Boy, it’s been quite a week for the cloud-schadenfreude crowd. If you listen to the various news outlets, apparently Rackspace has given up on cloud and Amazon is in free-fall. Here’s some representative
hack jobs pieces:
More accurate are these:
- Amazon Web Services Revenue Growth Is Way Down
- Rackspace’s Pivot Is A Sign Of The Times For IaaS Providers
Let’s look at what’s actually going on.
First, Rackspace. I was on the Spiceworks forum yesterday and the news is definitely being interpreted as “Rackspace is getting out of cloud, don’t consider them any more.” Now, it is their own fault for bungling the messaging here, but if you actually go look at what they are doing, at its heart they are making this change:
Rackspace Cloud will be sold only with a support contract now.
Yes, that’s it. That’s the change. Now it’s “managed cloud!” Which is fine, a heck a lot of software I buy has mandatory maintenance contracts nowadays, but this doesn’t mean “Rackspace is leaving the cloud business!” They just want to add in their “Fanatical Support ™” to the value proposition and not compete purely on a bare-metal (bare-API?) SaaS “how much does a 2-CPU 4 GB server cost” basis.
Rackspace has to get back out in front of this messaging hard – it’s definitely made its way to the practitioner trenches as “they’re pulling out.” I mean, I have to say Rackspace’s strategy is pretty opaque to most folks, but this message misstep has graduated from “muddled and unclear” to “actively harmful.”
Now, Amazon. The real story is:
Amazon Web Services only grew 38.39% last quarter.
For a large company that’s a pretty good growth rate, right, is yours higher? The press likes to turn IaaS into a 3 provider horse race. But so far – it’s not. Check out this recent (March 2014) Synergy Research graph.
The fact of the matter is that Amazon is beating the holy hell out of everyone else in IaaS. It’s more neck and neck in PaaS, but sadly the entire PaaS market is still low (due to Joe Average IT Shop basically interpreting PaaS pitches as someone standing up and screaming “I’m a sorcerer!!!”).
IBM, HP, etc. don’t have credible offerings yet. I know they’re investing, I know they have roped some random companies that love them into doing it, but they are just not there yet. IBM is not a commodity company, they’re a “you have a billion dollar contract with us we’re going to build out whatever we feel like with that.”
Google, same thing. It’s cool, it’s well priced, it’s dev friendly – but at the big price cut announcement, we had a big get-together at Capital Factory here in town. I looked around at the crowd of 40 clouderati types and said “OK, so who is comfortable running production apps on Google cloud yet?” Result: zero. Google’s throwing money at it but as with most of Google’s new offerings, it’s hard to trust it’s not just going to dry up tomorrow and get cancelled because they are running after private spaceships or whatever now, and nothing makes them money like their ad business so “it’s revenue generating” won’t save it. And Google is so bad at enterprise support…
Microsoft Azure was really good. Better than it had a right to be! I was very impressed with Azure in years 1 and 2. Execution was good (we used it for a SaaS service at National Instruments) and the vision was definitely “where the puck is going to be.” But post-Ozzie, it hasn’t exactly been shaking the sheets. At CloudAustin there was more Azure interest two years ago than there is now. They were going strong on dev friendliness and all, but trying to get into IaaS has been a distraction and they just aren’t keeping pace with Amazon’s rate of new features. Docker support, SSDs, new instances, vCenter integration, Dropbox competitor, desktop-as-a-service Citrix competitor…
Let me address the four big “why AWS is crashing and burning (despite being in an obvious position of market dominance)” points from the “Scorpion” article.
- AWS is not the low price provider.
Eh. Not sure why this is relevant and also not sure it’s true for what you are getting… It’s like saying “there are books cheaper than that book you just bought.” Well sure there are, but do they have the information I want in them? See below for why not always having the lowest cent per minute under Google and Microsoft doesn’t really concern me.
- AWS is not the best product at anything – most of their features are mediocre knock offs of other products.
This misses the point – their features are SIMPLER knockoffs of other products. That’s why it’s an accelerator. Dropbox and Salesforce and all the successful cloud entities have said “you know, some enterprise user left to their own devices is going to generate a list of 1000 requirements they don’t really need. Forget that. Let’s make the actual core functionality they need and leave off the rest so it’ll actually get used.” This is why they dominate the IaaS business. Many of their products are named to match. “SIMPLE email service.” “SIMPLE queue service.” “SIMPLE notification service.” This drives a new wave of architectural thought – instead of complicated services packed with stuff, what if instead I integrate simple, well-designed microservices? After doing a lot of cloud architecture work, those attributes are positives, not negatives.
- AWS is unbelievably lousy at support.
I’m not sure I’d want to be in a race with Amazon, Microsoft, and Google to see who supports customers worse. I’m not sure I’ve ever been part of an enterprise happy with its Google support, and all experiences I’ve had with Microsoft support have been some Brazil-esque “you can’t actually ask them questions, only some VP is a designated contact on the corporate contract…”. Amazon is positioning themselves more like a hardware vendor, you don’t bother getting much support from them besides parts replacement, you get support from the managed hosting provider or whatnot that’s a MSP on top of them if you need it.
- Once you are at $200k / month of spend, it’s cheaper and much more effective to build your own infrastructure
This is frequently untrue and based on people not understanding the full costs of getting stuck in the infrastructure business. What’s your cost of delay? Average enterprise “wait for servers” time is about 6 weeks; assuming you’re not just using them for nothing, your ROI is delayed by that amount. And what about all the operation of those complex systems? You can’t just stick in the salary of the developers and sysadmins you’d need – stick in your revenue per employee instead, because that headcount could be doing something useful for your company instead of plumbing. Not to mention the cascading percentage of each layer of management’s time spent worrying ab out the plumbing and the plumbers instead of conducting the core business of the company. Cost of delay from lost agility and opportunity cost are never taken into account but definitely should be.
I know a lot of the old guard want cloud to dry up and go away, it bothers their lovely datacenters. And some of the very new guard resent it because Amazon continues to be so successful – they keep up a rate of innovation that new players can’t disrupt. But this whole week of “the cloud is falling” news is complete BS, and won’t amount to much.