The Cloud War: Who’s winning and who’s bleeding out…

cloud-computing-handThere is no doubt that Amazon is the King of Cloud. The Amazon War Machine continues to power through the competition using a sinking price as its most fearsome weapon while other early Cloud providers start to languish and some of the old global war horses struggle to turn their ships. Internationally small niche players are starting to rise on the back of these behemoths and workloads are shifting across international borders a year after Snowden blew the whistle on the greatest scam in history.

Over the last year Amazon has retained it’s fighting position and taken further ground in the market. Looking at the Gartner Magic Quadrant we can see that the Amazon War Machine has continued it’s rise to the right. The War Machine is entering an almost cult like era and the service continues to dominate with new additions such as Desktop as a Service (DaaS). However, the War Machine is difficult to deal with for large government and private companies that don’t have skilled Amazon Architects and Engineers on their staff. That makes the jump to Amazon for those lacking that skill set nearly impossible. The War Machine needs to get the makeup out and start to think about wrapper services that allow access to that back end Cloud Nirvana.

Following up the quadrant and heading to the right, now within a decent stone’s throw of Amazon is Microsoft. It’s taken them a long time to turn the ship, years, but they are now reaping the rewards and gaining on the War Machine. They are making great ground in the individual and small to medium business space given that their service is a lot more polished at the front end and easier to access than Amazon, or others. This has always been Microsoft’s market, as desperate as they have always been to be an enterprise player, the small to medium business is where they live. Their entire model is now Cloud and they have a clear run on those coming after.

Making almost as much ground as Microsoft is IBM. Moving from a niche player to a visionary, Gartner tells us that they are where Microsoft was this time last year more or less. The IBM marketing engine has been in overdrive in recent days and is taking out some large Cloud contracts around the globe. Still, the business model behind the business end of their Cloud has not changed a lot. The can be seen as difficult to access and utilise. If they want to keep in the Cloud cage fight then they are going to need to change that business model to a friendly, helpful face, drop the blue suit, and throw away the tie.

Rackspace has analysts confused. Gartner pegs them as having taken an eight count blow in the last year, but still managing to stay on their feet. From a media perspective Rackspace is now competing in the full noise of several Cloud behemoths who are all marketing the hell out of their product sets as loudly as possible. Where analysts say Rackspace is vulnerable is cash. While other players now in the cage fight have revenue streams from secondary lines of business they can use to pour into a price-to-zero death dive, Rackspace may not. In other words, they may just be priced out of the market. Time will tell.

Dimension Data, according to Gartner, takes a massive backwards body-slam into the niche player zone, I see it a bit differently. Dimension Data is creating beach heads internationally, with a lot of time and effort being poured into the establishment of in-country premises where other global providers may choose to sit in the high revenue countries. Dimension Data also has a killer Ace up it’s sleeve. They started life as a telecommunications and networking company. In fact, their owner is Nippon Telegraph and Telephone, a $100 billion USD monster that has stretched it’s tentacles across the globe. So while Dimension Data may have taken a round out to regroup and replan, they can’t be counted out of the war any time soon.

Finally, in the big player stakes, HP has taken a big step back over the last year and shows no signs of recovering. This might be the first global technology company that is driven back into the stone age through the Cloud wars. They are currently hyping their private cloud but that back end business model doesn’t look good. Slashing staff and having a CEO that could have teleported in from the 1950’s is going to hurt. Worse, the EDS tiger that they tried to swallow whole a few years back is still clawing at them from the inside.

New Zealand – A case study in Hybrid Cloud

New Zealand has several home grown Cloud services that have all evolved over the past year. What is interesting is that in the medium to enterprise area, customers are putting price down the list in preference of services being wrapped around the Cloud itself. In other words, the focus is changing from buying the cheapest piece of storage to partnering with providers to get a specific business outcome (which may include price).

The two behemoths with New Zealand are Datacom, a privately owned company that has arguably the largest ICT service turnover in the country. The other is Revera, a Cloud provider for many years that was bought by Telecom in the past twelve months.

IBM has a Cloud presence in the country and the other multi-nationals are attempting to sell offshore services to a market that is parochial in it’s attitude to out of country providers.

A number of niche players are appearing in the Broker area, Fronde as an example, as well as other specific Cloud services aimed at various industry areas. For example, legal.

Both Datacom and Revera have made a significant amount of ground in the lucrative government area, these are via the centralised government procurement contracts, which while cheaper than the local Cloud market in general, are inflexible in comparison and the service has become known as “Utility Computing” as opposed to Cloud Computing. The private offering of both companies is far more like Cloud and offers a number of services around the actual nuts and bolts of the platforms. There has been good take up by private companies by both providers.

On the horizon it is likely that Revera will expand its offering set significantly under Telecom. Again, being part of New Zealand’s largest telecommunications provider gives a distinct advantage and it is rumoured there is a significant war chest available for investment. As long as both organisations can withstand the growing pains you can expect to see a series of new services appearing.

Datacom has the lion’s share of government outsourced contracts. This will ensure that they continue to see migration from agencies in particular, into their Cloud services. They have always been a nuts and bolts kind of company and we see them starting to add some interesting services to the platform. Databox for example, an onshore secure Dropbox and collaboration tool.

IBM, despite being part of the government contract, and having recently committed to more local investment, still doesn’t appear to be making a dent in the other two providers.

Local companies and agencies are buying a mixture of Cloud services, showing a certain maturity, where they may have up to a dozen different providers across their ICT Services from IaaS through SaaS delivered from multiple providers and multiple countries. This is driving a revolution in the Service Management side of ICT.

The shark in the Tasman has to be Dimension Data that will be landing their Cloud service in New Zealand later this year. That is going to be disruptive for a range of reasons. First, Dimension Data have very strong partnerships already with large companies and agencies, and second, the service is more mature than some other local offerings.





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