Cloud Computing Keiretsu: VMWare + Elastra, Amazon + RightScale + EngineYard
Posted by Bob Warfield on December 31, 2008
As the competitive landscape for the Cloud Computing World begins to take shape, forming Keiretsus is one of the most important things for the players to be doing at this time. Most of them do not have enough technology they can call their own to create a total solution for their brand. Even mighty Amazon, which comes closest, benefits from software like RightScale’s asset management suite (see my interview of RightScale’s CEO, Michael Crandell).
As such, there will be a rush to round out complete suites in these early days through partnerships. This is a normal business pattern and its good news for both the partners and customers. It will lead to more complete solutions, better integration between the components, greater standardization, and it signals the legitimization of the market and the beginnings of a shift from early adopters to the mainstream. In short, it is a sign of great health in momentum for Cloud Computing.
The latest news of the impending Keiretsu was the joint announcement that Elastra will partner with VMWare. I saw that one on Twitter this morning, BTW. It made me think of the various Keiretsu as revolving around 3 different major markets, each of which corresponds somewhat to an equivalent market in the conventional world:
The Pure Cloud is the Amazon-style market. It offers generic Cloud Infrastructure to all comers. It’s Cloud as a Service, and is analagous to the Software as a Service world. This world keeps costs extremely low and relies mostly on Open Source software (e.g. Xen Hypervisor) and internally developed software (S3 or Elastic Block Store) to keep the costs low. The model works great at delivering very low costs. My company, Helpstream, saved a bundle recently by switching.
The VMWare/Elastra combination is also interesting. In my (so far cloudy) framework of different Cloud models, I put VMWare in the same category as 3Tera (another great company I’ve interviewed). These companies are charging for software that Amazon has built or Open Sourced (not precisely, but the software is analagous to Amazon’s Xen Hypervisor and the Elastic Block Store they built). Presumably the customers for this type of Keiretsu will be hosting providers that want to play in the Cloud but do not have enough software development capability themselves to get there. There is also a market for corporations that want to create private data centers that take advantage of Cloud technology, or that are Cloud compatible so they can build composite apps that span the Cloud and the private data center. This is an interesting market, to be sure, it’s just different than the “mainstream” (if I can use that word this early in the Cloud cycle) Cloud Market that companies like Amazon or Google represent. It most closely resembles the perpetual license software market, with its vendors selling licenses for infrastructure. In fact it isn’t an exact analog because a lot of this stuff is services, but metaphorically, it’s pretty close.
The last analagous market is what I call the Vertical Cloud. Seems like there is always a vertical opportunity to be had in any megamarket, and this can be quite a lucrative field to play in. In the Cloud world, the verticals are represented by Google and Intuit, who have created special-purpose cloud platforms that cater to particular desires. One could even view things like Facebook applications as existing in the Vertical Cloud market.
Next we have the crossover players. RightScale is both a useful component for the Amazon world, and the company is also offering to deliver their service on clouds more like the Infrastructure Sellers operate in. There are many reasons why this is a valuable niche. To learn more, check out my interview of RightScale CEO Michael Crandell. Elastra is another product available now in two of the Cloud markets. Shifting over to the other side we see Ruby On Rails as a specialized vertical being delivered on the Amazon Cloud by EngineYard and Heroku, hence they’re in the crossover space between the two types of markets.
There are a lot of other players I”ve left off the diagram just to keep it clean and obvious at a glance what’s happening. For example, Force.com is trying to be both a Vertical, where it is ideal for creating add-ons to the Salesforce ecosystem, and a true Cloud as a Service where any generic application could be built there. To make it even more interesting, Force.com connects to both Amazon and Google. This framework provides a way of thinking about possible future combinations or products. What are other vertical crossover opportunities between the generic cloud and the verticals? What will be the crossover opportunities between the infrastructure and vertical worlds? Will there be more than just the 3 big markets, or are the analogs to conventional software markets convincing enough to tell us this is probably all there is?
It’ll be interesting to watch the Clouds continue to evolve and see what unfolds!