Amazon faces competition as cloud technology goes mainstream

Cloud is becoming a marketplace technology as enterprises look beyond AWS to Openstack-based cloud and Azure, says 451 Research

Cloud computing is moving away from being monolithic, where Amazon Web Services (AWS) was the only major cloud service provider, to a marketplace technology, with several cloud-based service providers, as users’ appetite for cloud grows, according to analyst firm 451 Research.

“It has taken a few years, but 2012 is the year we have seen some big difference, most of it driven by Openstack providers such as Rackspace,” said Simon Robinson, research vice-president of 451 Research, at the SNW Europe 2012 conference in Frankfurt.

Such a competitive market is good for enterprise users, who will see the cost of cloud services go down, he said. 

“In addition to pricing benefits, having more players will bring more cloud federation, standardisation and interoperability,” said Robinson. 

Technology companies and cloud critics have long argued that cloud must be more federated, automated and interoperable for users to see real benefits.

Increasing competition among cloud service providers

But Robinson warned that cloud computing service providers must not discount AWS. “It continues to innovate, and even today around 85% of public cloud-based workloads run on Amazon,” he said.

The rest of the 15% is shared between Microsoft Windows Azure in second place, followed by Openstack-based cloud services and other providers, he said.

AWS topped the top 10 cloud computing providers list at for three consecutive years – 2010, 2011 and 2012 – and despite high-profile outages, it showed no signs of losing its throne as the “cloud computing king".

“As an analogy, Amazon is the Coke of the cloud industry. We don’t have a Pepsi yet, but there are several brands of cola available in the market,” said Robinson.

But an increasing number of enterprises are using Microsoft, Google, EMC, Verizon and Rackspace cloud services.

Cloud adoption gathering speed

According to Robinson, several factors have contributed to cloud becoming a marketplace technology. Tighter IT budgets and the need to innovate and compete has seen enterprises consider private and hybrid clouds, as well as look at open source providers, he said.

“Cloud has become the new normal. Our research has showed an evolution among enterprises’ attitude to cloud computing,” said Robinson.

According to the analyst firm, there is a clear rise in the number of enterprises using some form of cloud computing services.

More and more enterprises are considering whether the applications they are planning to buy now can be deployed in the cloud before purchasing them, said Robinson. They are also telling suppliers to bring out products on a software-as-a-service (SaaS) model so they can save on capital expenditure.

“The cloud model they are exploring is not just the Amazon-centric model of web apps. They are willing to go down the route of hybrid and private cloud, making room for more service providers,” he added.

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