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Are the IaaS and PaaS markets locked? No, and here is why.

on ‎08-21-2014 10:25 AM

Cloud_content_management_RGB_blue_NT.pngReturning from a couple of days off, I found this article from David Linthicum in InfoWorld. IaaS and PaaS markets will no longer support smaller providers, which now need to find new specialties, or call it quits. It was written after the news that veteran Cloud provider Rackspace pulled out of the IaaS market . My objective is not to comment on Rackspace’s move, but rather to reject David’s claims. Let me explain why.


What Cloud are we talking about?

When David refers to the players that won the IaaS and PaaS market, he sites Amazon, Google and Microsoft—all three providing public Cloud offerings. The Cloud market is much larger than that. It’s actually ironic that, at the same time but in a different publication, Microsoft itself describes why it is using a hybrid Cloud environment, not just Microsoft Azure. If you dig a little deeper you’ll find that Microsoft keeps its business-critical applications in-house. And in my experience, they’re not alone.


Many companies are doing just that, setting up private Clouds to run their enterprise. Or they rely on enterprise-class virtual private Clouds, where security can be audited, locations are clearly defined, contractual arrangements are established and appropriate support delivered. These Clouds are of a different nature than the three described by David. They clearly have their space in the marketplace. Cloud is not just one-size-fits-all.


What role does public Cloud play?

Public Clouds have their roles to play, and most companies use them in one way, form, or shape. They are officially used for software development and testing, and for running non-core applications (using only non-sensitive data); often applications that interact with customers or users. Beside that, businesses tend to use the public Cloud environment for “shadow-IT-type” activities.


Start-ups, particularly in the U.S., tend to run everything in the public Cloud. So they don’t need to set up their own environments. In Europe and other parts of the world, security and privacy concerns tend to make start-ups a little more cautious. The same applies for small and medium businesses. U.S. companies are much more public-Cloud-friendly than European companies, for example.


The large security breaches that have come to light lately tend to also play against public Cloud, although there is no correlation between the two. Many companies are increasingly concerned to put valuable data on these massive Cloud platforms—even if they recognize these are probably well secured. The lack of transparency of how public Cloud environments are managed and secured is counter-productive.


Cloud and the Internet of Things

The public Cloud market will change drastically in the next five years. Indeed, the Internet of Things, which according to Gartner just reached hype peak, is creating new opportunities. Beyond the market of virtual infrastructure commodities (IaaS), and development/runtime environments (PaaS), a new space is appearing, as the one who owns the data provided by the sensors can now monetize the data. Should we call this “Data as a Service” or DaaS? I don’t know, but we see the need for Cloud resources moving increasingly to data analysis. None of the existing IaaS/PaaS players have major offerings in this space beyond the provision of infrastructure resources. So new, next-generation Cloud environments are destined to arrive on the market.


Often they will supersede the existing Clouds, because they build on the learnings from the first generation. They may even wipe out generation one. Let me give you an example: Do you remember Visicalc and Lotus 1,2,3? The same can happen in the Cloud space.


Public Cloud lock-in

Beyond this, there is another element increasingly guiding enterprise decisions—the fear of lock-in. Whether it is AWS, Google or Microsoft, all three environments are proprietary. If you develop an application within Microsoft Azure, you cannot easily take it to AWS or to any other Cloud environment. An increasing amount of companies are looking at alternatives where they are not locked into a proprietary environment. And here the Open Source initiatives (such as OpenStack) have a fundamental role to play. As these platforms mature, they will play an ever-increasing role. It’s actually quite probable they will be the basic platform for the next generation of Cloud environments.


If we go back in history once again, I remember the proprietary operating systems. Most of them have disappeared by now, first in favor of flavors of Unix and then with Linux. It took about 20 years to get there, but we know the world is accelerating drastically and, to give an example, OpenStack reached in 4 years the state it took Linux 15 years to reach. What happened in the operating system space will also happen here. The market is out for commoditization of basic services, while innovation and high-value services are valued.


Politics, legislation and compliance

Final reasons for the emergence of other large public Cloud providers are politics, legislation and compliance. The concept of public Cloud is such that the location of information and processing doesn’t matter. The reality is that it does. Some countries make access to foreign-based Cloud environments difficult. Others force specific types of data (personal information, healthcare, financial) to reside within given geographical boundaries. Others claim the right to access information owned by national enterprises anywhere in the world.


These elements are counter-productive. Mostly outside the U.S., politics plays a role in the Cloud decisions taken by companies. This is probably one of the reasons why Cloud in general, and the public Cloud in particular, grows slower than in the U.S.

Incompatible legislation has to be addressed and streamlined, and stringent compliance has to be standardized for Cloud to really become the global information backbone that will drive our migration to the digital economy.


Iaas and Paas are not dead

AWS, Google and Microsoft are important players in the public Cloud space. Today they may seem to be the only options. However, this is a myopic view at the Cloud marketplace. It reduces Cloud to public Cloud, not taking into account the other Cloud models that exist (managed and private Cloud). And it implies a status quo thinking, where the market is quickly evolving beyond Cloud to Big Data, the Internet of Things and the digital economy. This is why I disagree with David’s article. There is much more to Cloud than what he describes. Now, you may argue he speaks about IaaS and PaaS. Albeit infrastructure or development/runtime environments, we are just scratching the surface of what is feasible. And as far as that is concerned, the future is bright. However, it is companies that continuously innovate that will lead the pack. I leave it up to you to decide who that can be.

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on ‎09-14-2014 09:22 PM


Setting up a IaaS model of cloud computing is pretty capital intensive. Running them is also pretty expensive. If the cost of customer acquisition turns out to be expensive too, then lot of smaller players may not continue their business and might opt out of the opportunity.


However if the cost of customer acquisition comes drastically down, then the players will definitely thrive.


#PaaS however is taking a new turn, there are lot of IOT players who are offering PaaS kind of platforms exclusively for IOT applications. These IOT paas players will be the target of large cloud players going forward. So there is a lot more yet to come. But most of it might be relatively easy for larger players, and relatively difficult for smaller players, unless they are backed by strong VC funds.




on ‎09-16-2014 05:14 AM

Or they use open source cloud environments to deliver the functionality.... or they white label the infrastructure of a large player.... there are many new models appearing that we haven't thought about yet. Innovation will ensure small players continue to have a space. Most of todays large players were barely around 10 years ago, why can't history repeat itself?

on ‎11-03-2014 01:51 AM

You mention the 'big three' providers, (Google, Microsoft and AWS) as the key players in SaaS but I have been reading on CloudWedge that IBM really seem to be stepping up their game in this and building out a really impressive SaaS offering. 


on ‎11-08-2014 05:25 AM

Jon, this article is about IaaS and PaaS. So, I did not mention the SaaS players. The question you raise is who are the large SaaS players in the market today? According to, the Top 20 Software as a Service vendors do not include either IBM or HP. I could argue the same for HP as we provide many SaaS services through Pronq amongst others. But third party sources do not see us in the Top 20. Fine, we continue working on our offering, as does IBM I suppose. The SaaS market is still very fragmented, we'll see who will win over time.

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