Navigating the Cloud Wars: The Guide to the Battlefield

Panzura-BarryPhillips-headshotby Barry Phillips

How did a database software company, the leading online retailer and a search engine become competitors? They went to the cloud. Oracle CEO Larry Ellison, Amazon CEO Jeff Bezos and Google’s CEO Sundar Pichai are all talking cloud computing. From Oracle World this week, to AWS re:Invent and Google Alphabet’s recent earnings call, each CEO has emphasized their company’s cloud computing strategy, and with good reason.

Even though it’s only a 15 year old industry, cloud computing has without question disrupted many established hardware and software businesses. Some companies have already faded into history as a result, but there are still major players battling for the cloud prize – nothing less than the projected $52 billion in spending on cloud infrastructure by 2019. According to IDC, cloud infrastructure already accounts for about one-third of total IT infrastructure spend today, but this isn’t the end of the story.

To understand the future of the cloud industry, we can look at the past history of enterprise technology. There are clear examples of companies that failed to innovate and adapt as new PC, server and storage technologies emerged: Digital, SGI, Cray and Sun among them. The same thing is happening again with cloud computing. The quick stand a chance of surviving; many other technology vendors won’t make it.

NetApp and even the relatively young Riverbed come to mind. These companies have stayed too focused on their core business model, and the market has moved away too quickly for them to be able to adjust and adapt. Other vendors, like EMC/VMware, IBM, Microsoft, and Oracle have been quicker to diversify and adapt their business model to the cloud. Even though some may accuse these goliaths as being slow to evolve, each has built a cloud business, either organically or through acquisitions.

Which brings us to the Dell-EMC acquisition that was announced last month. As a combined company, they have tremendous strength in the enterprise and will be able to offer public, private and hybrid cloud services. The Dell/EMC/VMware products are entrenched in almost every enterprise datacenter. They have access to the CIOs at many Fortune 1000 companies, and they have a potentially very strong set of technologies for the cloud age. EMC is also combining its cloud assets in to a separate operating company under the Virtustream name, including VMware vCloud Air, EMC’s cloud storage platforms, and Virtustream’s cloud infrastructure.

Though Dell and EMC are stronger together, they’re facing a set of serious competitors, like Amazon, Oracle, Microsoft, and Google, all of whom have a significant head start in public cloud. For example, Amazon has massive scale with over 90 datacenters and millions of servers; it also has a huge customer base of departmental and developer deployments. Earlier this year, Amazon has announced that its cloud revenue is bigger than its four closest competitors combined.

Each provider approaches the market with specific strengths, but as Oracle’s Larry Ellison recently pointed out, the industry is still young. In the coming months, watch for more companies entering the market, either through organic investments or acquisitions. Others will exit or re-focus their efforts, like HP did this last month when it exited the public cloud business to focus on private and hybrid cloud. Overall, this will mean more competitive offerings for enterprise consumers so watch as features like price fluctuate and be sure not to get caught in a cloud storage markup trap.

In 2016, Larry Ellison, Jeff Bezos, Sundar Pichai, along with Michael Dell and Microsoft’s Satya Nadella, will only talk more about cloud computing. As the battle rages on, we can see where they’re heading – towards the enterprise customers. Getting companies to make the cloud a key part of their production IT infrastructure and run most of their applications in the cloud is end goal.

While most IT managers and CIOs aren’t there yet, Gartner has said that 72% of companies are already pursuing a hybrid cloud strategy. Panzura’s customers are among those already running hybrid clouds, where their production file data lives in the cloud but is cached locally for local access in their datacenters. It’s clear the Cloud Wars are far from over. In fact, they’ve only really just begun.

Barry Phillips is the CMO of Panzura.

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