Canalys: Private cloud is best for channel

Analyst tells VARs to pursue a private cloud strategy to stand a better chance of success

Channel firms wondering whether to throw their weight behind the public or private cloud would be better off plumping for the latter, according to analyst Canalys.

Speaking at the VMware partner event in Copenhagen, Alastair Edwards, principal analyst at Canalys, said building a public cloud was out of the question for many VARs because the financial stakes are too high.

"If you are going to take the step of building your own public cloud services, you will need to have the financial bandwidth to absorb a large-scale capital investment and are probably looking at three to four years of operating losses before seeing a return," he explained.

Therefore, channel firms intent on embracing public cloud services would be better off reselling those offered by third-party cloud service providers. Having said this, Edwards added that the private cloud market looks set to be the more lucrative one for the channel.

According to Canalys' figures, the global B2B cloud market will be worth $81bn (£51.3bn) this year, with the private cloud accounting for about $50bn of this.

"We think there is much greater opportunity [for the channel] in the private cloud space," said Edwards. "Just under half of this [$50bn private cloud business] will be driven through the channel."

In the public cloud, which is estimated to be worth $31bn this year, the channel-centric figure will be around $5bn.

The private cloud is also a better fit for many traditional resellers as it plays to their strengths in infrastructure resale, systems integration and professional services.

"There [will be] a big challenge in the public cloud space [for the channel] because of the risks associated with commoditisation, particularly around infrastructure-as-a-service," added Edwards.

"That is going to drive down margin [and] the channel will need to identify ways that allow them to avoid the commoditisation trap."

As an example of how to do this, Edwards suggests resellers could provide on-premise storage packaged with a public backup-as-a-service product.

"The majority of that sale is probably still on-premise, but it is complemented by a cloud offering," he added.

Speaking to ChannelWeb, Guy Martin, EMEA director of strategic alliances at VMware, said it is pushing more of its partners into the private cloud.

"There are other people in VMware who will be working with service providers, where there is much more of a push towards public cloud, but – from my point of view – the focus is on getting people to build private clouds," he added.

"The reason for this is that it will provide them with a springboard and confidence needed to burst out and build hybrid clouds, and public clouds, too."