Public Clouds - Private Clouds, not a zero sum game

INDIA: When Amazon introduced the so-touted never-heard-of concept called spot instances, a lot of IT compute and storage buying stood at a strange encounter with the thrill and sixth-sense powers usually reserved for volatile stock markets.

CTO Werner Vogels had exuberantly underlined in an introductory post that ‘Spot Instances are an innovation that is made possible by the unparalleled economies of scale created by the tremendous growth of the AWS Infrastructure Services.'

So far, the customers had two pricing formats to their disposal. On-Demand Instances that charged by the hour at a fixed rate with no commitment; and Reserved Instances where a one-time fee was paid for an hourly usage charge for that instance. Now with the advent of spot instances, customers could bid any price they like on unused EC2 capacity and run those instances (of course relevant only for tasks that can be flexible as to when they start and stop) for as long their bid exceeded the current "Spot Price."

This was a sign that pricing and cost management in IT was for once almost ripping the box in an attempt to think out of conventional wells. Imagine the excitement (or the panic, as applicable) of wielding spot rates of computing capacity, as prices yo yo between different ranges, as much akin to trading in a forex market yet as much like bidding and getting your preferred spot in a dry-cleaning queue or in a parking lot.

Pricing disruptions like these in IT land, where customers are only used to options like subscriptions and licenses, indeed were a seismic surprise.

The clock has turned a queasy spin as the industry enjoys a strip-tease poker game of sorts between public cloud giants this month. And while it is every bit entertaining, and a different price dashboard to watch again, may be there's time to shift our gaze to what cards the private cloud folks find themselves dealt with amidst this kerfuffle.

Tea and Coffee?

If public cloud prices have come down, shouldn't that lead us quickly to infer a jump in demand of this cloud format and hence a dip in demand for its alternative - the private cloud?

Hypothetically - yes. Without the constraint of checking the basic assumption that private and public cloud are substitutes for each other - yes. But in reality? Then, it's a may be.

Because that would imply that the only thing that was keeping prospective customers from diving into the vast ocean of public clouds was - prices. Yes, public cloud is a model so ready-to-wear, so-attractive and so much of ‘ah-someone-else's-heavy-lifting job with all the hardware and infrastructure'. But then why were customers hemming and hawing about it? An Iktsuarpok moment or the cliché laziness with new-fangled IT stuff? Or some other not-so-money-minded hesitation dilemmas?

Many debates have churned the binary (so-called) situation to the hilt and what is usually left in those dregs is the word called ‘control'. Unless words like ‘privacy concern' or ‘security worries' have been undistilled.

If they are indeed reasons that have deterred customers from taking a big bang plunge into public cloud, then price-discounts hardly sound like a magnet.

Then private cloud players, integrators, brokers, consultants or IT teams have not much to worry about.

Shailendra Singh, DGM Data Centre Infrastructure & BCP-DR, Sahara India affirms that these days the concept of private cloud is emerging very rapidly. "Few IT companies are also started solutions on private cloud like oracle 12c has started on concept of private cloud, but one has to take decision based on business call and other changes of public cloud."

As to Asia Pacific in particular, public cloud adoption will not accelerate due to this price drop here, confirms Forrester Research Senior Analyst Sudhanshu Bhandari.

He explains how public and private cloud choices are primarily driven by the application performance requirements (including network latency), security, data privacy, business agility and the operational expenditures.

So, this is not such a significant event that will suddenly drive more public cloud adoption in Asia Pacific than before.

Also, regional data centers will accelerate cloud adoption and so in India apart from start-up and small business, large companies will still leverage private cloud. Apart from the colocated data centers there are not many choices for India enterprises who want visibility about where their data resides.

Washing dirty laundry in public is not a strange sight, be it open dhobi ghaats or communal washing machines. It is hard to paint every one with the same soap though as some people will always prefer their own washing machine or bathroom tile in privacy and with control over sanitation and dye factors. At the same time, there would always be people who do not find it awkward to do their laundry with some neighbours and strangers around since it makes such a clean economies or public scale argument.

That is quite a cue that the pendulum may not swing massively towards any side between private and public cloud markets. Price-discounts may tempt but the ceteris paribus matters a lot.

Now since India is (or is perceived as) a price sensitive market, for some of the use cases such as archival for non structured data, public cloud offering will become more competitive.

Forrester models reveal a significant cost difference in file storage, with the cloud-based model coming in 74 per cent less expensive than I&O running it in-house.

In fact, veteran Cloud Industry-watcher and Vice President, Strategy for ActiveState Software, Bernard Golden strongly contends that low costs of public cloud environments can make them an attractive option for application deployment as well as a more economic alternative compared to a private cloud implementation.

"However as global public cloud vendors build data centers in this region - there will be more traction later this year and in 2015 that will drive public cloud adoption." Bhandari clarifies.

Tea and Milk?

What the ears of experts like Geva Perry or Nati Shalom catch and pass on hints at a blurring of boundaries. One does tend to pause and rummage some preconceptions when asked ‘what is exactly the boundary between public and private cloud'?

What if private cloud is not an adversary waiting to lose or gain as per public cloud's hopscotch footwork.

It could be very much rather be a one-foot-at-a-time dip in the cloud waters before one embraces a full-blown (public) cloudy avatar? What if private cloud is a complementary accessory for some applications when one decides to wear a public cloud attire? Would that make more room for private cloud market as soon as public cloud market expands? Haven't all major cloud players put some form of private cloud integration pipe on the menu already?

When Shalom who is CTO and Founder of GigaSpaces, dives into the topic ‘Public vs Private clouds (Again!)- it's not about the cost', he poignantly remarks that Amazon's own VPC (Virtual Private Cloud) is another form of connecting private with public cloud offerings, and an indication of how Amazon has adapted to this demand. He hints at the need to combine the two models well both technically and economically.

An interesting Forrester report on Cloud standards incidentally cited how Eucalyptus is smartly shifting focus and momentum to a specific use case not much attended to in the market today - an AWS private cloud. Moving AWS-native workloads internally for better economics or compliance is not an easy spot and that can be attacked sharply as per market's needs and current gaps. Specially as this typically represents a small inexperienced subset of the market. Commercial support and transition services or high-value feedback-cum-contributions or API support for dominant public clouds can be a good market opportunity to harness.

And why not? The market is up for grabs and it could be a symbiotic terrain where both segments grow together instead of a shrinking hole where one has to elbow out the other to stay in place.

An IDC study presented a first five-year forecast for the worldwide private cloud IT infrastructure market last year and estimated that the market size will increase to more than $22.2 billion in 2017.

As per a latest report "Public/Private Cloud Storage Market by Solution (Cloud Storage Gateways, Backup & Recovery, Data Movement & Access), by Software (Data Replication, HSM & Archiving, Security & Storage Resource Management) - Worldwide Forecasts & Analysis (2014 - 2019), the Public / Private Cloud Storage Market is estimated to grow from $13.57 billion in 2014 to $56.57 billion in 2019. This translates into a CAGR of 33.1 percent from 2014 to 2019.

It's indeed time that the debate should shift to combining the two forces called public and private cloud instead of picking a head in a pointless chicken fight (vegan is in, by the way, use the curry somewhere else).

Price discounts can be a good news or otherwise depending on how much people on the side of private clouds can stop those dominoes from toppling over after a price slide starting from public clouds.

Hay-making may be too old a trade but make spoons, while the gravy train chimes.