The Public Cloud No Longer Makes Sense for All Players

by Ostatic Staff - Apr. 29, 2015

Companies with household names ranging from HP to IBM have jumped rapidly on the cloud computing bandwagon, but they're not all necessarily focused on public cloud services. In fact, some companies are sending very mixed signals about the public cloud.

Case in point: Bill Hilf, HP's SVP of cloud product management said to The New York Times that "it makes no sense for us to go head-to-head" with companies like Amazon, Google, and Microsoft in the battle to sell on-demand computing to businesses. Meanwhile, InformationWeek notes that HP just came out with a statement to ComputerWeekly singing a different tune. "HP is not leaving the public cloud market," HP officials reportedly said. All of this is more evidence that we are seeing consolidation in the cloud computing market, and organizations must consider carefully where they are going to place their long-term bets.

HP recently reported middling revenues, and remains very committed to OpenStack, but not necessarily to the public cloud, where 800-pound gorillas like Amazon dominate. Just recently, Amazon and other cloud titans reported their cloud numbers.

The Amazon cloud is a $4.6 billion business. Amazon reported that the sales at AWS were $1.566 billion in the first quarter, up from $1 billion in the same quarter a year ago. Measured by revenue it is king of the hill in cloud computing. 

Microsoft said last week that its commercial cloud business is on a $6.3 billion run rate, but you have to take that with a grain of salt because the company lumps Azure revenues, money made by Office 365 and other metrics all together.  Still, it is pretty clear that just a few entrenched players dominate the public cloud space.

For companies like HP--or Red Hat and Mirantis, for that matter--private clouds may be more promising and fertile territory to mine. 

According to RightScale's State of the Cloud Survey for 2015 (where the graphic seen above comes from), hybrid clouds are also all the rage:

 "Hybrid cloud is the preferred strategy: 93 percent of organizations surveyed are running applications or experimenting with infrastructure-as-a-service; 82 percent of enterprises have a hybrid cloud strategy (up from 74 percent in 2014)."

"Public clouds are used by more organizations while private clouds run more workloads: 88 percent of organizations use public cloud compared with 63 percent that use private cloud; 13 percent of enterprises run more than 1,000 VMs in public cloud, while 22 percent of organizations run more than 1,000 VMs in private cloud."

 With so many players focused on the cloud, we are likely to see more consolidation going on, and companies large and small will have to pick an area of focus.