While Amazon dominates the public cloud platform market with AWS, and Microsoft is a distant second, emerging trends show that resellers and application developers are seeing alternatives. Read on for more…
Sramana Mitra: Let’s start by introducing our audience to yourself as well as to Egenera.
Pete Manca: I’m the CEO at Egenera. Egenera is a 15-year-old software company and I have been with the company since the very beginning. We started off mainly in the infrastructure software space selling both the hardware and software solutions that were targeted towards the enterprise market. We did that for the first 10 years of the company’s existence.
About three years ago, we saw the trend of the cloud. We acquired a company in Ireland that specializes in cloud management. We transitioned the company from a traditional enterprise perpetual license software company to a cloud management company that is more of a subscription-based cloud-based company. Today, that’s our main focus—selling, what we call, wholesale cloud. We’re mainly selling for the reseller channel at a wholesale level and providing an easy way to introduce cloud to their customers.
Sramana Mitra: What does that mean? What specifically are you selling?
Pete Manca: If you look at the cloud market today, it’s typically broken down into public cloud, private cloud, and hybrid cloud. It’s dominated by large players like Amazon or Microsoft in the public arena, and proprietary software like VMWare in the private arena. We found that there’s a hole in the market for traditional resellers. The route to market for customers acquiring these services is typically through the reseller channel because they’re used to buying their hardware and software through the reseller channel.
They have only two choices. They can resell one of the large public clouds like Amazon, or they can try to build their own cloud. If they resell Amazon, they really can’t make a lot of margins. There’s not a lot of money to be made for selling the large public clouds. Often, these resellers try to build their own and they realise that it might take a million dollars in capital, and you might need two to three people to manage the cloud. They’re stuck between a rock and a hard place.
What we offer them is a wholesale cloud offering that allows them to take our cloud solution, rebrand it, and sell it to their customers. We sell to them at a wholesale level at market prices that are typically under the public market, which allows them to make more margins. It also gives them a quick and easy way to resell cloud solutions that they can brand as their own.
Sramana Mitra: I have a question here. What is the fundamental motivation for a small company that’s looking for a cloud service to not go with Amazon or Microsoft Azure and look for a third-party solution? What is the driver?
Pete Manca: That’s a great question. There’s probably two fundamental drivers. One is the management of the solutions. If you just go to Amazon, put your credit card in and buy a bunch of resources, you’re stuck managing the solution yourself. Especially for a small company, that can be intimidating and, in some cases, even impossible.
With the VAR channel, they’re typically selling architectural and value-added services to the end users. They still want to use those services from their trusted advisers. They still go through that channel in order to get their resources whether on premise or in the cloud.
This segment is part 1 in the series : Thought Leaders in Cloud Computing: Pete Manca, CEO of Egenera