It is hard to believe we are only days away from the end of 2013. As I reflect on the last twelve months, a few things come to mind that I thought I’d share.

20131.      OpenStack’s Failure to Gain True Traction in the Service Provider Market

OpenStack is widely recognized in the developer community and has support from a number of infrastructure vendors as well as other large technology companies. But it is still a work in progress. OpenStack is developing quickly, but is immature in some areas and not yet ready for commercial deployment in a service provider environment.

While development continues, OpenStack currently fails to deliver the level of orchestration, functionality and service differentiation that cloud service providers need to offer customers to capture a share of the cloud services market and assure future revenue streams.

Any service provider looking to develop its cloud services business wants a service that can be brought to market quickly and cost effectively. It needs to provide differentiation, and to be able to scale as the service grows. It also needs to be stable and professionally supported. But while it answers some of these requirements, service providers developing in OpenStack experience a log jam, as it doesn’t yet have the business logic and advanced functionality needed for a commercial cloud service. Read more on this topic.

2.      AWS Demonstrates Massive Demand for Flexible Cloud Service

AWS has had another strong year; one analyst is now projecting the value of the AWS business to top $50 billion by 2015, driven by success in its Marketplace. Its continued innovation and growth shows the massive demand for genuine flexible cloud services. So how does a service provider compete? My view is that this is through differentiating in the marketplace. Being able to differentiate on what makes you truly different can still allow plenty of growth in a multi-cloud scenario. Read some of my thoughts from a discussion piece including responses to AWS bashing, price, federation vs. multi-cloud and an analogy used during the presentation and why I believe it is inappropriate. 

3.     Move from ‘Just Infrastructure’ to ‘Infrastructure + Platform + Apps’

It is no good just being a box shifter anymore. Service providers, in relation to the above AWS point, need to offer more than just the infrastructure. They need to offer services on top – the platform, the apps, and if they cannot do this, they will miss significant market opportunity. We believe service providers need the ability to add value through cloud blueprints and also easily integrate with third party technology to offer additional services.

4.     Why an Ecosystem is a Differentiator

You know of the AWS marketplace. You also know of plenty of other vendors who are creating ecosystems. Why? Because, it is a differentiator. If you can create a one-stop shop where vendors can easily gain the services, support and technology they need, you will grow. Read more about what we are doing to support this.

5.     Demand for Public Cloud Has Increased/Enterprise Mass Migration to Cloud Service Providers

The switch to public cloud is happening with increasing momentum. In fact, spending on public IT cloud services will grow five times faster than that for the IT industry as a whole from 2013 to 2017, according to a new report from IDC. Read our thoughts on the death of private cloud.

Those that accept the move to public cloud can invest time in finding a service provider that can meet their needs. This might not be the giants in the industry like Amazon, but instead service providers that differentiate based on the needs of the client. These differences could be based on vertical cloud, industry, language, user experience, amongst others. For service providers, this means you need the ability to turn private cloud customers into public cloud consumers of your services. Having the ability to differentiate becomes essential. Learn more about differentiating in this competitive market.

6.     Emergence of New Service Providers, Operating at Scale Through Resellers

Smart service providers are already gaining reach through other organizations’ existing relationships and resources by maximizing resellers’ vertical and industry-specific expertise and geographic coverage without requiring heavy investment in sales and marketing. This model offers huge possibilities in terms of revenue growth without significant investment to build your own resources and presence. We are seeing the emergence of new entrants in the service providers market that are able to use the reseller model to operate at scale. See our infographic on this topic.

Each of these points are trends we saw in 2013. The good news for the service provider is that they are gaining momentum and market share. So act now. Ensure you have the tools to compete in the market.

I have some predictions on 2014 that I’ll share when we are all back in the new year.

Happy holidays and see you in 2014!

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