Hosting Providers Unite

This one’s been eating at me since September 17 at 10:09 AM.   That was when a speaker from Tier 1 Research concluded a presentation at the 4th Annual Hosting Transportation Summit (HTS) at the Mirage Hotel in Las Vegas.

HTS is a great event for anyone involved in the hosting industry.  It was attended this year by about 400 people representing everything that’s anything in the U.S. hosting industry.  Attendees, for the most part, have profit and loss responsibilities and were there to find new weapons for their arsenals to increase revenues.   I love these focused conferences.  Having them in Las Vegas is really smart.  That makes it easy to gauge attendees’ interest by seeing how much of the audiences at the various sessions are lost to the casino.  The sessions at HTS were well attended!

By contrast, that week was VM World, right across the street (which in Vegas means only a 15 minute stroll) at The Venetian.  VM World was impressive – close to 15,000 attendees, I am told.  My sense walking around there, though, was that the majority of the attendees were more technology oriented – looking for cool new technology – but were not the people in their organizations responsible for P&L, who make spending decisions, and, most importantly, who make strategic business decisions.

So, what happened at 10:09 AM Las Vegas time on 9/17?  I just finished watching and listening to a very well researched and prepared presentation by a Senior Analyst at Tier 1, who organizes the event.  He very thoroughly described how the Cloud people, the compute on demand people – people like Amazon and Google, were kicking the hosting providers’ butts as they remain a commodity whose ability to compete with these Cloud giants is starting to wane.

What he didn’t do, though (and this is no criticism of him – he did his job), was talk about what the hosting providers can and should do to combat this.

So, why now?  If it’s been eating at me 7 weeks, why am I writing about it now?

Well, for the last couple of months, enterprise interest in Cloud Computing seems to have emerged in spades (pardon the Las Vegas pun).  VMware, Citrix, Microsoft and others have all made announcements readying themselves for enterprise Cloud Computing.  Our own marketing efforts have been focused around the enterprise as, though we are largely used by hosting providers and our customers are largely hosted, we have a full Cloud Computing platform that can run behind a corporate firewall, and our number of customers who do that, particularly enterprise customers, are definitely growing.

So, let’s not forget our hosting providers.  They are not only the salt of the Cloud, but they will be an integral part of Cloud Computing’s future.  In fact, as Clouds begin to interoperate globally, it will be the hosting providers who jump on that bandwagon who will fuel it with much of its resources.

Note to Hosting Providers:

If you are worried about how you are going to cope with this new competition, there is something you can do about it.  This advice might sound like an “if you can’t beat ‘em, join ‘em” mentality, but it is far from it.  The mentality is more of the nature that you should join a movement that they, too, will eventually have to join.

Whatever people think, there will not be a single dominant Cloud from any of these guys.  Cloud Computing, like any other utility, will evolve into a series of Clouds that can interoperate among themselves and are connected globally.  These interoperating Clouds will be run by hosting providers, will be proprietary Clouds like EC2, AppEngine, etc. and will be corporate data centers.

So, how does a hosting provider get on board?

Hosting providers need to implement Cloud Computing platforms in their data centers (of course, I think that platform needs to be 3tera’s AppLogic – plug, plug – surprise, surprise).  They need to build product offerings on these Cloud platforms.  Once there is a critical mass of applications hosted in all of these Clouds, the leaders will start interoperating with one another as people will want to share and reuse technology components, and, more importantly, companies will want to effect business to business transactions with companies running in other Clouds.

It will be inevitable that businesses running applications in proprietary Clouds will want to have the same capabilities, and in order to do so, their Clouds are going to have to start interoperating in the same ecosystem that yours do.

And guess what.  Many of the new enterprise customers we are attracting are and are wanting to run their web applications in external Clouds – HOSTED BY YOU.  So, there’s a whole new customer base here ripe for the picking.

So, hosting providers unite.  Get on board the Cloud train and in time, and not a real long time, the Amazons, Googles, Microsofts, Akamis, Salesforces, etc, of the world will have to join you or be beaten by you!

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