Volatile Clouds Create Channel Opportunities

Not all clouds are created equal, which helps explain why there are so many of them. Many solution providers expect to see growth of cloud computing in the channel, but they wonder which vendors to go with.

Like most emerging markets, the cloud computing space is volatile. IBM, for example, recently surprised many in the industry by reportedly plunking down more than $2 billion to acquire SoftLayer Technologies to fill a hole in its cloud computing lineup.

According to Dennis Quan, vice president of IBM SmartCloud infrastructure, the SoftLayer acquisition extends the IBM cloud portfolio with a public offering that is easy for independent software vendors to invoke. SoftLayer operates 100,000 servers in 13 global data centers, which are accessible via a standard set of application programming interfaces that make it easy to dynamically consume additional compute resources as required.

“It gives us a cloud offering that can be consumed in a more elastic fashion,” said Quan. “In terms of IBM and SoftLayer, we see strengths coming from both sides.”

Industry analysts, such as Judith Hurwitz, president of Hurwitz and Associates, generally agree. “I see this as a pragmatic, well-thought-out acquisition,” she said.

What’s not known, however, is how much more merger-and-acquisition activity there will be in a cloud computing market where almost every type of IT entity is trying to claim a piece of the action.

For example, system vendors are competing more aggressively in a cloud market that’s currently dominated by companies such as Amazon and Google. In addition, all vendors—from Microsoft and VMware to solution providers that have rolled their own cloud service—are, to one degree or another, competing for much of the same business.

Deals such as the SoftLayer acquisition usually indicate that a niche market has gone mainstream, said Charles King, principal analyst for the IT research and consulting firm Pund-IT. While there’s no doubt future consolidation will occur in the cloud, right now acquisitions are more about vendors filling out their cloud portfolios, he said. For IBM, that means not only competing in the private and public cloud space, but also offering a full portfolio of enterprise-class cloud applications.

In the meantime, a highly fluid cloud computing environment creates both risk and opportunity for solutions providers. Aligning with a particular cloud provider creates the risk of waking up one morning to discover that the provider has been acquired by a rival. However, customers are looking for managed services that will help shield them from the vagaries of the nascent market, and that presents solution providers with a great opportunity. Cloud service providers may come and go, but if the managed services being provided across a hybrid cloud computing environment are consistent, a lot of that disruption can be minimized.

Hurwitz noted that customer needs go beyond dealing with the occasional merger or acquisition. Customers want to run various classes of application workloads on different types of cloud computing services, which will span from their private clouds running on-premise to public and private clouds delivered as a service. All that diversity in the cloud represents a significant opportunity for solution providers to offer a layer of management abstraction across hybrid clouds that allows internal IT organizations to more effectively function as a broker of internal and external cloud computing services.

“You’re going to see a very hybrid world in the cloud,” said Hurwitz. “I don’t think we’ll ever have one vendor driving everything. After all, customers are always looking for better pricing.”

Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.