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Amazon AWS and the Public Cloud Paradox

Amazon need to think bigger about the cloud and embrace the enterprise

When VMware announced its hybrid cloud initiative it made perfect sense.  The hybrid cloud market could provide substantial growth opportunities for VMware, as discussed in VMware Crosses the Rubicon and Hybrid is a Whole New Cloud.  Yet one respected tech analyst has recently suggested that VMware's hybrid cloud may be too late.

Amazon (AMZN) could be the clearest benefactor of the hybrid cloud operating model if it accelerates the enterprise adoption of off premise cloud services, especially if it occurs before VMware (or Microsoft) is ready with an equivalent offering.

As discussed previously, the total addressable market for VMware server virtualization and private cloud is about $50B dollars, per a VMware presentation made late in 2012.  Amazon’s AWS revenues, representing an estimated 90% of the public cloud market, were under $3B.  This suggests a wide gulf between the public cloud and private cloud market and an even larger $60B hybrid cloud market that is available to the victors.

Private cloud is where the money is, because enterprises can get additional agility and efficiency without compromising the premise-grade controls over their IT operations.  The public cloud is also very much a commodity service while the private cloud has a robust assortment of ecosystem services and specializations.  Hybrid cloud is what enterprises want, despite the public and private cloud marketing machines.

Today hybrid cloud is too difficult and solutions too immature.  Yet the promise is so massive that service providers and large enterprises are already evaluating new solutions for devtest agility in the cloud, cloud migration and cloud-enabled disaster recovery in order to increase agility and achieve higher levels of protection and scale without more dedicated hardware.

A broad assortment of established enterprise tech vendors has been making hybrid cloud announcements, despite their inability to integrate customer data centers with clouds. They get it; and they’ve invested in confusing their customers (see, for example my Did You Say Hybrid Cloud? blog).  Yet Amazon on a product level is moving in that hybrid direction while maintaining a public cloud marketing posture, further enabling the confusion that does not benefit their new enterprise sales teams as well as others within the company.

Amazon clearly understands that public IaaS is too limiting, and has made a series of smart improvements to its cloud offerings that align them more closely to enterprise requirements.  It is possible and reasonable to suggest that Amazon’s enhancements (along with Azure’s coming grand entrance) may have forced VMware’s hand into its own IaaS offering, much to the unease of some key VMware partners.  Yet Amazon today is still stuck in the public cloud mindset.  Note, for example, a comment from my Cloud Predictions for 2013:

In 2013 Amazon will acknowledge the hybrid cloud and claim that the hybrid and public clouds are for all intents and purposes identical.  They will be right, yet they will have missed an opportunity to lead on this point in 2012 (see Two Weeks in Vegas) before their new competitors were ready.  Hybrid cloud leadership will be up for grabs as Microsoft, HP, IBM, VMware, Verizon, Rackspace and even Cisco vie for leadership in what could arguable be the largest new tech category in recent memory.

That public cloud myopia on the part of Amazon, which was so prevalent at last year’s AWS reInvent Conference, is an albatross around the neck of what has otherwise been perhaps one of the most successful and revolutionary launches since… online bookselling.  Amazon’s future success may depend more upon its ability to lead the cloud market versus being a former first mover.

More Stories By Greg Ness

Greg Ness is a Silicon Valley marketing veteran with background in networking, security, virtualization and cloud computing. He is VP Marketing at CloudVelocity. Formerly at Vantage Data Centers, Infoblox, Blue Lane Technologies, Juniper Networks, Redline Networks, McAfee, IntruVerofficer at Networks and ShoreTel. He is one of the world's top cloud bloggers.

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