Challengers to Amazon’s dominance in public cloud services face an uphill battle
It is quite a stretch for most cloud service providers to match the geographical reach of Amazon Web Services. It’s equally tough to roll out a portfolio of public cloud offerings at the same pace as Amazon.
It’s also quite hard to build the industry ecosystem of independent software vendors and certified professionals that Amazon has managed to nurture and grow.
And it is virtually impossible to beat Amazon on price.
But that hasn’t stopped dozens of companies from jockeying for position in the public cloud marketplace as the next best thing to AWS. There is still a significant market opportunity due to the fact that public cloud services are being used more frequently, both as an extension of enterprise IT as well as a base infrastructure for startups. The question many enterprise IT executives are pondering pertains to which ones are going to be around in three to five years.
Top 10 Amazon cloud challengers
Amazon is the undisputed leader in the global IaaS market, according to London-based market research firm TechNavio. Analysts there define the market as including both compute- and storage-as-a-service offerings. Amazon’s market share this year sits at between 41 and 43 percent, according to a report published by the company last month. Looking at just EC2, Amazon’s public compute option, the company held a market share of around 60 percent. Sitting at a very distant second was Rackspace at 13 to 15 percent. TechNavio analysts say they expect that Amazon will hold onto that lead for the foreseeable future.
While industry analysts point out that competitors like Google, Joyent, Microsoft, Rackspace, Savvis and Terremark are likely to gain some market share, they are not likely to cut too deeply into the revenue stream Amazon currently pulls in with AWS, as cloud spending is expected to grow rapidly.
IDC predicts that U.S. public IT cloud services revenue will experience a compound annual growth rate of 18.5% over the forecast period outlined in its most recent report, from $18.5 billion last year to $43.2 billion in 2016. The IDC report, published in late 2012, includes assessments in five functional market segments within its definition of public cloud services including application as a service, system infrastructure software as a service (which includes Infrastructure as a Service [IaaS]), platform as a service (PaaS), server as a service and basic storage as a service. IDC predicts that by 2016 the global market for these services will surpass $100 billion.
The advantages Amazon has over its competitors fall both in the technical and non-technical realms. Erik Sebesta, chief architect and technology officer at the consultancy, Cloud Technology Partners, says “At its core, Amazon is a business, just like most of its customers. Amazon really ‘gets’ the business application to the cloud and sells that very well.’’
But Amazon is also able to make a technical case to corporate IT based on its global data center presence, trusted brand, and leading edge technology included in its broad portfolio of services, adds Sebesta.
Forrester Research vice president, principal analyst James Staten contends that while the traditional hosting service providers like AT&T and Verizon/Terremark certainly have the reach in terms of the number of geographically dispersed data centers they own, “not all of them are offering cloud services, so catching up to Amazon in that regard is not an easy – or inexpensive – issue.”
Staten adds that Amazon has made a push in the last 12 months to pick up as many compliance, security and operational standard certifications as possible to help ease corporate IT’s hesitation about both its security or management practices.
AWS has achieved ISO 27001 certification and has been validated as a Level 1 service provider under the Payment Card Industry (PCI) Data Security Standard (DSS). AWS undergoes annual SOC 1 audits and has been successfully evaluated at the Moderate level for Federal government systems as well as DIACAP Level 2 for DoD systems. (There is a full listing of Amazon’s compliance credentials here.)
Microsoft has been working toward the same certification prowess with its Azure cloud platform, but Staten argues that Azure will not earn the same number of certifications as AWS for at least another six months.
Amazon also has a major lead in building industry buzz that attracts both ISVs and management consultants who can help build an attractive ecosystem around Amazon’s cloud to make it more attractive to customers who sign on to dabble, but stay in Amazon’s cloud because it’s the place to be seen. “I estimate that for every one ISV building an application on another cloud platform, there are 10 building an application to run in Amazon’s cloud,” Staten says.
Staten argues that Rackspace, working in conjunction with the entire OpenStack community, is the only vendor that might be able to rival AWS’s ecosystem.
Amazon’s weak link
The piece of the enterprise cloud implementation story where Amazon does not have a hard and fast answer is private cloud links and hybrid cloud implementation.
Here is where analysts say that established managed service providers with relationships within enterprise IT (IBM, Savvis, HP) that are now offering private cloud services; and pure play cloud companies supporting hybrid clouds (GoGrid, BlueLock) have a chance to beat Amazon into the enterprise.
Amazon has tried to neutralize this type of criticism by establishing partnerships with companies like Equinox to provide a direct, superfast connection between private corporate assets and AWS, calling the connection a “virtual private cloud”.
Amazon has no real intention to have on-premise private cloud services mainly because it is not viable within the business model it has established as the public cloud norm, Staten says.
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