Federated Cloud Services Offer Response To Commodity Pricing
As cloud services rapidly become a commodity, smaller local service providers are feeling the heat as market leaders Amazon Web Services, Google, and Microsoft engage in a price war that is quickly boiling down to who can best compete on average hourly price for storage, computing, and other cloud offerings.
Hence, smaller and mid-tier service providers looking to survive in an increasingly cutthroat cloud market are touting a "federated" approach that would allow service providers to share capacity. This, proponents argue, would allow smaller competitors to scale their cloud infrastructure services while offering customized services that would differentiate them from the likes of AWS, Google Cloud Platform, and Microsoft Azure.
The push for federated services is gaining steam as these three cloud providers have moved in recent weeks to cut prices for services. While each has enough volume to absorb prices cuts, smaller competitors are starting to feel the pinch of commodity cloud services.
In response, companies like OnApp are hustling to keep pace with custom packages designed to speed the delivery of cloud services while attempting to stand out from the crowd. The approach is sure to produce some product flops, but may also spur cloud innovation as the customer base expands.
For example, OnApp, a so-called "infrastructure-as-a-service" (IaaS) provider, earlier this month rolled out a package of cloud services along with European partner Interxion. The package includes OnApp's cloud management platform along with its partner’s software, hardware, and hosting.
IaaS can also be thought of as "system infrastructure" delivered at "a relatively low level," said Gartner analyst David Mitchell Smith. Along with storage, computing and networking, other IaaS offerings include virtual machines and security.
Smith said there are cost advantages for IT organizations able to source external cloud infrastructure from IaaS suppliers. In turn, these advantages can help smaller vendors to differentiate their services by meeting the specific requirements of "business users and the developers who need to be able spin up servers, get access to storage resources…without a whole lot of up-front planning and capital expenses."
It's all about cost, Smith concluded
The OnApp package, dubbed "CloudPod," could be deployed at Interxion's 36 data centers in eleven European countries, the partners said.
The cloud market is crowded, the scramble for market share intense and cloud performance is uneven. Hence, companies like OnApp are pushing federated services as the quickest way to roll out reliable services.
London-based OnApp says its latest offering combines its IaaS platform with servers and other hardware from Dell, connectivity via Custom Connect, and colocation hosting from Interxion. Based in The Netherlands, Interxion bills itself as a provider of "cloud and carrier neutral colocation data center services."
While the federated approach to delivering cloud services seems to be taking hold in Europe, it remains clear whether smaller U.S. providers can leverage this model in the United States to compete with Amazon, Google, IBM (which so far hasn’t cut its prices), and Microsoft.
Interxion makes its case for cloud and carrier neutrality here. In short, the company argues that the emerging federated approach to cloud computing "allows enterprises to future-proof their IT infrastructure."
