Can anyone close the gap with public cloud market leaders Amazon and Microsoft?
Oracle and Alibaba are making headway in infrastructure-as-a-service, and IBM is attracting renewed interested while VMware has retreated on its public cloud strategy after shedding the business to French hosting provider OVH.
That was the assessment of Kyle Hilgendorf, Gartner's chief of research, who spoke in Sydney this week at the analyst firm's data centre conference.
Hilgendorf revealed that both Oracle and Alibaba would make their first entries into Gartner's next infrastructure-as-a-service Magic Quadrant, which is in the "late stages" of preparation and will be published in the next few weeks.
Oracle, Alibaba and IBM
Oracle has been throwing investment at its cloud infrastructure. "This coming year, you'll see us aggressively moving into infrastructure-as-a-service," company founder Larry Ellison said at last year's Oracle OpenWorld conference.
The company launched Australian presence for its IaaS and platform-as-a-service earlier this year.
Alibaba Cloud, dubbed "Aliyun", also set up shop in Australia, opening a Sydney data centre toward the end of last year, among three other facilities globally in its US$1 billion effort to build out its cloud network.
Gartner has seen a renewed demand around IBM, driven by interest in its Bluemix cloud platform.
IBM's cloud portfolio, which Hilgendorf said would most appeal to existing Big Blue customers, offers a few benefits including its suite of services; IBM's network of data centres locations; as well as the company's managed services offer.
However, he was less complimentary about Softlayer, which IBM acquired in 2013 as the central plank of its public cloud play – "there has not been a lot of innovation in the Softlayer product", said Hilgendorf.
IBM has been putting most of its investment into its Bluemix infrastructure- and platform-as-a-service. "We are bit uncertain about what is truly the future of IBM and Softlayer, but [IBM] will continue to play in the public cloud space."
VMware
"The honest truth, in my opinion, is that vCloud Air was not doing well," said Hilgendorf. "We did not hear very good things about the service. There were customers who said if you just want to host VMs in an external data centre and get self-service with some clicks of a button, it does a pretty good job."
VMware is "completely changing their strategy", said Hilgendorf. The company has moved to a partnering model, most noticeably with an AWS tie-up first announced last October.
VMware sold its vCloud Air business to hosting provider OVH in April, though the deal did not include Australia and New Zealand.
The virtualisation vendor would not tell CRN why Australia was ring-fenced from the sale, however, Hilgendorf guessed it might be due to OVH's lack of footprint in our region. "Odds are they [VMware] are probably shopping for someone else in the Asia Pacific-Australian market to do that, and that adds even more uncertainty."
OVH has been ramping up its local presence, launching a Sydney data centre in Equinix last year then opening its Melbourne office last week.
The cloud duopoly
Amazon Web Services and Microsoft Azure still have a stranglehold on the cloud infrastructure market; the two now represent a near 50:50 mix among client requests seen by Gartner.
AWS and Azure will feature in any client cloud evaluation, but there's no obvious third player, said Hilgendorf, who was speaking at the Gartner IT Infrastructure, Operations and Data Centre Summit.
"The sentiment I hear from organisations all the time is, 'If we want the best technical feature provider, the one in which we have the most technical confidence, we will go with Amazon. If we want to a provider in which we have the most trust relationally, which has given us the best service over past couple of decades, we will pick Microsoft.'"
Amazon Web Services
AWS stands apart thanks to three criteria: features, scale and its ecosystem and marketplace.
It has long led the pack in terms of features: the company had already launched 236 new features and services by April 2017, after releasing 1017 new services and features last year.
But AWS' superiority in terms of features is under pressure from aggressive poaching of engineering talent, said Hilgendorf, as well as competitors occasionally beating the company to market with their own innovations, such as Google with Cloud Spanner and Microsoft with Cosmos DB.
AWS does have feature gaps, though, such as a lack of a service-level agreement for single instance availability, said Hilgendorf – if customers require protection of the SLA for availability, they must deploy multiple EC2 instances across multiple availability zones. "If you have an application that can't scale across multiple VMs, you don't have any level of protection for that."
He said another downside was Amazon's SLA for availability of its Simple Storage Service (S3); at just 99.95 percent, the SLA allows for approximately 30 minutes of downtime per year.
Microsoft Azure
Gartner pointed to three major selling points for Azure: Microsoft's close-knit relationships with IT shops; its identity and access management; and financial incentives.
Active Directory gives Microsoft "an enormous amount of gravity", said Hilgendorf. "It is really hard to convey all of that out to AWS."
Microsoft has also won share by throwing thousands of dollars – even hundreds of thousands of dollars – of free Azure at customer organisations, though Hilgendorf expects this to slow down as the company gets closer to market leader AWS.
One potential barrier for Azure is the lack of multiple data centres per region. "I cannot underscore how big an issue this is for a lot of organisations," said Hilgendorf. Microsoft is working on a plan but it will take the company "a couple of years" to roll that out, he added.
"If you need the highest level of availability, this could be a showstopper."
Google is firmly in third position but the "honest truth" is that the company "is in a very tough position being number three", said Hilgendorf.
"Google is in a situation where you can't say they are the best technically, you can't say they are the best relationally. It causes them to fall out of a lot of evaluations.
"Time and time again we see RFPs within our client base that have three providers. It is always Amazon. It is always Microsoft and then commonly it is more like an incumbent – it could be a traditional partner like HPE or Dell with managed private cloud, it could be Fujitsu, VMware or IBM," said Hilgendorf.
Google's standout selling points are storage; global network connectivity; and sustained use discounts, which have turned the AWS Reserved Instance model on its head by discounting users after the fact based on historic consumption.
"I firmly believe that if Google is going to try to climb that ladder and get from No.3 to No.2 or No.1, they will need to do it with ruthless pricing," added Hilgendorf.
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