Today the news is, Verizon will be exiting the public cloud services market.  It has given its existing clients a month to move all their workloads and data out of the cloud for Verizon doesn’t guarantee its availability after April 12th.  The reasons for the exit are cited being the competitive landscape.  It is too hard to compete with AWS, Azure, and Google on price.

This leads me to ask a few questions:

  • Is the public cloud service providers differentiated solely on cost?  Are there other variables that could make price less of a decision criteria than it is now?
  • If Verizon couldn’t make it in this market, does it mean that the barrier to entry is so high that it is unlikely anyone will enter the rink other than who is already there?  Therefore, is this really a competitive space or has the ship sailed?
  • If we assume that the infrastructure providers in the public cloud space have been defined, where does the opportunity lie for everyone else?

I don’t believe there are simple answers to any of these questions.  I do believe that the ship hasn’t sailed yet for everyone though the only way to enter the race is to differentiate on something other than cost.

Who has the opportunity to compete with Google, AWS and Azure?  I think the ones who have the most potential to make it are actually the component manufacturers.  A lot of functionality in managing a public cloud are already available in projects such as OpenStack and CloudStack, no need to reinvent the wheel here.  What the component manufacturers have is the lowest cost of hardware and the supply chain.  Why is this important?  Well, there are really only 2 hard drive manufacturers left and there are only 2 real processor suppliers.

What does it mean for the rest of the industry?  There are many areas where solutions don’t yet exist even if the problems are acute or are not very mature or comprehensive.  Developers need to keep the assumption in mind that cloud doesn’t equate to public and that many organizations are opting to offer in-house private clouds and therefore solutions that leverage both public and private will have the broadest audience and therefore, the largest TAM.

There have recently been a number of technologies that make using public and private cloud easier.  These are tools that enable seamless machine mobility across hypervisors and clouds.  This simplifies use of cloud for disaster recovery, bursting, and other temporary or continuous use cases.  To mention one specifically, Ravello, recently bought by Oracle.  Ravello is able to move machines between clouds.  Buying Ravello gives Oracle a way to help customer migrate workloads out of other clouds and move workloads into Oracle cloud from on prem infrastructure.  We might see similar movements made by Azure, AWS, and Google.