Inof this two-part series, I explained why I thought Amazon Web Services is the leader in public infrastructure as a service (IaaS), and why no other company really seems poised to catch it at this point. There is no doubt in my mind that Amazon's developer-centric approach to cloud sets it far apart--and ahead of--the hosting companies trying to compete in that market.
That said, Amazon's market position is not invulnerable, and there are several ways that it can be beaten--or at least challenged. What it will take is a different approach to the public-cloud market equally as disruptive as Amazon's. In this post, I'd like to go over a few that I've thought about over the last three years. I'll present them in the order of least to most likely to succeed.
Complete head-to-head with Amazon
The most obvious way to take market share from Amazon would be to address the developer market as well or better than it does. There are so many elements to this that the barrier to entery would be very, very high, but in theory it could be done.
Here's what you'd have to do:
- Build/buy/already own several large data centers worldwide.
- Hire/acquire a top-notch team of software developers and systems designers who can quickly build extremely large-scale computing services.
- Figure out how to beat Amazon's price or feature set.
- Get the e-commerce part of cloud service sales right.
- Attract an ecosystem of third-party management tools, development tools, and services.
In my humble opinion, none of the hosting companies has the capital, skills, and patience to do this on their own. The telecommunications companies might be able to pull it off, but they'd have to acquire and nurture the skills they don't already have. (Interestingly, Verizon told me that itswas about about acquiring software skills.)
Another way this could be done, however, is if a heavily capitalized investor (say, a Warren Buffett) were to determine that building such a business (likely on top of an existing business) was worth the long-term return on a significant upfront investment. They'd have to be ruthless in pursuing all of the aspects I listed above, however, or they would fail.
Change the rules of the game
Another way to go about competing with Amazon today is to introduce new capabilities which disrupt Amazon's "services as a platform" approach. There are two companies that I think exemplify this approach today, and both are taking Amazon with enhanced platform as a service (PaaS) models:
At VMworld this week, virtualization leader VMware spent a lot of time talking about its Cloud Foundry platform. Like other platform as a service (PaaS) software, Cloud Foundry allows developers to deploy scalable applications without having to directly manage the virtual machines, operating systems, or middleware in which the code runs. Just deploy your code, and let Cloud Foundry manage the cloud infrastructure needed to scale the applications appropriately.
VMware's plans for Cloud Foundry don't stop at attracting a developer community to VMware's revenue stream; VMware is one of many companies that understands that cloud enables a new disruption in software development and deployment. As I noted in part 1, developing PaaS without restrictions is challenging, but VMware believes building an open ecosystem (in terms of supported languages, services and clouds) enables flexibility for developers.
Another company that has been looking to change the game for some time is Microsoft. Azure is developer-centric, and it took a "PaaS-first" approach to building cloud applications. In Microsoft's case, however, I think the only ecosystem it has attracted so far is the existing .NET ecosystem--probably in part due to the reliance of Azure on .NET architectures and frameworks.
That may change, however, as Microsoft supports an increasing number of languages, supports an IaaS service within Azure, and builds an ecosystem of third-party services that run on or with the Azure service. It has a huge uphill climb in front of it, however, if its wishes to attract those committed to open-source software practices. Amazon doesn't have that problem.
Join an open cloud ecosystem
One of the metaphors I like to lovingly use with respect to Amazon is the following: AWS is the AOL of cloud computing. To be clear, today they are AOL circa 1985--they have most of the customers and the most interesting "content"--and they have a huge profitable road ahead of them for some time.
However, the nature of cloud services lends itself to the appearance of an open, multi-vendor ecosystem over time, and when that ecosystem reaches maturity, Amazon will have a decision to make. Does it dig a wider moat, or does it take action to join and nurture the open ecosystem. AOL failed to embrace the Internet, attempting instead to use its content as a carrot to attract and keep membership, a strategy which eventually knocked it off the leadership perch.
This is where open-source cloud infrastructure and cloud service projects become extremely important. Projects such as OpenStack and Red Hat's Aeolus promise to give some baseline capabilities to the entire cloud marketplace that will serve as the launching point for new classes of services and technologies.
This, in turn, will attract both entrepreneurs, as they can create services that the users of those technologies can easily acquire and deploy, and service providers, as there is a long tail of service offerings for the platform that they can choose from to differentiate themselves from their competition--without requiring proprietary systems to operate the service.
My bet is on an open ecosystem to even the playing field with Amazon in the medium to long term. I also believe that Amazon might remain the market share leader if it were to join such an ecosystem voluntarily. However, the economics of choice are just too powerful for a single vendor to counter an open ecosystem unless it controls the method of distribution of its product or service. Much like AOL, Amazon doesn't control the Internet, so that doesn't apply here.
Not everyone agrees, by the way, that OpenStack is a sure thing for generating an ecosystem in the face of AWS. Adrian Cockcroft, who is in charge of Netflix's cloud architecture, is unimpressed with what he's heard about OpenStack so far. He dug a bit deeper into why he doesn't see it as an alternative to AWS at this time. The short, short version: OpenStack's community may be getting too large, with too much focus on building the project itself, and not enough attention on building new services on top of it.
Regardless, time has a way of chiseling away at the dominance of any one vendor in any given market. Whether an individual entrepreneur or an entire market figures out how to capture market share remains to be seen, but it will happen. The question is, is any cloud ready to begin that process today?