Amazon outages to spur 'cloud' competition

More companies will build private clouds in 2013 while paying for redundancies from commercial clouds supporting the same system, in effect creating a hybrid cloud.

By TheStreet Staff Dec 28, 2012 7:38PM

Clouds behind cracked glassBy Dana Blackenhornthestreet logo


This has not been a good year for's (AMZN) cloud computing service, at least at its Virginia data center.

 That is the facility that on Dec. 24 suffered  its fourth outage since April of last year; the latest event spoiled Christmas for Netflix (NFLX) and some of its 30 million subscribers. 


This is not the way the cloud is supposed to work. The cloud is not a data center. Even a data center using cloud technology gets you just half-way to the cloud. A cloud is, in fact, a network of data centers, providing you with the redundancy and resilience of the Internet itself.


But Netflix, like hundreds of other companies, rely on Amazon's data storage and related services. Once a sideline for the Internet retailer, cloud services have surged into a business likely to generate $1 billion this year.

What the cloud can be

Google (GOOG) developed many basic cloud technologies, and has the biggest cloud of them all. It's the model for what cloud can be. Other aspects of the technology were developed within Yahoo! (YHOO), which has refocused on the technology and software with the aim of becoming a serious player. Google, until recently, had been reluctant to re-sell cloud capacity, preferring to provide services based on its infrastructure. But that changed in 2012.


Amazon also has a network of data centers, but most customers don't take advantage of the redundancies the network offers, choosing instead to save money by putting all their eggs in one data-center basket.

And when they do, companies that have many customers concentrated in the Northeast are affected when Amazon's Virginia facility suffers a temporary outage. Netflix says it mirrors its content in many different locations and yet it was hard-pressed to explain why it was hit as hard as anyone by the Christmas Eve outage.


No more. Change is coming to the cloud. The cloud is going to become all it can be, starting next year. 

Ready to take the next step 

So far, most big enterprises have given only small workloads to the cloud, but that is what's about to change. These companies have enjoyed savings from virtualized systems, from distributed workloads, and are ready to take the next step. That means rewriting key applications for this new infrastructure, building a platform on which they will offer services.


Remember those words. Infrastructure -- provided as a Service it's IaaS. Platform -- provided as a Service it becomes PaaS. Both acronyms descend from Software as a Service, or SaaS, which has been around for decades. But when SaaS hits a real cloud infrastructure it finally fulfills its promise.


For many, OpenStack will be the answer. OpenStack is open source, and most major enterprise players now support it.


Red Hat (RHT) has focused its own Open Shift platform on OpenStack. Rackspace (RAX), the original sponsor, has more OpenStack experts than anyone and has finally shifted its own operations to it.


Dell (DELL) and Hewlett-Packard (HPQ) are both building global cloud networks based on OpenStack. So are most major telcos. IBM (IBM) is a platinum sponsor of the code base.

There are ways in which companies can have their Openstack and Amazon, too. Eucalyptus, led by former mySQL head Marten Mickos, is among those working hard to bridge the gap between Amazon EC2 and these new open source clouds.


Amazon's dominant share in the cloud is shrinking, while that of OpenStack is growing. Companies are going to be building their own private clouds in 2013, and many will want public clouds that support the same system, creating a so-called hybrid cloud. They won't mind the extra expense if they get redundancy, resiliency and a single throat they can choke if something goes wrong.


For the cloud, 2012 has been a year of commitment, and 2013 will be a year of action. This is negative for Amazon. But this will be good for the cloud.


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