it
makes sense from a financial perspective is immaterial. From what I have seen
and heard, there is definitely a market for local IaaS.
Telefónica seems to thinks so too. Their recent
announcement about their Instant Servers, an infrastructure-as-a-service,
positions them as direct competitors with Amazon and other large cloud vendors.
Based out of London and Madrid, the telecom giant should be able to easily
leverage its existing customer relationships to power rapid growth.
Telecoms in general are
better positioned than AWS to compete for enterprise business. With strong,
established relationships and trust already in place, telecoms will leverage
this advantage to win customers to their cloud offerings.
3. Replicating the MVNO
Model in the Cloud to Penetrate Niche Markets
Continuing on to a
related vein of Localized Cloud Services, there is also a challenge that all
cloud vendors are experiencing - trying to get into niche markets. These niche
markets could be a geographical area as mentioned above, or it could be a
market segment such as gaming, content or even by customer size. A white-labeled
solution with special prices and terms will likely be introduced soon by ‘cloud
sub-contractors' to cater to a focused niche market approach that meet
geographical or market specific requirements. If there are virtual call centers
and virtual mobile operators, why not do the same in the cloud?
4. Cloud Computing
Tailored Just for You
Ever try squeezing a square peg into a round hole? It
doesn't really work so well. The same is true in cloud computing. Forcing
customers to adapt their computing needs to standard offerings often leaves
them with either too little or too much cloud resources. Although Amazon's
no-frills, self-serve offering appeals to many users, there is growing demand
for custom-sized and optimized computing packages. Companies like CloudSigma
allow you to build your own package with any "unbundled" combination of
resources, so you can purchase CPU, RAM, Storage and bandwidth all
On the service side of the
cloud, the customer experience will definitely become a differentiator.
Companies like Rackspace understand this with their "fanatical support" and
usage of the Net Promoter System for maintaining high-levels of customer
5. The Expedia of Cloud
When the cloud got started, the ease, agility and
scalability were such a big draw that many companies jumped in feet first
without deep analysis of costs and benefits. However, as the market grew up,
real-world business concerns about cost and ROI began to surface.
Market leader Amazon quickly reacted to the cost
concerns and began offering more cost-effective options such as their Reserved
Instance pricing plans. Here at Cloudyn, we actually have seen a huge upswing
of AWS customers moving towards Reserved Instance pricing from just 29% of
customers using them in January to over 50% today.
As mentioned before, cloud
users are looking for better service, and best-fit deployment in addition to
optimal pricing and utilization. This has created an opportunity for a "cloud
exchange" where compute units and other cloud resources can be bought and sold
freely. Cloud consumers will be able to shop around for the best deal, akin to
how travelers use sites like Expedia to build their perfect vacation package (I
first made this analogy during the
‘Trading Computing Power as a Utility' panel at the GigaOM Structure conference
this past October). They also will be able to offload unneeded resources,
helping to keep vendor pricing competitive with real market demand.
Challenges to Developing
a True Cloud Marketplace/Exchange
There are many hurdles to
make this a reality. While Amazon's Reserved Instance market is an early
attempt at this, it will likely take a few more years before materializing as a
truly liquid market.
Some of the issues that need
to be addressed include vendor standardization of cloud resources and compute
units. This is necessary for buyers to accurately compare cloud packages from
different providers with an ‘apples to apples' clarity.
To be honest, I don't see
this happening from the vendor side (as they have an interest in keeping things
opaque), but I do believe that we will soon see 3rd-party technology that
enable cross-vendor evaluations and comparisons.
Another area that will affect market liquidity is the fact that data has gravity.
The larger the volume, the more difficult it becomes to move data to a new
location. Businesses managing more than 100 gigabytes of data will need to keep
their data local (which might play nicely into the growing private and hybrid
cloud market). Although bandwidth technology is growing, it will never match
the rate at which data is being collected and created - creating a paralysis in
moving data around to different vendors. However, there might be solutions
where you can "bring the compute to the data." If this works, than these
companies managing petabytes of data will be able to significantly impact the
liquidity of a cloud compute exchange.
Incidentally, this issue of
data gravity is probably the answer to why many companies, despite repeated AWS
outages, are still keeping their operations in Amazon's problematic US-East
Towards a More Efficient
The main value propositions
of the cloud have always included agility, scalability and affordability. But
currently, the cloud is not nearly as efficient as it could be with customers
getting stuck with resources they don't need and bills they don't expect.
Trying to optimize one's cloud consumption can also be
very difficult as cloud vendors don't provide adequate tools for visualizing and
understand cloud cost and usage.
All of the trends I foresee
will ultimately lead to a more efficient and transparent cloud where the
consumer benefits from getting exactly what they need, when they need it, and
at competitive market prices.
Thanks for reading along
this far, and of course, I'd love to hear what you think about my predictions
and if you have any of your own. Please share with all of us in the comments
About the Author
responsible for the strategic company direction and the overall day-to-day
execution for Cloudyn (www.cloudyn.com). Prior to joining Cloudyn, Sharon
was Sr. Principal Consultant for CA Technologies (NASDAQ: CA) Cloud Connected
Enterprise business unit where he enabled sales activities for CA SLM solutions
in NA, APAC and LATAM. Prior to CA, Sharon was Director of Product Management
and Business Development with Oblicore (Acquired by CA Technologies) where he
was responsible for the company strategic roadmap and played major role in
Oblicore's acquisition by CA. Sharon holds B.Sc in Mathematics and computer