The Growing Importance of Cloud Service Providers

 
 
By Michael Vizard  |  Posted 2016-09-12 Email Print this article Print
 
 
 
 
 
 
 
cloud service providers

With more application workloads moving into the cloud, vendors are starting to put greater emphasis on forging partnerships with cloud service providers. Rather than reselling IT infrastructure based on what a customer may request, most CSPs represent a hybrid between traditional channel partners and end-user customers.

On one hand, CSPs want to be rewarded for the amount of IT infrastructure they can get their customers to consume. At the same time, however, the cost of supporting that IT infrastructure heavily influences with which vendor a CSP ultimately decides to become partners.

Keeping those nuances in mind, Nimble Storage on Sept. 12 announced its first formal CSP program. Gavin Cohen, head of product marketing for Nimble Storage, said CSPs already account for 20 percent of Nimble Storage's revenue. But the company is also seeing 69 percent growth in year-over-year revenues generated by this segment of its customer base.

The Nimble Storage cloud service provider program is based on two-tiers that reward CSPs for the amount of storage their customer consumes as well as providing joint sales and marketing tools. In addition, via a new app-based pricing for storage-on-demand option, CSPs now only pay for the storage their customers use, regardless of whether consumption goes up or down. Nimble takes responsibility for providing the appropriate storage devices to meet an application-specific service-level agreement. CSPs are only billed monthly for the actual application storage usage, starting from 6.8 cents per gigabyte per month for all-flash storage arrays.

Cohen says Nimble Storage expects to further accelerate that growth by both deliberately focusing on CSPs, while also enhancing the multi-tenancy and quality-of-service (QoS) capabilities of its storage platform.

When it comes to IT infrastructure in the age of the cloud, many vendors now find themselves in a quandary. While more workloads than ever are moving into public clouds, the top-three cloud service providers—Amazon Web Services, Microsoft and Google—all build their own servers and storage systems. For IT infrastructure vendors to thrive in the cloud, they need to get the next tier of CSP to opt to buy IT infrastructure rather than investing engineering resources to build their own.

The degree to which IT infrastructure vendors can accomplish that task is critical because, in order to remain viable, each vendor needs to be able to generate a critical mass of sales. The paradox in the case of the storage industry is that while more data than ever is being generated, much of that data resides in the cloud. Even when that data resides on-premise, IT organizations are paying much less per gigabyte to store data, which often results in the IT storage budget remaining flat to actually declining. The good news is that there is a significant shift under way toward all-flash systems for primary storage. That means while overall spending is down, pockets of the storage industry are creating massive new opportunities for channel partners.

For solution providers across the channel, the battle for control over individual workloads is starting to resemble trench warfare. IT vendors, naturally, are hoping to supply arms to CSPs and classic resellers alike. The challenge facing solution providers now is to make sure they stay relevant, regardless where those application workloads wind up running.

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications, including InfoWorld, CRN and eWEEK. He currently blogs daily for IT Business Edge and contributes to CIOinsight, Channel Insider and Baseline.

 
 
 
 
 
 
 
 
 
 

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