What the latest cloud explosion really means

Cisco, Google, Amazon, and Microsoft all made major cloud announcements last week, with far-reaching implications for business customers

The cloud surge last week was like nothing I've ever seen. It reminded me of one of those sudden blasts of fog through the Golden Gate.

It all started with Cisco announcing it would invest $1 billion in an OpenStack-based "intercloud" to provide cloud services to large b-to-b customers. A day later Google slashed its cloud prices -- Compute Engine by 32 percent, App Engine by 30 percent, Cloud Storage by 68 percent, BigQuery by 85 percent -- and introduced Sustained Use Discounts that lower costs even further. It took Amazon just 24 hours to fire back with its own price cuts of 36 to 65 percent for its Simple Storage Service and 30 to 40 percent for EC2, among other reductions.

[ Which freaking PaaS should you use? InfoWorld helps you decide. | Stay on top of the state of the cloud with the "Cloud Computing Deep Dive" special report. | Stay up on the cloud with InfoWorld's Cloud Computing Report newsletter. ]

The grand finale came in Satya Nadella's press conference Thursday, where he announced Microsoft's Office for the iPad and conjured a vision of a "cloud for everyone and every device." Nadella made clear Microsoft wants to dominate the SaaS segment of the cloud, starting with clients distributed and administered from its Office 365 hub and ultimately embracing a new wave of devices not imagined yet.

What should we make of this fresh cloud explosion? Let's take the three cloud flavors in turn.

1. The rush to IaaS

No one is sure exactly what Cisco has in mind for its OpenStack intercloud, but the idea of offering specialized cloud infrastructure services to, say, the telecommunications industry among other verticals is intriguing. If SDN means the days of high-end, high-margin networking equipment are numbered, Cisco had better lay the groundwork for high-end, high-margin cloud services.

As for the dramatic Google and Amazon IaaS price reductions, they still won't convince enterprises to move big chunks of their existing infrastructure to the cloud wholesale. Large enterprises can't tolerate that sort of dependency, and migration to Google or Amazon doesn't absolve the customer from having to manage infrastructure, virtual though it may be. On the other hand, lower cost can only accelerate the usual enterprise IaaS activities: dev and test, disaster recovery, and more recently using IaaS as a platform for buidling customer-facing systems of engagement that need to change and scale quickly.

It's a different proposition for businesses just starting out. Who wants to make risky capital investments in infrastructure? Cheap cloud capacity makes the all-in cloud practical, and the enticement of Sustained Use Discounts makes it less likely new businesses will eventually migrate their cloud deployments back to local infrastructure. Expect Google's competitors to clone that pricing model soon.

1 2 Page
From CIO: 8 Free Online Courses to Grow Your Tech Skills
Join the discussion
Be the first to comment on this article. Our Commenting Policies