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What’s Next for Cloud Service Providers?

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What’s Next for Cloud Service Providers?

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The recent acquisition of Terremark by Verizon further illustrates how the cloud would potentially undergo the same evolution that global Telcos have gone through in recent years.

The hardware that makes up the cloud infrastructure is being continuously improved and optimized, so that over time it will be standardized and commoditized (much like “dial tone” at the PSTN days, or airtime for Mobile carriers).

This means that the infrastructure being offered by different cloud service providers – as it pertains both to the bare irons, and also to a great degree to the overlying stacks – would gradually become more and more similar. Cloud providers would offer nearly identical hardware and stacks – which is more cost effective on their end in terms of maintenance and operational costs. This will also provide greater flexibility to the end user – who will be able to more easily migrate between clouds and expect the same set up and performance.

Once the Infrastructure-as-a-Service becomes pretty much the same between clouds, the question then becomes what are the differentiators between the cloud service providers that can also generate additional revenue and increase profitability. Not surprisingly, much like the differentiators between Telco companies today, the value comes from added services (VAS) that are running on top of this heavily populated and distributed cloud infrastructure.

The direction we’re seeing is a gradual move from Infrastructure-as-a-Service to cloud added services. Looking at the current landscape and the already decreasing prices for the mere simple Virtual Machine (VM); it is the homegrown as well as branded Platform-as-a-Service (PaaS) and Database-as-a-Service (DBaaS) that mark the differentiators between cloud providers. Offering premium features and a unique set and functions like high availability and distribution – certain add-on services will become the key differentiator for the infrastructure they run on.

When the roads and lanes are the same – the car you drive becomes the issue :)

Customer, vendors and providers will need to ask themselves: What’s in it for me? How can I best benefit? — and the answer should be straight forward: Which value added services that are offered across more than one Cloud Service Provider (CSP) will drive for competitive pricing, service level and flexibility.

Look out for those vendors offering cloud agnostic solutions that can be run natively on both public clouds as well as in your private cloud or hybrid solution to allow for optimal CAPEX and respective OPEX.

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