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Taking Stock of Public Cloud Vendors

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A very happy new year from Rishidot Research. As we enter 2018, the pressure on CIOs to modernize their IT is going to increase significantly. Any further delay will hurt the business bottom line. At Rishidot Research, we have our hands full on a research agenda focussed on Cloud Native Computing landscape and CIOs will find our research very valuable for their modernization strategy. As a first step, and also to set the context for our discussions in the coming months, we will take stock of the major public cloud vendors and where they stand against their competition.

Amazon Web Services (AWS) is the leading cloud vendor by a huge margin. The scale and the momentum in the recent AWS Re:Invent 2017 is a clear indication of this trend. Now AWS’ user conference is comparable to the traditional IT vendors and the number of CIOs and other decision makers I came across in this event indicates that enterprises are eager to embrace public clouds. It is only natural to start our analysis with AWS.

Amazon Web Services

  • AWS leads all the cloud providers in the sheer number of services they offer to customers. Their push towards serverless which started two years back is now moving to other areas such as containers (AWS Fargate), Data Services (AWS Aurora Serverless), etc.. At Rishidot Research, we deeply believe in higher order abstractions playing a critical role in enterprise IT (we were only of the early believers in PaaS and ran a conference dedicated to it) and we strongly advocate the “serverless” abstractions as the path forward. AWS serverless abstractions other than Lambda is still in early stages and we would expect the services to become even more seamless and autonomic (eg: Without having to describe the limits on resources. AWS should handle that seamlessly with better ways to limit runaway costs)
  • Even though they are slow to push container services and Machine Learning, they are pushing hard in these two areas. AWS Fargate is how container services should be and might provide a competition to many Cars and PaaS vendors in the market. I would characterize their approach to “giving choice to customers” as an underdog marketing approach in areas where they are not a leader in the market. Both containers and ML are areas where mindshare is still not there with AWS. By touting “user choice”, AWS is trying to catch up with other cloud providers
  • One of the criticism I heard from users during AWS Re:Invent 2017 conference is on the interoperability of their services. I would expect AWS to focus on fixing the issues and solving the pain points faced by users of multiple AWS services. I would also like to see Amazon cut down the complexity in the consumption of services. The sheer number of services offered by Amazon makes it a daunting task for decision makers as they plot their strategy. Anything Amazon can do to tame this complexity beast will be helpful. A good example is AWS Fargate service. At Rishidot Research, we believe in the composability of the different layers in the IT stack but it shouldn’t come at the cost of increased complexity to consume the services
  • Both in terms of their service offerings and the customer momentum, AWS has the lead in the market. One trend I observed during the recent Re:Invent is that the size of the IT team makes a difference in organizations going all in with AWS. Large businesses with smaller IT teams are more open to going all in with AWS. If you are an enterprise decision maker wanting to go all in with a single cloud provider, the size of your IT team will impact the decision making process.

Microsoft Azure

  • Microsoft Azure is steadily increasing their public cloud marketplace. The main Azure development is driven mostly by the existing relationship between Microsoft and the IT decision makers but they are changing minds among OSS developers and the younger generation of developers by a strong OSS push. Being the largest contributor in terms of the number of lines of code (because of .NET being open sourced), Microsoft has gained the critical credibility needed to make Azure palatable to OSS developers. By releasing services like CosmosDB, Microsoft has been working hard to gain developer adoption to Azure cloud services
  • Microsoft may not be a leader in Containers but they are investing heavily in hiring Kubernetes talent. Many pundits (including myself) have linked AWS’s embrace of Kubernetes and CNCF as an indication of standardization around Kubernetes but Microsoft’s investment is critical because they are now in a position to neutralize Google from pushing Kubernetes in a direction suitable for them
  • I would like to see Microsoft focus more on making their services more “serverless”. They have necessary components including service fabric and others to move in that direction. I am expecting some announcements in this direction from Microsoft in the next Build conference
  • Microsoft is still an underdog when it comes to ML and AI workloads. They do have a solid technology to make Azure an attractive destination for such workloads. I am yet to see a coherent go to market strategy in this case
  • With Azure Stack (AS), Microsoft gave a great story for hybrid cloud/edge computing in last year’s Build conference. The use case with Carnival Cruise Line is a perfect example of Azure Stack. The way they are integrating serverless technologies with Azure Stack will make AS an attractive option for edge computing use cases

Google Cloud

  • After a slow start, Google Cloud got attention through two open source projects, Kubernetes and Tensorflow. With Kubernetes, Google is uniquely positioned to help enterprises “run like Google”. Even though they showcased some customers in last year’s Google Cloud user conference, they are yet to publicly demonstrate continued success with enterprises. I am hoping to see more customers in this year’s conference
  • Even though Google got early momentum with Kubernetes, AWS and Azure have since caught up with Google in terms of both mindshare (in the case of Azure) and market share (in the case of AWS). I would love to see Google showcasing technology that will make their cloud more attractive than both AWS and Microsoft when it comes to container workloads
  • Google cloud is a clear leader in ML and AI workloads on the cloud. They took a more opinionated approach with Tensorflow and it is paying off, mainly due to the success of Tensorflow as an OSS project. They need to demonstrate that they can capitalize on this early success this year
  • Google has an advantage in Big Data services but AWS and Azure are catching up fast

IBM Cloud

  • IBM started its cloud push much earlier than Oracle and even before Google or Microsoft showed their seriousness towards enterprise adoption of cloud. In spite of their acquisitions around cloud data centers, data services and even DevOps, they are still lagging behind the top three cloud providers in both mindshare and market share (at least, with AWS and Microsoft). More than anything else, there is absolutely no clarity on IBM’s cloud journey. After betting on OpenStack and CloudFoundry early on and, now, Kubernetes, they are yet to demonstrate a clear path towards success in the cloud. In 2018, I expect to see a more coherent cloud story from them
  • IBM Watson was supposed to help IBM gain on cloud computing. Even though there are some customer stories based on Watson and IBM Cloud, we need to hear more in 2018

Oracle Cloud

  • Oracle was the last to enter infrastructure as a Service business among the top cloud vendors. They are still in early stages even though they have made some announcements related to containers and container orchestration. I expect to see them take a deeper plunge in the Kubernetes ecosystem even though they are yet to demonstrate that they can work well with other vendors in an open source project.
  • They need to shore up higher order services if they have to compete effectively with AWS and Azure. They cannot just rely on their database service as the path to cloud success and they need to compete with AWS on the breadth and depth of higher order services. Looking forward to hearing from them on this topic in 2018

We are also closely tracking both Alibaba cloud and Huawei cloud. We do notice that Alibaba cloud is fast adding new features but we are waiting to hear from them on their US traction. We will include these two cloud providers in our future analysis.

Disclosure: AWS, Microsoft and Google paid for travel and stay to attend their user conferences in 2017

Oracle Cloud Strategy – An Analysis

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Oracle., the enterprise giant of the legacy era, hosted their annual user conference Oracle OpenWorld last week shed some more light on their cloud strategy. Oracle made some announcements focussed on cloud computing, Artificial Intelligence, and Blockchain but it came out more like an organization trying to jumpstart their vehicle to catch up with competition than a thought leader pushing innovation. Oracle is almost a decade late into the cloud game and their efforts to compete is still focused on marketing than showcasing any substance. In this analysis, let us dive into Oracle’s strategy for the modern enterprise stack

Current Status

After dismissing cloud for the better part of the decade and then calling their legacy enterprise applications as cloud, Oracle started focussing on Infrastructure as a Service to take on AWS, Microsoft Azure, Google Cloud and IBM Bluemix. They built an infrastructure service from the ground up, tapping into AWS and Azure engineers, focussing on Compute, Storage, and Network. Then they expanded their offerings to include containers. Here is Rishidot Research’s SWOT analysis on Oracle IaaS strategy earlier this year.

Oracle OpenWorld 2017 Announcements

Oracle made many announcements at this year’s OpenWorld and we are highlighting some of the important ones on their cloud offerings

  • Oracle’s cloud strategy involves basic IaaS which competes with AWS on the “enterprise-centric” pricing strategy and vendor claims about better performance and “PaaS” (quotes used to differentiate Oracle’s definition of PaaS from the traditional industry definition of PaaS) which includes their middleware offerings and database service. At this point in time, their differentiating factor from the industry leader AWS is pricing
  • Set of container-based services on top of their IaaS to compete with container offerings by every other cloud provider. This includes Kubernetes based container service, Oracle container registry and Oracle container pipelines
  • Announcement of an open source functions as a service platform. It is an early stage software than a service on top of Oracle IaaS. However, with their middleware tools and IaaS, this could be a Oracle cloud service in the future
  • Announcements regarding AI strategy and blockchain tools in their cloud
  • Oracle 18c, their enterprise database offering with automation based in machine learning and enterprise grade SLAs

Rishidot Analysis

Oracle is building a infrastructure as a service offering with compute, storage and network. They are also adding container services to the mix. Compared to the top three cloud providers, AWS, Microsoft Azure and Google Cloud, Oracle Cloud is still at a barebones stage when it comes to the depth of their offering. We expected a bunch of higher order services on top of their IaaS but we didn’t see any announcements for newer services or even a coherent roadmap to match the depth of services in the other three providers. Oracle spent the news cycles around OpenWorld focussing on a strategy that is more about reducing their bleeding than convincing newer customers about Oracle Cloud as the infrastructure for innovation. They spent way too much time in the Larry Ellison keynote on their pricing strategy compared to AWS than showcasing innovation that could make their competitors sweat. Even their pricing strategy was more about convincing the customers of Oracle database and applications to use their IaaS than enticing newer customers to start embracing their cloud. We think that the pricing strategy is more old-fashioned and focussed on enabling their salespeople to close big deals than a pricing strategy for the modern era.

It is important for the market to have Oracle as a strong player but, to compete effectively, Oracle has to go at full speed to build depth in the services they offer on top of IaaS. Building iteratively is not going to either help them close the gap with the top three providers or in giving confidence to decision makers that betting on Oracle IaaS is a smart choice. Between now and the next Oracle OpenWorld, I would love to see Oracle add a wide range of higher order services so that enterprise customers can really innovate on top of Oracle cloud. Modern enterprise CIOs are more focussed on innovation than cost savings or iterative performance improvements. They need a powerful infrastructure on top of which their developers can innovate. It is critical for Oracle leadership to understand this need and build a compelling offering to outcompete AWS, Azure and Google Cloud.

Oracle’s container strategy is on the right path but the lack of higher order services is going to hinder the developer adoption of their container service. They do offer a suite of tools to manage the containerized applications from development to production but it is still barebones and they have their work cut out in making this offering more compelling as Amazon ECS or Google Container Engine.

I am glad to see Oracle talking about AI and Blockchains as a part of their modern stack and I am hoping that they have a production ready set of tools available by next OpenWorld.

Recommendations For Enterprise Decision Makers

If you are an Oracle Customer wanting to migrate your applications to the cloud, it makes complete sense to consider Oracle IaaS for your migration needs. However, this is recommended for the migration of existing applications than building any net new applications. They have limited set of services for building next gen applications. Wait for their offerings to mature before using Oracle cloud for newer applications.

If Oracle tech stack is not critical for your applications, AWS, Microsoft Azure or Google Cloud have a wide range of services needed for the modern applications. We strongly recommend these providers for your next gen applications at this point. Oracle can still evolve fast to compete with these providers by increasing the breadth and depth of their higher order services but they are not there yet.

Conclusion

In spite of their late start, Oracle has shown seriousness and commitment towards a more coherent cloud strategy. They still have a long way to go before they can catch up with their competitors. Right now, their IaaS is quite attractive for migrating existing applications built on Oracle stack because of the aggressive pricing but their cloud is not recommended for net new applications. This may change between now and next OracleWorld if they accelerate rapidly, either by building or acquiring companies, to offer higher order services. We will have to wait and see. Rishidot Research recommends enterprise decision makers to closely watch their roadmap for the next year before betting their strategy on Oracle Cloud.

Google’s Enterprise Ambitions – Google Cloud Next ’17 Report

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Even though Google is one of the pioneers in Cloud Computing, they were late to enter the enterprise market. In the last couple of years, they started focussing on enterprise customers and, in the recent Google Cloud Next Conference at San Francisco, they showcased their determination to go after the enterprise market. Compared to last year, this year’s event was a big affair with a slew of announcements on new products and features being the highlight of the event.

Targeting the enterprise

In this conference, Google tried to appease enterprise customers by attempting to speak the language they like to listen. Whether it is talking about multi-cloud or partnering with SAP or talking about the engineering support options, Google tried to appeal to enterprises moving to cloud. One of the criticisms about Google Cloud was they appeal to vendors like Snapchat and Evernote but not much to traditional enterprises. They tried to negate this by lining up vendors like HSBC, Colgate, Schlumberger, Disney, The Home Depot, etc.. Listening to all these customers, I saw a common thread on their interest with Google Cloud. It is about the potential for Machine Learning workloads aided by powerful big data offerings from Google.

Google’s enterprise push focussed on

  • Large datacenter footprint: They announced support for new regions worldwide such as California, Montreal, and Netherlands.
  • Security: With the announcement of Identity Aware Proxy and Data Loss Prevention API, along with making other security features in GA, Google is promising enterprises that they can trust Google cloud.
  • Infrastructure reliability: Google highlighted 99.999 percent uptime to give confidence to enterprise customers on the robustness of their infrastructure. Rishidot Research strongly advises their clients to focus on resiliency in their application architectures rather than worry about infrastructure reliability.

I have long been advocating that Google’s path to relevance in the cloud is through Machine Learning and AI. I heard the same from various enterprise customers in this conference. One of Google’s strengths is in big data and, with the announcements related to Machine Learning, they are positioning themselves as the go-to cloud for ML workloads. Google’s machine learning engine and Google Vision API is now generally available. As a part of Vision API, Google is exposing the metadata as a service so that it helps app developers to use the API to gain Google Photos like detection capabilities. This along with the Video Intelligence API puts them as the top cloud destination for ML and AI workloads. Expect to see more startups and enterprises flocking Google Cloud for their ML and AI needs.

SWOT Analysis

Strengths

  • Data Center investments is their asset and the fact that their regions are connected by a private network gives them an edge and enterprise credentials
  • Machine Learning and AI are their strengths and will give them an edge over both AWS and Azure
  • Google is well positioned to offer the best in class security with their assets and expertise. But jury is out on whether it is enough to convince enterprise customers

Weakness

  • They are yet to gain widespread enterprise traction. We would love to see customers moving “all in” with Google cloud
  • Even though they have beefed up Google App Engine, it is yet to attract significant attention
  • Their multi-cloud pitch shows their weakness in the cloud market. Even though multi-cloud is fast becoming a reality, a public cloud provider using the pitch in high decibels is more indicative of their challenges in the market
  • They are still in a weak spot compared to AWS when it comes to Functions as a Service. After seeing the success of all the AWS Lambda sessions in the last re:invent, I expected Google to come out swinging. Even though their announcement regarding Firebase integration with Google Cloud Functions offers promise, they have a long way to go before they can catch up with AWS Lambda

Opportunities

  • Even though AWS has the runaway lead, the infrastructure market is huge and tons of legacy targets available for both Microsoft and Google. Google is positioning themselves to gain significant portion of the remaining cloud market
  • With the success of Tensorflow in the community, Google has the potential to attract a significant share of Machine Learning workloads. With their advantages in AI, they have an opportunity to become the cloud of choice for not just ML and AI focussed startups but also the enterprise customers
  • Their inter-region network and security focus will help them gain credibility with the enterprises

Threats

  • Google’s go to market strategy to attract enterprise customers is still not very convincing. Yes, Google cloud’s top leadership is packed with proven enterprise leaders from VMware, Red Hat, etc. but there is a lack of clarity on their approach. They are neither taking the AWS approach to enterprise customers nor taking a traditional enterprise path. They seem to be playing a middle ground and it runs the risk of not being attractive enough for enterprises
  • I love their Engineering Support announcement and how they are trying to incorporate AI into customer success. But some of the requirements for their support model could be upsetting the enterprise customers and may come back to bite them. I fully understand why these requirements are needed from a support logistics point of view but we will have to wait and see if it works

Conclusion

Google has started its journey to lure enterprise customers to their cloud. They are definitely growing up in this path but they still have to go a long way before emerging as a strong player. The next two years will be critical for Google Cloud to convince enterprises to trust their cloud. The key to their success lies in convincing enterprises that they are the destination for most of their workloads than giving a message that they are one of the providers in the multi-cloud era. We will have to wait and watch whether they can be a credible contender to AWS and Azure

Competitors

Amazon Web Services, Microsoft Azure, IBM Bluemix, Oracle Cloud, Digital Ocean

Disclosure: Google paid for my travel and stay during the conference

SWOT Analysis Source: https://github.com/rishidot/SWOT/blob/master/Google/Google-Cloud.md

Briefing Notes: Oracle IaaS

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Oracle announced their IaaS offering late last year and they briefed analysts of their offerings and roadmap. Rishidot Research makes a quick analysis of the briefing to highlight our clients and readers on the status of Oracle IaaS offering from our vantage point.

Market Overview

Ever since Amazon announced public cloud infrastructure services, the IaaS market has been growing steadily with increased enterprise adoption in the past 3 years. Amazon Web Services is leading the pack with annual revenue of close to $13 Billion as per the latest financial results. After some initial missteps, Microsoft is investing heavily on Azure making them a credible competitor to Amazon. Google Cloud and IBM Cloud are the distant 3rd and 4th place vendors in the public cloud infrastructure landscape. In spite of the threat for lock-in and open source efforts to enable a federated market place for cloud infrastructure providers, public cloud infrastructure market is tending towards oligarchy with Amazon, Microsoft, Azure and IBM as key players. After a delay, Oracle is finally taking steps to enter public cloud infrastructure market (IaaS).

Oracle IaaS

Oracle is betting their IaaS on three factors that may be attractive for enterprise customers, performance, security/governance and lower cost than AWS. When it is compared with Oracle’s SaaS and other products, they can easily become the one throat to choke for enterprise customers. The performance and security claim comes from the fact that their IaaS is built with bare metal servers as building blocks and they are hoping that the physical isolation provided by bare metal servers will be attractive to enterprises worried about cloud multi-tenancy. With their marketing on better performance provided by bare metal servers, Oracle is betting on enterprises wanting to forklift legacy applications to cloud. The bare metal performance advantage becomes less important for cloud native applications unless it is in the niche area of HPC workloads but when you forklift legacy applications to cloud (an approach Rishidot Research strongly discourages but many enterprises are faced with situations where they cannot move some of their mission critical applications to cloud native architectures), compute and network performance matters. Oracle IaaS is pushing ahead with their marketing on better performance than other public clouds (an independent verification on this claims is needed at this point) and hoping that their enterprise customers will prefer Oracle IaaS over AWS or Azure. The cost advantage and governance are not big differentiators as it is easy for competitors to close the cost loop and many higher order services (including 3rd party services) can provide the necessary tools for governance.

SWOT Analysis

Strength

  • Oracle has the enterprise market power and they can leverage that position to push Oracle IaaS to their enterprise customers. This will clearly stem the bleeding that is happening as enterprises wanting to move to cloud look towards AWS or Azure for their cloud needs. With Oracle IaaS, offering a cheaper price (at least in the short term), can be a good carrot to dangle in front of their existing customers. If Oracle can get to $1 Billion in IaaS revenue by the end of 2017, I can confidently say that their enterprise cloud strategy is on a strong footing
  • With bare metal IaaS, they can easily target diverse workloads including high performance, virtualized and containerized
  • There have the necessary financial muscle to do whatever it takes to compete with AWS and Azure
  • Having a strong SaaS portfolio helps gain traction for custom apps on their cloud

Weakness

  • Lack of higher order services on top of Oracle IaaS is definitely a problem. Without these services, it is difficult to get developers to use Oracle IaaS for their needs. They definitely have a database service that will be useful in the enterprise app dev segment but not enough to make a play in the public cloud market. AWS, Azure and Google Cloud all have a good set of services developers can tap and it is critical for any IaaS platform to not just succeed but also to lock in their users
  • The delay in entering the public cloud infrastructure market will definitely be a drag. How they ramp up adoption in the first year is going to decide the longevity of their IaaS ambitions
  • The success of AWS is solely due to the success they had with developers. Even though Oracle has the attention of Java developers, it is going to be a tough climb for Oracle to gain developer karma. It is going to depend on their community outreach in the first year to see how far they can go on this front

Opportunities

  • Their leadership in database market will help them gain enterprise interest in their IaaS.
  • By leveraging their Java platform to Oracle IaaS and making Java apps first class citizens on Oracle IaaS, Oracle can gain widespread enterprise developer trust
  • Oracle IaaS (and their strategy in the coming years for Oracle IaaS) is going to help them go head to head with Microsoft targeting enterprise customers. This puts them in a position where they can target Microsoft for the second place in public cloud market. It is not going to be an easy path but they are better positioned than Google to compete with Microsoft for enterprise customers

Threats

  • Lack of a rich cloud services ecosystem like AWS but this can be easily overcome once Oracle gives the trust that they are serious about their IaaS offering
  • With AI getting widespread adoption since 2016 and Google, Microsoft and Amazon investing heavily on AI services on their cloud, Oracle is at a disadvantage. Google is using AI as a way to compete hard against AWS and Oracle will need an enterprise AI strategy to make their IaaS stay competitive in the coming year(s)

Conclusion

Even though they are late by close to a decade, Oracle has moved into the public cloud space. They are clearly disadvantaged at this point in terms of richness of developer and other higher order services on top of their IaaS. But we expect them to fill the gap through acquisitions and compete hard with AWS. If they can take their IaaS revenue to $1B in 2017, I can confidently say that they will be a major force in enterprise public cloud market. It will be interesting to watch where they go from here.

Competitors

Amazon AWS, Microsoft Azure, Google Cloud, IBM Bluemix

Document Source

Briefing Note: https://github.com/rishidot/Briefing-Notes/blob/master/2017/Oracle-IaaS-Jan.md
SWOT: https://github.com/rishidot/SWOT/blob/master/Oracle/Public-IaaS.md

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