Amazon Web Services (AWS) could be worth upwards of $50 billion by 2015, by some estimates, but that doesn't mean enterprise IT is rushing to embrace the cloud leader. In a blunt reminder that the enterprise is different, UBS analyst Brent Thill argues that old-line datacenter outfits Microsoft and VMware—not Amazon—stand to get the most love from cloud-prone CIOs.
Amazon's Growth Surprises Even Itself
By any metric, the growth of AWS is staggering. As Gartner analyst Lydia Leong shows, AWS offers five times the utilized capacity of the next 14 competitors combined. (Note: Google was not included in Leong's analysis because Google Compute Engine was not yet generally available.)
In fact, AWS has in some cases grown so fast that it hasn't been able to build out enough capacity to meet customer demand. Recently AWS launched a new breed of EC2 instances for compute-intensive workloads, sporting faster processors and SSDs for high-performance storage.
Unfortunately, demand for these C3 instances far outstripped supply, as AWS' Jeff Barr writes:
We believed that this instance type would be popular, but would not have imagined just how popular they've been. The EC2 team took a look back and found that growth in C3 usage to date has been higher than they have seen for any other newly introduced instance type. We're not talking about some small percentage difference here. It took just two weeks for C3 usage to exceed the level that the former fastest-growing instance type achieved in twenty-two weeks! This is why some of you are not getting the C3 capacity you're asking for when you request it.
The infinitely elastic cloud, in other words, is not so elastic as we thought. This shortage highlights one concern that some CIOs have with public cloud computing: loss of control.
Enterprises Want The Cloud ... Less Cloudy
To this concern could be added worries over security and performance, among other things. The irony is that enterprise IT has a paltry record of delivering such things themselves. Arguably Amazon or other other public cloud providers have far more experience delivering IT resources at scale with much better performance, but this doesn't obviate thornier questions related to security, something UBS analyst Brent Thill discovered was top-of-mind while attending a recent Gartner event:
Currently, public cloud services are still viewed as premature. They might not meet a certain service and availability level that some enterprises require. In addition, analytics on confidential data or mission-critical systems should not run on the public cloud due to compliance or strategic considerations. Having a private cloud in place is necessary to perform those functions and integrates analytics from the public cloud to present a full picture of the business and help companies make informed decisions.
Thill finds that hybrid clouds have become the norm, with enterprises straddling the benefits of public cloud infrastructure (speed and agility of development) with private cloud resources (security and control).
VMware And Microsoft: Old Dogs Learning New Tricks
In a hybrid cloud world, who wins? According to Thill, virtualization vendors that most effectively bridge the old world of data centers with the new world of cloud may have the upper hand:
We view server virtualization as a stepping stone to the private cloud. By leveraging their incumbent status, [VMware] and [Microsoft] can land their customer base first in the private cloud business and expand to the public cloud whenever enterprises are ready.
This follows earlier Piper Jaffray research showing a remarkable loyalty for Microsoft among CIOs. The future is here, but CIOs are desperately trying to make the new world look just like the old world.
Thill's thesis makes sense. As much as CIOs may want to sprint into the public cloud, very real considerations like control and security give them pause. That said, there are also such compelling benefits to public cloud infrastructure that it's foolish to suppose that CIOs will be able to hold back adoption within their ranks.
The reality is that we're going to see bottom-up public cloud adoption continue to grow alongside and in sometime conflict with top-down virtualized, private cloud adoption. The question is whether VMware and Microsoft are merely gateway drugs to a public cloud they ultimately won't monetize, or whether AWS has merely been an interim tease that will give way to "grown up" cloud computing that looks a lot like old-school data centers.