Ever wonder where the other big guys are in the cloud computing space? If Google, Amazon, and Microsoft are general purpose service clouds set to dominate as ecosystem plays, then what about those big companies that can’t deliver an ecosystem, but have the size to play ball? (See Pt. 1: Service Clouds). The answer is they play to win on price.
Enter … commodity clouds.
Infrastructure Commodity Clouds Recently large providers like AT&T announced their entry into the Infrastructure-as-a-Service (IaaS) cloud computing market and some bigcos with a vision, like British Telecom (BT), even tried to move early building upon 3tera’s technology to deliver on-demand hosting services. Even Sun started to get in on the act with their Sun Cloud. One could argue they led the whole charge with their early on-demand grid service, but by all accounts it wasn’t very successful.
What’s common about these new entrants to the cloud computing space is that generally they are not technology & innovation businesses themselves with the obvious exception of Sun. In particular, they don’t have track records in innovating in the large scale on-demand infrastructure and datacenter space. But … they have name brand recognition, buying power, and the ability to price themselves competitively against large incumbents like Amazon and Google.
Without the ability to innovate their clouds the primary tool of differentiation for these entrants is pricing. While I’m sure they would argue with me about this, the fact remains that we’re unlikely to see the next AppEngine, SimpleDB, or similar from most commodity clouds.
An ecosystem play is just not in the cards.
Platform Commodity Clouds We haven’t seen a Platform-as-a-Service (PaaS) commodity cloud and it’s unlikely we will in the short term given the relative technological complexity of building a scalable shared multi-tenant infrastructure that can host arbitrary code. If it were easy, then AppEngine and Salesforce/Force.com would have a whole lot of competitors right now.
Bottom line is that PaaS doesn’t play as a commodity cloud.
Bringing it Back Again, just a reminder that there are three ways to be a market leader: first, best, and cheapest. Commodity clouds are focused on being cheapest or, at least, that’s primarily where they can play in terms of value. This doesn’t necessarily mean that the list pricing will necessarily be cheapest. Companies like AT&T and BT, at least, will deliver cloud computing as part of their product portfolio which means that businesses that pick them likely will do it because their overall costs or ROI are lower. They will see cost savings either through discounted pricing when combined with other services or through non-obvious areas like avoiding bandwidth charges. If you’re in an AT&T datacenter, have AT&T connectivity, then data transfer between ‘the cloud’ and your office will be ‘free’.
What do you want to be? Best, first, or cheapest? If service clouds are best, commodity clouds are cheapest, that only leaves being first. If you can’t be first to the general market (Amazon wrapped that one up) then you need to be first to a smaller focused market. More on that in Pt. 3.
 Sun doesn’t have a reputation for delivering on-demand services as I’m sure even they would admit.
 You’ll notice I haven’t mentioned RackSpace. The jury is still out there. It seems clear that RackSpace has service cloud ambitions, but it’s unknown whether they can execute. I’m going to lump them in the commodity cloud bucket for now until more time elapses. Also their current pricing for the Cloud Servers product seems to reinforce the notion that they are largely a commodity play.