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Cloud vendors rise to meet divergent demands of enterprises and service providers

Vendors tailor their cloud computing platforms to address the growing gulf between the needs of the enterprise and of the service providers.

Not all compute clouds are created equal. Nor should they be.

There is a world of difference between the needs of an IT service provider -- be it a hosting company, a data center operator or a managed services company -- and the typical enterprise IT shop.

Service providers lead the way on cloud computing, because it’s how they make their money. For the enterprise, on the other hand, IT, whether it encompasses cloud or not, is just another cost center.

Now after many failed attempts to sell replicas of cloud infrastructure platforms into enterprises, vendors have begun to tailor cloud products for the two sides of cloud. Even though enterprises don’t have the same needs as cloud providers, IT managers still see the benefits to the kind of commoditization and automation used by providers like Amazon Web Services.

It’s tricky for the cloud vendors. Enterprises come in many flavors and sizes; a medical services firm doesn’t need what an advertising firm needs. Service providers are large or small; only huge enterprises that own or run IT on the same scale as a service provider can build out on-demand architectures that look like AWS, according to Randy Bias, president of Cloudscaling.

“These days, people are trying to figure out where they’re going to fit. They’re either building at very large scale…or [they’ll] be in one of these other spots” said Bias. Cloudscaling, an IT consultancy, has built cloud environments for large enterprises like Kaiser Permanente, a health care organization as well as providers such as Internap Network Services and VMware. Enterprises that weren’t building at scale were far more likely to look at a tailored option or a provider catering to their particular needs instead of building a general purpose cloud, he said.

“Rackspace has over 100,000 customers that have an average of two servers each, I think,” said Chris Kemp, former NASA CTO and now CEO at Nebula, a Palo Alto, Calif.-based cloud appliance maker. “That’s very different from what an enterprise will require. Typically, you have these vertical silos of compliance requirements.”

Commodity is king in the cloud.

Because of that fundamental operational difference, enterprises seek a holistic view and control of their infrastructure that lets them leverage automation but stay with compliance frameworks and preserve existing infrastructure management tools.

“One of the key points is compatibility with CMDB tools,” Kemp said, referring to the configuration management databases that most big companies use to track their infrastructure technology.

Nebula will be a top-of-rack appliance that runs OpenStack, the open source cloud platform sponsored by Rackspace and Dell. The pitch to enterprises will be interfaces designed to work with common management tools, such as IBM Tivoli, ArcSight, CA Spectrum and BMC.

The idea was to make a cloud environment work out of the box with existing tools, Kemp said. “Enterprise IT is driven by compliance and conservatism. The less of that we have to ask people to change, the better we’ll do,” he said.

Cloud providers tailor pitch to their audience

Other vendors present a dual approach by tailoring their cloud pitch differently to service providers and enterprises.

New releases of CA Automation Suite for Datacenters (12.5), CA Suite for Cloud 1.0 emphasize connectivity and mobility for workloads. Ryan Shopp, a director of marketing at CA, said one advance was a streamlined process to convert existing VMs into public-cloud ready Amazon Machine Images.

CA also has a separate track created entirely for service providers.   “CA Cloud Market Accelerator for Service Providers”, which is part of the AppLogic 3.0 release, targets providers that want to whitebox CA and rebrand their cloud environments.

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Dell’s new Rackspace and OpenStack-powered cloud-in-a-box is aimed at service providers, such as hosters and telecom companies, and other organizations that look to build a cloud from the ground up, according to the company.

It’s worth noting all these options use the same basic parts: commodity servers. No one disputes the basic math of cheap computing power. Cloudscaling’s Bias says he aims for a run rate of $10/mo. per virtual server (equal to AWS’ “m1.small” instance), amortized over five years on a cloud environment. Amazon charges $70-$80/mo. for an m1.small. Conspicuously missing from these plans is high-end, specialized and pricy hardware such as Oracle’s Exadata or Exalogic. Commodity is king in the cloud.

Cloud platforms only a hit at providers

Other than big, legacy vendors like Dell and CA, established cloud platform startups such as Abiquo, Enomaly and Eucalyptus Systems have succeeded mostly in selling to service providers to date. Enomaly targets hosting providers and telcos specifically.  Eucalyptus, after touting Eli Lilly and financial firms as early wins, now boasts NTT as one of its biggest customers.

That’s not to say there’s no room for cloud platforms or cloud infrastructure in the enterprise. There is. In fact, Abiquo CEO Pete Malcolm said his firm made more revenue from enterprise customers than  from service providers for the first time in the second quarter of 2011. But it’s also now clear that there is a widening gulf between what enterprises want out of cloud and what service providers want, and the market is moving to address that.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at, or follow us on twitter.

This story was updated August 15 with Abiquo comment.

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