Cloud Update: Providers

As we continue through our quick update of the cloud storage market, this entry will focus on the providers. I describe this group as the data asset holders and as predicted last year, this segment is getting crowded in a hurry, with big names and ones you never heard of. Cloud storage providers are coming from everywhere; software companies, storage hardware companies, server hardware companies, managed hosting services, telecommunications companies and E-commerce book retailers. Providers will need more smarts than money as they attempt to bring solid storage management and data protection processes to the table, as well as offering a complete understanding of data security.

Providers vary in the choice of storage infrastructure. Some have chosen to go it alone and develop their own storage platforms, with their own storage software running on standard Intel based white boxes. Others are using storage systems specifically designed for use in cloud storage and still others are using more traditional storage systems with some sort of software overlay.

While an internally designed platform was the early favorite in cloud storage platform strategies, this was mostly because there were no other options. Now it seems that most new entrants into the provider space are selecting off-the-shelf cloud storage solutions, whether that is a storage system designed from the ground up to address cloud storage provider needs or a platform from a legacy provider that has overlaid software to complete the solution. Cloud storage providers may end up becoming the modern version of the storage integrator; the companies that work with storage hardware companies to provide a turnkey cloud storage infrastructure to users. The model seems to be developing in such a way that leads me to think that users will download the cloud enabled application of their choice. They will then install that application and select the cloud storage service provider they want to use to house that data.

What cloud storage providers need to realize, and I'm not sure they all do yet, is that they all have to compete for the potential cloud storage user. The ISVs think they have no vested interest in directing the user one way or another. While I would argue that logic, it is critical that providers realize that getting the ISV to list your cloud as a potential target for their application is only half the battle. The other half is making sure the users understand the value in each of their cloud storage offerings as compared to someone else. If a provider is the price leader then they are probably fine; if you are trying to offer more than just cheap cloud storage then you need to get that message out as to what it is you do different and why the user should care. Most providers do a dismal job of communicating those differentiators. They can't assume that busy users will figure it out.

The conventional wisdom in this market is that the providers are going to swell to a few hundred and then the market will quickly contract to a few very large providers. I don't think that will be the case at all. There are not enough barriers to entry, its not like phone lines needs to be laid, all that work is done. This is not like wanting to take on Intel in chip design. You don't need to go build a new fab. While not easy, an organization with a relatively small amount of resources can become a cloud storage provider. Thanks to the cloud specific storage platforms they don't need internal development to build the storage platform. While getting started is easier than building a fab, staying in business is not.