The Juggernaut of Public Cloud

For a long time, I was not convinced about the power of the public cloud. Naturally! I, like many others, thought that it was a sideshow, and one which would mostly cater to startups and some medium size companies. However, I discovered I could not be further from the truth.

The cloud, from the very beginning, has been confusing term, at least to me, due to two different sources, one from SalesForce and another from Amazon Web Services. The original CRM portal was what became the definition of Software as a Service (#SaaS). What made SalesForce famous as a cloud offering is when they created the platform upon where different applications could be built.

The mighty conquest by AWS started with introduction of first weapon in 2006 called Simple Storage Service, or S3. This started a brand new battle, which would later lead to a huge war i.e. cloud war. The belligerents were Amazon on one side and old guard infrastructure providers like Dell, HP, EMC and Cisco on the other. As you can probably guess, all the casualties happened on the non-Amazon side. The second weapon AWS introduced was called Elastic Compute Cloud, or EC2 to power compute and new assault on old guard ; and with this, further weapon after weapon, battle after battle Amazon kept winning. Of course!

Amazon, being smart enough, did not target enemy strongholds (aka big enterprise customers) but smaller posts (aka SMBs and startups) to start with. These customers were relatively insignificant to big players. So, for a long time a lot of folks (along with me!) thought that Amazon’s war was a SMB war and would never expand into bigger territories.

Obviously Jeff Bezos, the commander of Amazon’s army, had something else in mind. He had already won the retail war a few years back. The memory of casualties and bloodshed in retail war still terrorizes surviving retailers. The war resulted in countless graveyards, some of them being Circuit City, Sports Authority and Borders.

The second phase of war was fought on two fronts. One was an assault on enterprise strongholds, and the second was the introduction of a new weapon class called PaaS, or Platform as a Service.

I call PaaS offerings by Amazon the Kirkland phenomenon. It is where Costco puts a competing cheaper Kirkland product next to a vendor’s product, cannibalizing vendor revenue while providing more choices to the buyer . I no way mean that AWS offerings are inferior (nor are Kirkland). On the contrary they are simpler, and in that sense, superior. Amazon’s PaaS offerings are not targeted at destroying few whales like IaaS offerings are. But are targeted at large number of platform vendors, both large and proprietary ones like Teradata, SAP and Oracle, and companies who build their platforms around open-source (open-core). Platforms around open-source make this very interesting as these platforms were set to target proprietary software and it’s vendors. Now both are being threatened by simple services built on AWS.

At present, a lot of clients are shying away from these PaaS offerings as they do not want to get tied to a specific cloud vendor, but this will not last for long. I saw the same phenomenon happen for database vendors when clients would not even use a database specific JDBC driver like OCI in the early 2000’s. In a few years that changed when companies realized that they were already Oracle or some other DB vendor’s shop. In the next two to three years you are going to hear the same for public cloud that this company is AWS shop or Azure shop and sometimes Google Cloud shop (for a change). Once that happens, companies will prefer simpler, already integrated PaaS offerings from these cloud vendors.

There are already competing services available. Like AWS Kinesis and Azure Event Hub for Kafka, AWS EMR and Azure HDInsight/Data Lake for Hadoop/Spark, and many others. All of these services have been built ground-up keeping cloud in mind, according to Andy Jassy, CEO of AWS. And I cannot agree more. Most of these services also do not have rich functionality provided by platform vendors, but most of the clients do not really need richer functionality. Most of the features with any platform or software go unused.

Talking about the second front of this stage of the war and, i.e., the enterprises, enterprises had a different concern, which was stopping them from moving to the cloud. These concerns revolved around security, data governance and other enterprise features. Now AWS and other cloud vendors have crossed that inflexion point where they are believed to be as secure as on-prem installations, if not more.

Another point (there is always another point!) is the price-point where all three cloud vendors have a huge advantage and, i.e., they are all cash-rich due to their other businesses. It means that they can ensue a pricing war which will not make either of them blink, but will drive the rest of the traditional (and even cloud!) vendors to the ground. Amazon has maintained a very low-margin for a very long time, and the stock market has not complained. So yep, there is a track record out there.

Are other vendors putting up no defense? In fact they are, in the form of a private cloud and hybrid cloud. However, the private cloud is dead on arrival. But the hybrid cloud I consider as migration strategy to a public cloud rather than a sustainable solution.

So now, back to the future. When these players have won the war, how will the new world look like? How will survivors align? First, the biggest winners are going to be customers who like the way it happened in the retail war. Second, will be benefactors who, although not exactly winners, are going to be consulting companies like us. But that would depend upon how fast we align ourselves to serve the new masters.

Once this rebuilding is done, the IT world will be simpler, leaner, richer in functionality, and more beautiful. Or maybe I am starting to sing the praises of the new masters too soon!

P.S: This blog, in part, was influenced with great insights by John Furrier and Dave Vellante, who shared on SiliconAngle media.