Comments on: Cloud Infrastructure Commoditization is Inevitable: Make Money While You Can http://blogs.gartner.com/daryl_plummer/2009/02/23/cloud-infrastructure-commoditization-is-inevitable-make-money-while-you-can/ A member of the Gartner Blog Network Sun, 12 Feb 2012 11:32:48 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: Daryl Plummer http://blogs.gartner.com/daryl_plummer/2009/02/23/cloud-infrastructure-commoditization-is-inevitable-make-money-while-you-can/comment-page-1/#comment-173 Daryl Plummer Thu, 26 Feb 2009 16:09:14 +0000 http://blogs.gartner.com/daryl_plummer/?p=89#comment-173 Peter, that depends on how close they can stay to the ultimate consumers. the farther away from the ultimate consumer you are in a service Oriented model, the more likey it is that you will be at a level of cost recovery rather than value add. That is what happened to power, water, telecom, and a host of other basic infrastructure providers. those who add value (as Lydia suggests) will have to be closer to the ultimate consumer of the solutions that ride on top of them or the equation wkill just take longer to drive them into the commoditization. For example: In this chain of suppliers, who would YOU - the ultimate customer - care most about. IPTV and On Demand Movies to your home frovided by ATT-Uverse --> alcatel Lucent (pipe provider with value add). Alcatel is pretty critical and important, but most users don't even know they are in the equation and the same will be true of enterprise users who pay for cloud services. Peter, that depends on how close they can stay to the ultimate consumers. the farther away from the ultimate consumer you are in a service Oriented model, the more likey it is that you will be at a level of cost recovery rather than value add. That is what happened to power, water, telecom, and a host of other basic infrastructure providers. those who add value (as Lydia suggests) will have to be closer to the ultimate consumer of the solutions that ride on top of them or the equation wkill just take longer to drive them into the commoditization. For example: In this chain of suppliers, who would YOU – the ultimate customer – care most about. IPTV and On Demand Movies to your home frovided by ATT-Uverse –> alcatel Lucent (pipe provider with value add). Alcatel is pretty critical and important, but most users don’t even know they are in the equation and the same will be true of enterprise users who pay for cloud services.

]]> By: Peter Evans-Greenwood http://blogs.gartner.com/daryl_plummer/2009/02/23/cloud-infrastructure-commoditization-is-inevitable-make-money-while-you-can/comment-page-1/#comment-172 Peter Evans-Greenwood Thu, 26 Feb 2009 12:04:37 +0000 http://blogs.gartner.com/daryl_plummer/?p=89#comment-172 Does this mean that cloud infrastructure providers will eventually end up on a cost-plus model, similar to existing (power/water) utilities? Does this mean that cloud infrastructure providers will eventually end up on a cost-plus model, similar to existing (power/water) utilities?

]]> By: Daryl Plummer http://blogs.gartner.com/daryl_plummer/2009/02/23/cloud-infrastructure-commoditization-is-inevitable-make-money-while-you-can/comment-page-1/#comment-170 Daryl Plummer Wed, 25 Feb 2009 15:37:33 +0000 http://blogs.gartner.com/daryl_plummer/?p=89#comment-170 Russ, the issue is that of commiditization of the business of being a cloud infrastrucutre provider. to sync up our language, I will say this. I believe there is one public cloud but many cloud providers who have different cloud platforms. so when we are talking about different cloud "platforms" (not different clouds what I mean is that delivering computer power or storage services, etc. will commoditize since those basic functions have little value to be added on top. There will be companies who add value like flicker does on top of a storagte service but within the provider, proprietary extensions to a cloud infrastructure service just makes it harder to interoperate with that servic. So, although it may take quite some time, the lower level cloud services like infrastruct will eventually commoditize as some degree of standardization happens. this happened with the Web in that being a Web Server provider became a bad business to be in if you wanted to generate revenue. some used CGI to differentiate site capabilities but this too was replaced by a more high-levelway of adding programmatic function to the web. As more players deliver cloud infrastructure, the common patterns of use will arise and standards will emerge. thus does NOT mean that all cloud services will be interoperable - only that in the long run, it won't be a sustainable, differential blke revenue generating business for a lot of players. A smaller set of players will eventually win out. Russ, the issue is that of commiditization of the business of being a cloud infrastrucutre provider. to sync up our language, I will say this. I believe there is one public cloud but many cloud providers who have different cloud platforms. so when we are talking about different cloud “platforms” (not different clouds what I mean is that delivering computer power or storage services, etc. will commoditize since those basic functions have little value to be added on top. There will be companies who add value like flicker does on top of a storagte service but within the provider, proprietary extensions to a cloud infrastructure service just makes it harder to interoperate with that servic. So, although it may take quite some time, the lower level cloud services like infrastruct will eventually commoditize as some degree of standardization happens. this happened with the Web in that being a Web Server provider became a bad business to be in if you wanted to generate revenue. some used CGI to differentiate site capabilities but this too was replaced by a more high-levelway of adding programmatic function to the web. As more players deliver cloud infrastructure, the common patterns of use will arise and standards will emerge. thus does NOT mean that all cloud services will be interoperable – only that in the long run, it won’t be a sustainable, differential blke revenue generating business for a lot of players. A smaller set of players will eventually win out.

]]> By: Russ Castronovo http://blogs.gartner.com/daryl_plummer/2009/02/23/cloud-infrastructure-commoditization-is-inevitable-make-money-while-you-can/comment-page-1/#comment-168 Russ Castronovo Tue, 24 Feb 2009 17:50:23 +0000 http://blogs.gartner.com/daryl_plummer/?p=89#comment-168 I'm not sure I 100% follow your thoughts on commoditization of cloud infrastructure. Are you saying that you think that clouds will use commodity hardware and software or are you saying that the clouds themselves will be like commodities? If you're saying its the first then that's sort of equivalent to a the commodity (good-enough) components being the most effective because they're cheaper. Couldn't one easily disprove this by building a cheaper to use, more efficient cloud with proprietary components, but using the same interfaces as a cloud with commodity hardware and software? Clouds enable the users to distance themselves from hardware choices and focus on the APIs and machine images. If the interfaces were compatible would a customer care about the hardware or the price? If you're saying the second then do you see any differentiation between clouds. Couldn't one develop an cloud optimized for high performance technical applications or with the added security feature needed for the healthcare? These specialized clouds would conceivably allow for more market players as the requirements of the applications might actually require changes in the hardware and software. A cloud provider who went this route might be able to charge a different rate than a cloud provider using commodity components as a different level of service would be provided. Anyway, I appreciate your thoughts on this. Russ I’m not sure I 100% follow your thoughts on commoditization of cloud infrastructure. Are you saying that you think that clouds will use commodity hardware and software or are you saying that the clouds themselves will be like commodities?

If you’re saying its the first then that’s sort of equivalent to a the commodity (good-enough) components being the most effective because they’re cheaper. Couldn’t one easily disprove this by building a cheaper to use, more efficient cloud with proprietary components, but using the same interfaces as a cloud with commodity hardware and software? Clouds enable the users to distance themselves from hardware choices and focus on the APIs and machine images. If the interfaces were compatible would a customer care about the hardware or the price?

If you’re saying the second then do you see any differentiation between clouds. Couldn’t one develop an cloud optimized for high performance technical applications or with the added security feature needed for the healthcare?

These specialized clouds would conceivably allow for more market players as the requirements of the applications might actually require changes in the hardware and software. A cloud provider who went this route might be able to charge a different rate than a cloud provider using commodity components as a different level of service would be provided.

Anyway, I appreciate your thoughts on this.

Russ

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