Contributed article by the CohesiveFT team

2014 Predictions: Amazon will lead, but the gap is closing

Amazon Web Services (AWS), the public cloud Amazon has built up since 2006 has continued to dominate the market.  Both technology features available and user base lead the competition.  Gartner analyst Doug Toombs writes that AWS have over "five times the compute capacity in use than the combined total of the next 14 largest providers (based on Gartner's estimated market share statistics)."  The cloud provider's wildly popular re:Invent conference, only started in 2012, saw attendance double in 2013.

But what is the future of AWS? Will they be able to hold on to the lead for another year or six? CohesiveFT team members weigh in on the aspects on AWS that are keeping the cloud provider up and to the right, as well as some other providers who might show AWS some competition in 2014.

AWS will lead with innovation, but GCE and HP will follow.

Amazon will continue to innovate ahead of the rest of the market.  Clearly the succession of product launches announced at re:Invent at the end of 2013 show that Amazon isn't standing still and waiting for the field to catch up.

CTO Chris Swan writes that newer clouds like Google's Compute Engine (GCE) will use architecture advantages to get an edge on AWS. Fresher architectures allow lessons to be learned from the (few) mistakes that Amazon has made. GCE's live migration is a good example - it doesn't just benefit from a more flexible hypervisor, but also takes advantage of networks that can span availability zones and regions.

Ryan Koop, Director of Marketing and Products agrees and adds that HP is also positioned to become a credible AWS challenger.  HP is focusing on both public and private cloud through its use of OpenStack.  Openstack has allowed them to get a head start on the public cloud offering (HPCS 13.5 based on Grizzly offers 80% of AWS VPC functionality today), gain insights and efficiencies on the public side they can take to the private, and use open standards and common infrastructure to offer hybrid cloud capabilities where other providers have failed. HP has also signaled through announcements and actions that it will build, support, and foster it's cloud partner ecosystem rather than build supplementary services themselves (see Akamai for CDN, Stacko for PaaS, Gigaspaces for SaaS, etc.).  This recipe suggests success in 2014 by allowing HP to control the customer relationship/experience, offer a high margin service and focus on its core competencies.

Rogue IT will be reigned back in.

The Abiquo team (one of CohesiveFT's partners) predicts an ebb in user-provisioned Amazon accounts and AWS independent of the IT department. Rogue teams "had a detrimental effect on the IT organisation, not to mention the unforeseen costs involved," writes Ian Finlay, VP of Products at Abiquo. "As a result we have seen a demand from the IT department to gain back control through the adoption of management platforms to gain visibility around what resources to acquire and where. IT departments also started to direct their attention to spending in the cloud, and therefore acquiring systems which include robust reporting functions." Look for more top-down decision on cloud provider spending in 2014.

Similarly, Ryan Koop thinks the C-level will steer purchasing decisions toward the familiar brands. HP, Microsoft, and now even Google, are incredibly familiar and trusted brands in the enterprise world. Some enterprises will continue to struggle with buying IaaS from an online bookseller regardless of what their hip dev/ops team advises.

And lastly, for pricing factors in the cloud provider market, CohesiveFT team members see different outcomes.

CTO Chris Swan thinks a full on cloud price war will not break out. He writes "elasticity of supply remains way too low, and even the largest providers aren't placed to cope with the demand that lower pricing would bring. AWS will continue to haircut prices (at a lower rate than their cost of supply), and their competitors will follow. Google have started something here with its 10% cut against comparable Amazon offerings. That might be enough to sway projects that are starting from scratch, but a larger delta will be needed to make migration between services a serious consideration (and lead to counterattack price cuts)".

On the other side, COO Dwight Koop thinks AWS will not increase prices to match the competition. Yes its true, AWS prices are just too good to be true.  In spite of the massive marketing campaign by the incumbents in the technology sector justifying their higher prices, Amazon will be too stubborn to increase its prices to match others'.  This, of course, will force many enterprise shops to stick with their over priced incumbent providers, because a move to EC2 would require answering the question, "why didn't go to IaaS and AWS 5 years ago."  Oddly enough, it is easier to hide behind higher prices.

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CohesiveFT enables enterprises to run business operations in the cloud. Our solutions help migrate, transform and extend both customer facing systems and internal operational platforms. CohesiveFT lets enterprises build on existing IT resources, save money on a single, upfront migration and focus on an application-centric view of integration, governance and security.

Our solutions provide cloud infrastructure products and services allowing enterprises to safely migrate through a logical set of steps. CohesiveFT products allow enterprises to use existing resources, software components and operating systems to target public, private, and hybrid clouds.