Some companies stand to benefit from the rise of the cloud and others stand to lose. ZDNet picks the IT winners — and tomorrow, we reveal the losers.
Jack Clark | zdnet
The growth of cloud computing will affect the economic nature of the industry as much as its technology.
The huge scale at which the hardware and software of the cloud operates is having a significant affect on not only the types of technology being used in the industry, but which companies stand to benefit from its rise.
A round of interviews with executives within cloud companies, hardware vendors and analysts underlines the trend towards the growing influence of the cloud over the structure of the IT industry, and identifies the likely winners and losers among IT suppliers.
This article does not focus on cloud providers, such as Google, Microsoft and Amazon, but on the companies that stand to benefit most from the changes to the IT ecosystem due to their rise.
The software opportunity
The growth in commodity hardware, and the shift in infrastructure intelligence up from chip level to distributed software systems, gives an advantage to companies comfortable managing large-scale heterogenous IT.
Virtualisation expert VMware is in a good position as its technology cares little for the hardware it sits on top of. Furthermore it has the SDN technology from Nicira, which could help it appeal to a new breed of companies with different attitudes to how networks should work.
Big Switch Networks stands to benefit as well. The company, whose co-founder helped develop the OpenFlow networking protocol, has begun selling software tools that let companies spend less on network hardware by moving functions away from proprietary gear and onto low-cost commodity servers.
Another is Cloudera, which does a commercial version of the open-source Hadoop data analysis system. Cloudera’s customers include Morgan Stanley, Monsanto and government intelligence agencies.
Many of the software technologies generating much of the cloud interest are open source (Puppet, Chef, Hadoop, Linux), and so to win in this area companies need to help steward the development of the technology while concentrating on enterprise-grade support — a potent source of revenue in open software.
For this reason companies like Linux stewards Canonical and Red Hat also stand to benefit, along with companies backing strong open-source projects and making them into commercial products — like cloud infrastructure software maker Joyent via the node.js language, or Rackspace via OpenStack.
In the same way that Hadoop can be run locally or from a cloud service, such as Amazon Web Service’s Elastic MapReduce technology, all companies that deal in scalable software have the potential to sell to the whole spread of the IT market, ranging from individual developers up to companies with on-premise commodified hardware and, perhaps, to the cloud providers themselves.
The Asian low-cost manufacturers’ time to shine
Asian manufacturing companies such Quanta, Wistron and Foxconn, that help organisations build their own equipment, stand to win out as well.
In the trade these companies are known as Original Device Manufacturers (ODMs) from their heritage of making low-end equipment for the mass market, such as notebooks. These days they make low-cost server, storage and network gear as well.
Cloud companies like Google, Facebook and Amazon have started to go direct to these companies to get their kit built, sidestepping traditional vendors like HP, Dell and IBM.
Along with this, many of these ODMs work closely with Facebook’s Open Compute Project — a trans-industry scheme to create low-cost server designs. Companies such as Wistron already have designs available and are preparing to sell them to companies large and small.
As more and more interest grows in commodity datacentre hardware, these companies will benefit.
Colocation and hosting providers such as Equinix, Telstra and TeleCity with large datacentres in key locations are also likely to win.
This is because as companies move to the cloud some will maintain a private cloud presence. Typically they will put their cloud in a datacentre operated by such hosting providers. These providers can then offer dedicated links to cloud operators (such as Equinix’s Direct Connect partnership with Amazon Web Services) as one-stop provision for both public and private cloud. The move to cloud in general will benefit those with such options.
High-end software and low-end hardware rule the cloud
Put together, these winners suggest that a major change is afoot in the IT industry as clouds build their own bespoke hardware and smaller companies look to save on kit by adding software capabilities. The companies with the greatest chance of winning are either those who are designed to serve huge infrastructure operators, such as the Asian ODMs, or software companies who can help lessen IT buyers’ hardware budgets by giving them more control through software.