Fragmenting cloud market to go straight up

Is it time for providers to address specific niches with their cloud offerings?

Cloud offerings must now become vertical as well as horizontal if they are going to fulfil customer requirements, pundits at Cloud Expo Europe and Datacentre World said today.

Jason Mendenhall, executive vice president for cloud at US datacentre developer Switch, told a panel discussion at the London show that the cloud computing market is continuing to mature, with customers now demonstrating a desire for cloud offerings customised to their particular needs.

"Where cloud is evolving now is from the point where you have just some horizontal platform that you do stuff on to the point where it is verticalised, for example around industries or industry niches," he said.

So the market is now ready for brokers and other VARs that can help them pick and pack from a complex range of cloud offerings, dealing with the different vendors and systems so the customer doesn't have to.

In this way, the customer gets a customised cloud offering that would be too technical and costly for its own resources to create or put together without assistance.

Mark Thiele, executive vice president of datacentre technology at Switch, agreed, noting that this reflects an expected stage in the growth of any market. Initially there are few offerings, and most customers buy direct from the original vendor.

However, as a market matures, it begins to fragment and get more complicated. At the same time, customers begin to demand more from the product or service – opening up a gap for intermediaries such as channel partners.

"The average IT organisation has just 10 people who work in the datacentre – and not even one of them is likely to be a real datacentre [specialist] person," Thiele said. "I'm a cloud person, and I still always think, jeez, how does one even get started? There are so many niches out there. Does one just pick a name?"

Other barriers to cloud channel profits may continue to come down, the panel suggested.

Sundar Kannan, chief executive of global cloud computing and broker Computenext, said many of the privacy and security issues, for example, are no different from earlier iterations, as it were, of third-party services provision.

True cloud is different from application services provision, hosting, or SaaS. But not that different, he said.

"Mid-market CIOs in particular are heavily, heavily pressured, because their budget is not in the hundreds of millions of dollars, and when it comes to the barriers, the security for example, it was the same when they were hosting it at other datacentres," Kannan said. "Although I think enterprises will take a little bit more time."

James Mitchell, chief executive of UK cloud broker and services dealer Strategic Blue, said many organisations had tried the big public cloud vendors such as Amazon and found that it didn't offer quite what they wanted.

At the same time, they didn't want the inflexibility of traditional tech any more.

"And the difference from buying from a vendor is that you're stuck for the lifetime of the contract. But with Amazon, we can just turn it off again," Mitchell said.

Pricing issues had some way to go still before it enabled the flexibility that customer organisations want, but the advantage of buying cloud services – and doing it from a broker or cloud marketplace – was still clear, he indicated.