As a cloud veteran it has been interesting to watch the evolving perception of larger vendors in the hosting industry. I am continually inspired by the many successful business stories that are shared at Hostingcon. These businesses really understand their market and support their customers well. However I am equally surprised by parts of the industry that ignore the rise of the “Large Vendors” often due to outdated perceptions or mis-understandings. Since Amazon Web Services (AWS) is the market leader, this year I tested support for AWS with a simple survey.
Two years ago at HostingCon Boston, Amazon was dismissed by the majority of attendees so I was excited to explore how opinions may have changed. Industry Leader Amazon Web Services accounted for 37% of the $US9 billion infrastructure as a service (IaaS) market in 2013, according to analysts from equity research firm Evercore. The IaaS market is growing by 45%, but Amazon Web Services has a growth rate of 60%
AWS also has more than five times the computational capacity of its 14 next IaaS competitors combined, according to a Gartner report published last fall.
There are some truly great businesses and smart people in the industry so I was looking forward to their opinion. I set out with a survey question which was “Why isn’t AWS used by more hosting providers in the industry? ” and the results are shown in this chart.
Not surprisingly 34% of the respondents said they wouldn’t deal with AWS as they were a competitor but the more interesting part of the survey was that 18% the industry said they would adopt AWS moving forward. This is interesting because it reflects a growing belief that the industry will start to incorporate AWS into their product offerings.
When you look further at the numbers you see issues such as current technical skills (14%), inability to monetize (16%) or the perception that AWS is hard to work with (8%). If you add these together it amounts to 38% which makes the largest group.
The ones I would call out here are technical skills and business models. The industry is developing tools that assist Managed Service Providers and better knowledge is developing around ways to monetize new cloud opportunities.
The Public Cloud largely requires developer centric skills and the ability to use API’s and create value further up the stack. Many believe there are limited opportunities in basic infrastructure sales moving forward so that ability to sell “as a service” is the main opportunity. There was one presentation at the conference that discussed AWS Managed Services. AWS Managed services, AWS overflow compute or Disaster Recovery and other such services can complement existing businesses and provide a new revenue opportunity.
This means is there are lots of opportunities moving forward but they will be different. Will the industry’s distrust of the large vendors change ? The Cloud is not only disrupting customer’s businesses but also the service provider business. The vendors that get the eco system correct will be the next “Windows” of the Cloud with a very healthy partner community. Will this be AWS ? Will we be discussing Azure as viable platform next year? What do you think?
Next Article: How the Big Three Vendors in the Cloud will Change the Market in the Future.