The truth will out they say, and that includes truth about the cloud. According to a report in Business Insider, both Google and Amazon are now looking at their own premises cloud strategies, an acknowledgement that Microsoft and IBM may be onto something in just how far public cloud services can go. And, perhaps most important, how they might get there.
There’s a perception, driven no doubt by publicity, that public cloud will eat all of IT. That’s hardly realistic in my view. Most of you know that I’ve been modeling public cloud adoption for years, and through that time my numbers have consistently shown that only about 24% of current applications can be transitioned to public cloud, and that even postulating adoption of cloud-specific application architectures the public cloud share struggles to hit 50%. That means that virtually every enterprise ends up with a hybrid cloud because much of their stuff stays in the data center.
If the data center is an active partner in the future cloud, then it follows that data center IT giants could have, or could develop, a commanding cloud position by exploiting that truth. In fact, since mission-critical or core applications are the ones most likely to be hybridized (and obviously are the most important), these IT giants could end up framing the way the cloud is used and the way that public cloud services have to be presented.
Microsoft’s Azure services have played on this truth from the first. Windows Server and Azure share a programming model, and since Azure is PaaS it’s easy to migrate applications written to that model to an Azure cloud, and easier to integrate multi-component and microservice applications using Microsoft’s model. All of this means that Microsoft could gain public cloud traction because it has a foot in the data center too.
Azure was in many respects a bold decision by Microsoft, because Microsoft has a product line (Windows Server and associated applications) that could be displaced by the cloud. However, Microsoft is a PaaS player, which means that it gets incremental revenue from the cloud licensing of software. Since Microsoft is in virtually every enterprise, even in Windows Server form not to mention desktop Windows, it’s been gradually building a following among enterprises, even in line departments.
IBM also seems to be playing a hybrid card, from a slightly different angle. Their presumption appears to be that hybrid mission-critical stuff will indeed drive the cloud, but that this stuff will drive the cloud from the data center out. IBM’s cloud strategy is carefully positioned to be presentable by IBM account teams to CIO-level buyers. To prevent themselves from being left out of the phantom-IT-line-department deals, they split their public cloud (SoftLayer) off and have tended to focus on channel partners to move it.
The IBM approach seems to shift innovation focus to traditional IT and to partners, and as a result perhaps IBM’s SoftLayer web service repertoire falls short of the offerings of both Amazon and Microsoft. Where the latter two companies have a rich set of both horizontal and vertical services aimed at developers of cloud-specific applications, IBM seems to prefer taking data center middleware elements into the cloud to preserve their ability to drive things from the IT professional side.
The challenge that both Microsoft and IBM pose for Amazon and Google is that very relationship between IT professionalism and cloud deployment. If “Cloud One-Point-Zero” is the simple IaaS model, then it’s never going to move the ball much and probably never really alter the IT landscape either, media hype notwithstanding. Thus, the question is how “Cloud Two-Point-Zero” comes about, and both IBM and Microsoft are doing a lot to empower traditional data center people in driving the cloud bus within the enterprise. That would leave both Amazon and Google on the outside, since neither company has a position in the data center.
The question is how to counter this, and I wonder if trying to get into the data center platform business is the right answer, for three reasons.
The first reason is that they risk exacerbating their risk rather than controlling it. The threat to Amazon and Google is less that someone else will drive a data-center-centric vision of cloud evolution, but that such a vision will develop at all. What both Amazon and Google need is for computing to become more populist, tactical, framed on hosted offerings rather than on self-development. That’s not what data center and development people would be predisposed to do, no matter who’s selling cloud to them.
The second reason is that to the extent that either Microsoft or IBM would pose a specific threat, open-source premises computing is a better response, and one that’s both accepted by buyers and supported by several highly credible sellers. Microsoft and IBM already struggle to position against open-source alternatives, and it’s very possible that an organized drive by Amazon or Google to penetrate the data center would help the very IT giants they fear most.
The final reason is that Amazon and Google would fail in an attempt to field a real data center platform. You need massive account presence, field marketing support, technical support, positioning and marketing—stuff neither company has in place for data center sales situations. Further, deciding to compete in the data center would likely result in Microsoft and IBM using their account influence against Amazon and Google cloud solutions.
So what should Amazon and Google do? The answer is simple; create more and better cloud web services that can be used in data center and hybrid applications. And target IBM specifically, not Microsoft.
Distributed, cloud-hosted, application components are the best way to advance cloud adoption and shift dollars from data center to cloud. The further this trend goes, the more spending will be impacted and so cloud providers would benefit more. Obviously, the converse is true and if IBM and/or Microsoft got more enterprises to drive their cloud plans in a data-center-centric way, then probably more spending would stay in the data center.
IBM is the greater threat in this regard because IBM has a very specific need to protect its remaining enterprise data center business. IBM has suffered a revenue decline for almost 20 quarters, and it seems very unlikely that the growth in its cloud revenues will cover future declines in data center spending any better than it has in the past—which is not well at all. Also, IBM is struggling with an effective cloud strategy and positioning, far more so than Microsoft who seems on track. Finally, IBM doesn’t have the broad horizontal and vertical web services in its cloud that Amazon, Google, and even Microsoft have. Any campaign to promote growth of this type of service would thus hurt IBM.
We are not in a battle to see if the cloud will replace private IT; it won’t. We are definitely in a battle for how the applications of the future will be developed, and that battle could alter the way that public cloud, private cloud, and traditional application models divide up the IT budgets. In fact, it’s that issue that will be the determinant, and I think we’re seeing signs that the big players now realize that basic truth. Expect a lot of development-driven cloud changes in the next couple years.