Semi Dedicated Web Hosting | Hosting Providers Aim To Challenge Cloud Leaders
The global market for cloud providers is still wide open to new entrants, the head of a UK hosting company told members of a British computer trade assocation this week. Speaking at the Intellect Cloud Computing Conference in London on Tuesday, Kate Craig-Wood, managing director of Memset, contradicted the conventional wisdom that only multi-billion-dollar, US-based businesses such as Amazon, Google and Microsoft can afford to compete in the emerging market for cloud infrastructure and platform services.
“Players in the UK could scale up and be competitive on a global scale,” she told attendees. “You don’t have to be an Amazon or a Google to play in this game.”
Fresh from a recent fact-finding visit to the US, Craig-Wood said that, apart from Amazon, most IaaS and PaaS providers were still relatively small, with few penetrating the $100 million mark in revenues. This, she said, meant well-resourced UK and European players could still close the gap on them. As an established provider hosting 20,000 websites, including some of Britain’s biggest, Memset could be one of those players, she intimated. The company, which was the main sponsor of the one-day event, has a long record of providing virtual machine hosting and is an early participant in the UK government’s G-Cloud initiative. [ Disclosure : I attended the event at no charge as a speaker].
Such fighting talk from Craig-Wood is a sign that it’s not time just yet to write off the European hosting industry as it morphs to embrace the cloud. But there are some important challenges any hosting incumbent has to overcome if it’s going to make its mark as a cloud provider:
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Building an on-demand cloud . Any cloud provider worthy of the name has to implement the full set of abstraction layers that enable players like Amazon, Rackspace and others to deliver truly scalable, API-driven, on-demand compute, storage and platform services. It’s not as hard or arcane an art as when Amazon first started building the AWS infrastructure a decade ago ” much of it has been documented and even packaged up into open-source and commercial software stacks. But it’s still tough to execute reliably at scale, as Amazon’s own outages have demonstrated. Memset will launch its API early next year, Craig-Wood told me, so the provider has really only just started out on that path.
Executing well with hybrid cloud . While it is building its on-demand cloud, the bread-and-butter business for a provider like Memset will be to satisfy all the demand now coming through ” both from public sector initiatives like G-Cloud and from the commercial enterprise market ” for various forms of semi-private cloud. All kinds of organizations are realizing that they need a more cloud-savvy infrastructure . Using a provider like Memset will get them there a lot more quickly, reliably and cheaply than attempting to do it in-house, while still having the comfort of using dedicated rather than publicly shared infrastructure. But providers must be careful that satisfying that demand doesn’t distract them from continuing to build an on-demand offering.
Managing the transition to on-demand . The final challenge is the hardest. Providers must support their customers as they start taking advantage of on-demand cloud services for greater agility, scalability and economy ” even though this means losing the higher revenues they earn from hosting the same computing on dedicated infrastructure. Implicit too in this move is a change of business model for the provider and its account management team as customers shift increasingly to on-demand services. Those providers that have been too slow to invest in their on-demand services will find they haven’t reached sufficient scale to stay competitive as a general-purpose cloud provider, and then will be forced into hard choices as they give up certain lines of business to concentrate on a more targetted range of specialist offerings.
None of this is going to be easy, but one factor that may help UK and European providers is the question mark hanging over data privacy when hosted by US providers. Businesses in Europe are concerned about US cultural and legal attitudes to personal data, along with the implications of the Patriot Act for confidentiality of all forms of data held by US-owned providers, even within their European facilities. Such uncertainties provide a competitive edge for European operators that most are determined to exploit as long as they can. The stronger privacy protection afforded by EU regulations can even provide an edge when selling in other regions such as Asia and South America.
Although European providers have some catching up to do, the market is still young. There are certainly opportunities for aggressive providers to leverage their local market presence into a platform for global expansion. But there are plenty of traps along the way that could derail their efforts. It remains to be seen whether Memset and others can seize those opportunities and go on to realize their global ambitions.