Big Cloud Offers Big Opportunities for Small Providers

Arthur Cole

The cloud is starting to dominate IT infrastructure and the hyperscale providers are starting to dominate the cloud. So is it game-over for the data center? Or the small cloud providers? Not exactly.

To be sure, the vast bulk of the enterprise workload appears headed for the top providers like Amazon, Google and Microsoft. According to Synergy Research Group, worldwide revenue from cloud and SaaS services is on pace to hit perhaps 29 percent annual growth for the remainder of the decade, passing $200 billion in 2020. This will be driven largely by 11 percent annual growth from the hyperscale providers offering primarily infrastructure and software services, to the point that they will soon control upwards of 80 percent of all cloud and SaaS revenues.

Still, that 20 percent represents a huge business for the many smaller providers who don’t have to own the industry in order to be successful. As Fortune’s Barb Darrow points out, many providers like Equinix and BackBlaze have developed specialty software that provides unique services in areas like workload visibility and archive management – things that the enterprise values highly once they agree to shift data to someone else. Meanwhile, top Amazon users like Netflix are starting to make a pretty good living selling the software that it has developed for itself to management hyperscale resources more efficiently.

In fact, says CIO Dive’s Justine Brown, if you look at Gartner’s latest Magic Quadrant for cloud infrastructure and services, you’ll notice a raft of new names in the niche player quarter, few of whom are actually new but are making their presences known in an increasingly diverse industry. Companies like Interoute and Skytap are sharing space with NTT Communications and Fujitsu by targeting narrower use cases that nonetheless have the potential to generate substantial revenues because the customer base is now measured on a global scale. In this way, the cloud is evolving along the lines of the software market: a few dominant players but still plenty of room for innovation and differentiation.


And while it is true that much of this cloud activity will come at the expense of local data center infrastructure, particularly hardware, this still represents an opportunity for those willing to go for it. SUSE and Supermicro recently entered a partnership to build Linux-embedded compute modules designed to give organizations a quick and easy way to build their own private clouds. The platform will be built around SUSE’s YES Certified hardware architecture that will house platforms like SUSE OpenStack Cloud, SUSE Enterprise Storage and SUSE Linux Enterprise Server on footprints as small as the 1U SuperServer. Leveraging technologies like multiple hot-swappable NVMe Flash drives, the companies say they can supplant larger and less efficient infrastructure with systems that provide higher performance per watt, per dollar and per square foot.

So overall, the cloud is growing and the data center is shrinking, but because data loads are becoming larger and more diverse, it appears that market opportunities for providers, platform designers and software developers are on the rise.

As the old saying goes, wherever there’s a problem, there’s a way to make a buck by solving it.

Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia. Follow Art on Twitter @acole602.


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