Sramana Mitra: Your business is to provide the full stack that would enable value-added resellers to offer public cloud solution on top of your platform.
Pete Manca: Right. What we do is we partner with Equinix for data centres around the world. We have clouds located in the US, the EMEA region, and also in the Asia Pacific region. We provide the hardware, software, and the people to manage the cloud. It’s a full suite of hardware, software, and services that we offer to the reseller channel. They can take those with no money down. It’s a pay-as-you-go model. They can take those cloud resources, rebrand it as if it’s their own to sell to their end users.
Sramana Mitra: What percentage of the cloud market operates in this mode? If you look at cloud market shares, how much is in this buckets of third-party cloud solutions?
Pete Manca: Amazon dominates the cloud market today. I don’t know the exact numbers today but it’s probably 80% of the market. Microsoft probably has 15%. Those two vendors dominate the market today. However, we are seeing a real trend towards resellers and VARs who want to make more money. Our business is growing as a result. We’re seeing more gravitation towards this type of model.
Sramana Mitra: When you say you’re seeing a real trend, can we double-click down on the retail base that you’re working with? These are value-added resellers. What are they putting on top? Are we talking about vertical logic or domain-specific stuff on top of the public cloud? What do you see happen?
Pete Mance: It’s really a horizontal solution, if that makes sense. We’re seeing all kinds of services added on top.
Sramana Mitra: My question is different. I know your solution is horizontal. What I’m asking is if the retailers are selling horizontal solution or are they offering vertical solutions.
Pete Manca: The resellers offer vertical solutions.
Sramana Mitra: You are essentially catering to the applications developers who are developing solutions on top of public cloud offerings and then going to verticals. Their motivation to go with you as opposed to Amazon or Microsoft is that they want more margins.
Pete Manca: That’s right. I wouldn’t say we’re specifically targeting application verticals. We’re targeting service providers who have added value. It could be an application or it could be that they have a special expertise – HIPAA compliance for example. It can be both an application vertical or a specific expertise for a specific market.
Sramana Mitra: Do you see people who have started on AWS or Microsoft and are moving to your solution?
Pete Manca: Absolutely. I was just in Japan last week talking to customers. It’s actually a pretty good trend in Japan. AWS got a lot of traction in Japan early on. Now we’re seeing some dissatisfaction from the resellers around both margin and SLA. If you look closely at the AWS service level agreements, they don’t really offer a high SLA. In the Japanese market, that’s very important.
Sramana Mitra: I see. Let’s do the broad industry level questions. When you look at the cloud services industry, what are the gaps? What are customers asking for that people are not fulfilling right now?
Pete Manca: I think what’s going to happen here is we’re going to see more and more specialised cloud. Whether it’s service providers taking wholesale cloud like ours and adding value or cloud service providers that specialise in certain verticals, we’ll see a lot of very specialised cloud popping up. What will be needed to manage that is a really good cloud brokering capability—the ability to take a set of requirements from a workload or from an architecture spec and go up and figure out what are the best clouds to deliver a platform for that particular solution.
In other words, if your application requirements have a need for physical servers, a need for virtual servers, or a need for compliance like HIPAA, you won’t get all that from a single cloud vendor. You might want to get that from many cloud vendors, but you want to have a cloud broker or tool who can go out and find you the best solution for each part of your architecture.
Sramana Mitra: Thank you for sharing your perspective.
This segment is part 2 in the series : Thought Leaders in Cloud Computing: Pete Manca, CEO of Egenera