Death of the Pure IaaS Cloud: Part 1

Over the last few months it has become clear that many of the largest Infrastructure-as-a-Service (IaaS) public clouds are increasingly morphing into more like Platform-as-a-Service (PaaS) operators. In other words, these clouds are moving from providing pure computing resources to providing services running on top of those computing resources. That may seem like a pretty innocuous change but as I’ll outline in this and the next part of this post, it has a pretty profound effect on the role of the IaaS cloud vendor and their interests vis-a-vis their customers. Moving from infrastructure to offering software based services IS A BIG DEAL that customers should take note and be aware of when choosing an IaaS vendor.

Understandably, many customers using cloud services, particularly at the infrastructure level, are also interested in other tools that may add convenience. These are usually service driven; things such as email services, content distribution networks, DNS services etc. etc. So the debate here really is who is best positioned to provide those services and how should they be offered/delivered to end customers? It’s my opinion that an IaaS public cloud vendor is not the best entity to be trying to deliver and manage all those different services, particularly as they often require quite different skill sets. Likewise one size fits all services are never going to be optimal. So are many public IaaS vendors going in the wrong direction, chasing ever expanding service offerings?

Lessons from the Mobile Network Operators

A great parallel can be seen in the mobile (cellphone) network carrier market. Do mobile phone network operators offer the best software level services on mobiles? We all know the answer is absolutely not. Did mobile phone companies in the past try to ‘own’ the software experience of their customer phones? Yes absolutely and almost universally the products they created and offered were inferior to the offerings of much smaller, more focused, independent third parties. These in-house services failed even though the mobile phone network carriers had huge advantages in terms of access to capital, the ability to favourably position and integrate services into user phones etc. etc. You can clearly see this even in the pre-smartphone era; can you remember using your mobile phone carriers’ portal over third party websites on your old mobile? I certainly don’t, I went to dedicated services that offered a much better experience for news, email and more. Post-smartphone the carriers are non-existent in terms of services occupying the user’s time on the phone. It was never feasible for a mobile phone network operator to innovate across the whole software layer for mobile phone delivered services. I think we can draw a direct comparison between the mobile phone network carriers and public IaaS cloud vendors today. I think public IaaS cloud vendors are making the mistake that mobile network operators made in the past in trying to offer these services and in the process are hurting customer interests.

CloudSigma is an enabler just like a mobile network operator. It is our job to make it as easy as possible for our customers to use our cloud infrastructure and to delivery reliable computing. Reliable computing in terms of both availability and predictable performance levels that is. We are a utility company, a means to a greater end. When we are invisible we are doing our job. Restricting the way our customers do their computing is not part of that picture.

Depth versus Breadth

Should utility companies (like IaaS vendors) try to provide value added services? My position and our strategy for CloudSigma is a definite no. It isn’t an easy road to tread as there is a constant temptation to move into new areas and expand what we do to try and capture additional revenues by providing closely related services to core IaaS. For public companies often the pressure is particularly overwhelming. That’s why we see so many clouds expanding into value added services but it is a mistake.

There is a huge amount of innovation happening in the core area of IaaS provision and the hardware that enables it. We are pouring our creative energies into channelling these changes into improvements to our core product offering i.e. CPU, RAM, data storage and data transfer. That might not be very sexy or headline grabbing but ultimately, improving our delivery of those core products is the bedrock of what we do. When I say improve, I mean a fundamental improvement, not removing restrictions that should not have been there in the first place (such as adding a new server size or operating system).

The great news is there are some major areas of innovation and improvement that are market ready and we will be rolling them out in the short and medium term i.e. in 2011. Beyond 2011 there are huge possibilities for the delivery and deployment of our products that we will be embracing.

Jack of all Trades, Master of None

Why not do both? Surely we could tag on additional services without fundamentally changing our core offering? I would certainly disagree with that position. If you look at the corporate history of many technology (and non-technology) companies, expanding into an ever expanding and diffuse range of products inevitably complicates the business and ultimately undermines the innovation and quality of the original core product. Don’t forget, public IaaS cloud vendors are basically utility companies.

For example, can Amazon Web Services maintain a position where it offers the best email service, the best DNS service, the best database service …? In all categories I can point to products and services offered today that in my opinion are better than the AWS alternative. Of course customers have different needs so the best for you might not be the best for another user. Don’t customers deserve easy access to the best services for them? Surely the challenge for the IaaS cloud vendor is therefore to make the widest choice of services available easily to their customers, not to offer an anointed service or in-house offer?

In Part 2: Unknown Territory

So as I’ve outlined, our position is very much about core innovation not about widening our role as an IaaS cloud. That’s why we describe ourselves as a pure IaaS cloud. In part 2 I’ll outline how the IaaS space is changing (with examples) and how the strategy of many public clouds is putting them in direct competition and conflicts of interest with their customers.

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About Patrick Baillie

Patrick is co-founder of CloudSigma, and comes from a career working in Investment Banking Technology, as well as having previously ran his own business.