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BLOG: Being a Public Cloud Provider may not be all that

Alan Shimel | May 29, 2013
Dell and others rethinking if they want to play in the public cloud provider market

My colleague and fellow Network World writer Brandon Butler wrote an article the other day about Dell deciding that it was not going to become a public cloud provider. Instead leveraging its recent acquisition of Enstratius, it was going to allow customers to integrate and use the resources of the over 20 public cloud providers that work with Enstratius.

This was despite the fact that Dell already offered some VMware-based public cloud offering and had previously announced a commitment to rolling out an Open Stack-based public cloud. Instead. Dell's Open Stack focus will be in helping customers roll out private Open Stack clouds. What about the VMware public cloud? I don't know.

The bigger question to me is why would anyone want to be a public cloud provider if even an outfit the size of Dell recognizes that the investment to do it right may make it a prohibitive to succeed venture.

I believe that in the near future there will be only a handful of truly public clouds that will have the scale to be truly public. The reason is the barriers to entry. A key question of any business model is, "what are the barriers to entry to other competitors coming into the market?" To develop public cloud at true scale requires such an enormous investment that the barriers to entry are going to prohibit all but the very biggest players. Amazon, Microsoft, Google, Rackspace have staked their turf. VMware is trying to get in now. As time goes by it is going to be harder and harder for even larger companies to enter this market.

Dell seems to have realized, and probably rightfully so, that for the near event horizon, hybrid cloud integration with private cloud is the better business model. Some people may look at this and say this is bad news for Open Stack, Cloud Stack and the other cloud stacks. While it may mean that there are less public cloud opportunities, to think that Dell has walked away from Open Stack is wrong. 

Fo the next five years or so, there are going to be private clouds sprouting up all over the place. I would think the ratio of private cloud to public cloud could even be as high as 100 to 1. So I think Dell is making a smart move in moving away from being a public cloud provider to concentrate on developing private clouds using Open Stack. 

It also plays right into the Enstratius acquisition as many of those private clouds will seek to connect to public clouds for back-end scalability. This hybrid cloud model will be the dominant model for years to come.


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