Rethinking the Network

Michael Bushong

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What Is Important for #Cloud Services? | @CloudExpo

Amazon has cut prices to their cloud offering more than 40 times since introducing the service in 2006

Amazon is indisputably the biggest name in cloud service providers. They have built up a strong market presence primarily on the argument that access to cheap compute and storage resources is attractive to companies looking to shed IT costs as they move from on-premises solutions to the cloud. But after the initial push for cheap resources, how will this market develop?

Is cheap really cheap?

Amazon has cut prices to their cloud offering more than 40 times since introducing the service in 2006. The way this gets translated in press circles is that cloud services pricing is approaching some floor. But is that true?

In October 2013, Ben Kepes over at Forbes wrote an interesting article that included a discussion of AWS pricing. In the article, he quotes some work done by Profitbricks that shows AWS pricing relative to Moore’s Law. The article is here, and the image from the article is below:

aws-moores-law

Moore’s Law tells us that performance will roughly double every two years. Of course it is not really a law but more a principle useful in forecasting how generalized compute and storage performance will track over time. The other side of this law is that we have come to expect a commensurate drop in price-performance. As performance increases, the cost per unit of performance (be it compute, storage, or networking) ought to follow a similar trajectory.

The punch line here is that despite all the price decreases over the years, AWS is actually not dropping their price at the same rate that performance is increasing. The cynical among us might conclude that even with all the price cuts, Amazon is actually widening their margins over time. If margins actually improve, at what point does cheap cease to be cheap?

If not cheap, then what?

If the primary competitive access is not price, then what is next? Based on recent cloud announcements, it would appear the next axis of competition is performance. CARIcloud announced their new cloud service today. Notable in the announcement is that they are offering a combination of best-of-breed technologies to provide higher-performance cloud services.

While much of the IT chatter is aflutter with discussions about white box solutions, CARI embraces branded solutions en route to blazing speeds that crush the competition. If nothing else, it is certainly a counter position to what is more talked about. By pursuing performance at every turn, CARI is actively promoting a more performant cloud, targeting customers whose objectives extend beyond pure price. The message here is that if you are looking to do more than just shed OpEx (i.e., if your application performance matters to your business), then there are alternatives to AWS

[Plexxi and CARI.net partner to deliver dynamic application-oriented cloud services via CARIcloud.]

Application-agnostic vs. application-aware infrastructure?

When building out capabilities, the easiest path is to create application-agnostic infrastructure. Assuming that all applications or tenants are the same is a far easier task than building in awareness and then treating individual applications or tenants differently. But in the real world, not all applications and tenants are created equal.

Cloud service providers that understand and account for this can create additional service offerings. Basic capacity can be billed out at low rates, and then additional services can be monetized based on performance SLAs. Guaranteed compute cycles, I/O rates, and network capacity provide not only the infrastructure but the assurances that businesses need to migrate confidently to the cloud. CARI’s announcement today underscores the importance of application-centric cloud services.

Application locality

For some applications, locality of both the compute resources and data stores is important. As cloud services take off, expect service providers to start to compete in metro areas where they have datacenter resources. Of course, this means that the providers themselves have to distribute their resources, which makes pooling more difficult.

As datacenters embrace more optical technologies, spanning Layer-2 domains across large distances becomes more possible. This means that cloud providers will be able to offer application-oriented services across geographical distances, using low-latency interconnects.

Flexibility vs. lock-in

But perhaps the most interesting element to keep an eye on is flexibility. Incumbents across virtually all technology spaces have a nasty habit of locking their customer bases in once they make sufficient inroads. It’s not that they are inherently evil, but business strategy dictates that you raise the barrier to entry for would-be competitors who have their sights set on you.

Microsoft (the former ruler of proprietary tactics) has turned over a new leaf. They have developed a cloud OS that they use for their Azure cloud. But beyond that, they have allowed others to use their cloud OS. That CARI can build an entire cloud offering around the Microsoft offering is actually proof that Microsoft has removed lock-in. And this means that customers can deploy their applications on multiple cloud infrastructures, which creates competition in the Azure space. That competition will act as a driver for innovation while simultaneously creating a damping force on price.

The bottom line

While the cloud focus has been primarily around price as cloud providers compete with owned infrastructure, the axis of competition will soon change. That Amazon is slowly ratcheting up its margins actually supports this view. If players like CARI attack along other vectors—performance, application orientation, locality, and flexibility—it could be that the purchasing criteria for cloud become a lot more diverse, which would potentially disrupt the all-too-common storyline that Amazon eats the world.

[Today’s fun fact: A jackrabbit can travel more than 12 feet in one hop. Of course Plexxi can send traffic 10km in one fabric hop. We have our eye on you, jackrabbit.]

The post After cheap, what is important for cloud services? appeared first on Plexxi.

More Stories By Michael Bushong

The best marketing efforts leverage deep technology understanding with a highly-approachable means of communicating. Plexxi's Vice President of Marketing Michael Bushong has acquired these skills having spent 12 years at Juniper Networks where he led product management, product strategy and product marketing organizations for Juniper's flagship operating system, Junos. Michael spent the last several years at Juniper leading their SDN efforts across both service provider and enterprise markets. Prior to Juniper, Michael spent time at database supplier Sybase, and ASIC design tool companies Synopsis and Magma Design Automation. Michael's undergraduate work at the University of California Berkeley in advanced fluid mechanics and heat transfer lend new meaning to the marketing phrase "This isn't rocket science."