Cloud Service Providers: Does Size matter?

We have heard history repeats itself. And to me it is quite evident in this space as I am sure it is to you as well.

Let us go back to the late 90’s and early 2000 when the dot.com was the buzz all around. There was a lot of demand for IT infrastructure as everyone was going the dot.com way. Correspondingly, there was a sudden spike in the need for data centers as well. It became fashionable and profitable for people to fund and open many data centers around the planet, which indeed happened.

Emerson reported in December 2011 that there were a total of 509,147 data centers globally and the total area covered by this was about 285,831,541 square feet. Now that’s approximately 6000 football fields right next to each other – Massive!!!

Cisco puts out an annual Global Cloud Index and it has predicted that by 2016, 62% or two-thirds of global workloads are likely to be cloud based and by 2018 this percentage would reach nearly 76%. So if that happens to be true, what do you think will happen to 500 thousand data centers globally?

Now let us take a view of the cloud market. Gartner is its Cloud Magic Quadrant indicated 15 global leaders that include AWS, MS Azure, CenturyLink, Google and many others. There are various reports which predict cloud market to grow at 20 to 30% CAGR (compound annual growth rate) over the next few years. Do you want to start and become a cloud provider? Does this sound like deja vu?

Large vs small

We have seen there are many cloud providers of various sizes offering different things in the Cloud. The question remains will or will they not be able to compete with the biggies? Will their services be reliable enough for your critical workloads? Will they expand and have sufficient capacity or will they take care of technology refresh?

Logically with the kind of money Microsoft, Google, AWS, IBM and the other biggies can invest in their public cloud infrastructure, it will appear that smaller players may not be able to survive. However, smaller players also have different economics and overhead structures. They may focus on a niche market specializing in something that you may not get from the biggies.

What we recommend our customers is to be nimble. Whether you have an on-premise or a cloud infrastructure, it is vital these days to not be committed to this with a capital investment. You should be able to pay for what you use and you should be able to relocate and migrate from one to the other easily without outages and without headaches. Keep your business running and find ways to make IT flexible for you. We can help. Contact us.

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