Private cloud is dead.
It died because it failed to deliver results the industry was expecting.
Show me at least one company with the scale and growth of Amazon Web Services (AWS) in the private cloud space today.
Nada, Zilch, Zip, ZERO.
I rest my case.
Back in the day, however, I was the staunchest supporter and the most vocal advocate. I convinced myself six years ago that private cloud is here to stay and win.
In an ancient blog post back in April, 2010, I argued in favor of my cherished notion, a notion I bet the last five years of my career on:
“In fact, the belief that large cloud vendors are the only groups with dramatic economies-of-scale may well be misplaced. The same cloud technologies, automation tools, sustainability tools, containerized data centers, and other options are also available to large enterprises. With these powerful cloud building blocks, there is no reason why enterprises cannot leverage private clouds to dramatically decrease IT maintenance costs while increasing business innovation and agility, particularly for strategic and mission-critical applications that drive business value.”
I was dead wrong
And I found that out the hard way. With blind enthusiasm of a self-proclaimed innovator, I poured my blood, sweat, and tears working at companies such as Dell and Mirantis in a sincere effort to push this agenda forward.
It so happened in my case that OpenStack was a vehicle to realize the vision.
For me, OpenStack was a shiny new toy and I was like a starry-eyed kid in a toy store. It’s massive open community momentum and industry backing didn’t hurt and I fell for it line, hook, and sinker!
The next shiny toy could be something like Docker containers or Kubernetes or some such new-fangled thing that Silicon Valley or the Open Source community is surely going to throw at us.
But the technology isn’t the issue! (Hint: It was never a silver bullet)
It didn’t matter what software, hardware, appliances, converged systems, engineered solutions, or reference architectures were used to build the private clouds with.
None of them delivered to our expectations and hopes.
Why did this happen?
Let me offer my perspectives:
We technologists often mistake the technology for the business solution. It’s a fatal trap we often fall into over and over again. Surely — we say to ourselves — that the next shiny new technology is revolutionary and will transform things overnight.
Yeah, right! We have seen this movie before — many times!
We need to realize that it’s just hardware and software — no matter how shiny and revolutionary it may look. However, with the right assignment of operational responsibilities, business model, consumption model, and pricing scheme, one can create valuable cloud services. And that’s what cloud is all about: a rich set of operational services with a promise of guaranteed levels of security, performance, reliability, and availability.
Repeat after me: It’s the services, stupid.
In the last five years, the world changed around us. Public cloud became real and let’s face the cold hard fact — it became a force to reckon with (800 lb gorilla, anyone?) for the rest of us in the infrastructure space! AWS reached $13 Billion in revenue growing 60% every year with Microsoft and Google running like crazy to catch-up. Sure it’s still a tiny slice of the market, but it’s mind-boggling to see the dizzying array of services that the big three are adding every day. They will continue to cut prices aggressively to a point where the issues of cost or TCO won’t even enter the discussion— but they also realize that race to the bottom isn’t the way to win in the long term. AWS is about empowering developers these days. They don’t emphasize their infrastructure services anymore. Clearly, moving up the stack is where the value game is played.
On the other hand, enterprise applications (think ERP, supply chain, human resources, finance, accounting, sharepoint etc) have not budged one inch from their traditional (aka legacy) strongholds. The public clouds are simply not the right vehicles to run these apps. Less than 5% of these workloads moved to the cloud (think mostly SaaS). What is needed here are vendors who can provide dedicated infrastructure services to host and operate these workloads with all the attributes of a public cloud service while supporting the customer’s SLA, performance, compliance, and security requirements.
What does it mean for the rest of the infrastructure and software players?
Adapt and differentiate should be their mantra everyday. The alternative is not being relevant in the industry.
Lot’s of infrastructure vendors claim to provide full stack capabilities, but I can tell you from experience it’s all vaporware, brochureware, or just pretty powerpoint with a lot of hand waving and smoke and mirrors. They are so not prepared to build — much less operate — a full stack of cloud services like AWS. Large infrastructure vendors will simply become the public shopping mall (more like a Walmart than a high-end store) for infrastructure components. This is a losing race to the bottom with razor thin margins. If that’ the business they want to be in, good luck to them!
Traditional large software vendors too fall short: Microsoft has good PaaS (Azure) and SaaS solutions, but they don’t play much in the data center business; SAP is trying hard with their HANA cloud (for a limited use case); Oracle is promising the full breadth of IaaS, PaaS, and SaaS capabilities for the enterprise as well as cloud-native workloads plus they have the hardware from the Sun portfolio. And therein lies the opportunity for some of the incumbents to remain relevant (and gasp! even win) and not get steam rolled by the public cloud juggernaut.
What about startups in the infrastructure space? If all they are doing is selling software licenses or subscriptions for a “me-too” software-defined-whatever storage or network component, there is real no long-term value in the cloud game. Infrastructure software is dead, too, unless it solves the operational life cycle management and automation problem across the entire stack or for a particular use case. No startup, however well funded, can tackle that huge problem on their own.
What about managed service providers? If all they are doing is selling “me-too” infrastructure services. AWS will eat their lunch sooner or later. To thrive, they need to differentiate along one of the dimensions that public cloud is not likely to address any time soon. These dimensions could be specific industry focus (financials, health care, telco), or specific workload (such as HPC, NFV or Enterprise applications) or some other differentiated service level such as high-performance network bandwidth, automated compliance/security etc.
Don’t believe me?
If you are not convinced yet and you still believe private clouds are living— er, living dead — I will refer you to three excellent blog posts which provide detailed reasons for the demise of the private cloud. Coming from respected industry insiders who have lived through this first hand, their obituaries are really compelling. Check them out:
Subbu Allamraju VP of technology at Expedia admonishes: “Slow down on your private cloud projects, and get out of enterprise data centers as fast you can”:
Chuck Hollis SVP of Oracle’s Converged Infrastructure speaks of the deep misconceptions that perpetuated the private cloud myth. “Perhaps there is no deeper disappointment in life than when a cherished concept fails to produce the desired results. Such is the case with the industry’s notion of private clouds. I’m throwing in the towel, walking away — and cursing under my breath. It’s a failed concept”:
The Private Cloud has failed us
Boris Renksi, CMO of Mirantis, speaks of the death of infrastructure software which is a subset of the bigger problem I highlighted here. “Numbered are the days of any company whose core business is pinned to selling licenses or subscriptions to infrastructure software bits. It feels as though the entire industry is stuck in a self-perpetuating cycle of trying to justify its own existence. And if we keep it up, we’ll be dead too.”
