Life after Cloud? Ditlev Bredahl CEO, OnApp.com
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1 Life after Cloud? Ditlev Bredahl CEO, OnApp.com
2 Hosting CV Been in the hosting/service provider biz since 96 Last 6 years as CEO of UK2Group Built several large hosting brands: VPS.NET, 100tb.com, Resell.biz and others Made 10+ acquisitions in the industry Been through 3 exits Latest one UK2Group sold for ~$77 million Now founder and CEO of OnApp.com Largest cloud platform provider in the industry
3 Cloud layers SaaS PaaS IaaS Software as a Service End users that consume services (like Salesforce) Platforms as a Service For Application developers (like Force.com) Infrastructure as a Service (like AWS) Enterprises/SME s This is what I will be focusing on today
4 Random subjective observations no guarantees, no promises or even common sense
5 OnApp is a software business that enables service providers to offer cloud, CDN (and storage) products to their clients.
6 Two core products
7 (and one new one)
8 OnApp cloud means business End to end software cloud solution for service providers Powers more than 50% of all public clouds +1,000 installs across all continents 2 5 new clouds set live every day
9 OnApp Cloud Utility billing, hourly/plan based, user/reseller based Role based user admin, resellers, iphone/android apps Provisioning, autoscaling, failover, load balancers
10 Cash in your spare capacity End to end CDN solution for service providers Enables anyone to setup a CDN without the capex concerns Helps service providers monetize idle capacity and resources.
11 OnApp CDN ties together idle resources, across our service provider client base, into a large federated virtual CDN network, that can be offered as a turnkey CDN service
12 CDN Market $2.6 bn market in players, almost monopoly (Akamai) Insanely high margins, but very high entry barriers Project based sales process Totally non disrupted (almost) enterprise only
13 A CDN edge server image that can be installed in any OnApp cloud with a few clicks The CDN Federation is a marketplace inside OnApp where hosts can buy and sell CDN edge resources Fully integrated CDN business in a box Utility billing, hourly/plan based, user/reseller support... Incl. an OnApp managed Anycast-DNS infrastructure
14 The OnApp Federation!
15 Cloud.Storage.Solved! OnApp Storage is distributed across HV s Master less disk central deployment Inherent failover Thin provisioning, Deduplication, API s etc Come see a demo today at our booth
16 Some of our clients
17 'OnApp is here to help service providers increase profitability and remain competitive'
18 profitable and competitive What does that mean in this industry? What challenges are service providers facing? Who are they competing against? Why are they squeezed on margins? What have we seen work for our clients? What s the solution? The Holy Grail of Hosting That is what I will be talking about today!
19 Cloud phases... Phase 1 Cloud was for early adopters Cloud was not sold on features or use cases, but on hype Quite often, cloud was not cloud but just rebranded old technology Phase 2 Cloud is commoditizing Cloud providers are being squeezed on margins, with lower pricing and higher CPAs Cloud product now defined, and scale becomes important Phase 3 Cloud is no longer the cloud, but just how stuff is done... Cloud is the underlying infrastructure below most public/private service offerings Battles for clients are fought outside of the cloud cloud is boring...
20 Headache #1
21 Cloud hosting market Amazon market leader with +$1bn revenue how the h... did that happen? Not exactly the greatest uptime Best effort support with hours Very expensive, with linear cost structure Hardly any marketing Not user friendly Very hard to move in/out of
22 Amazon has 3 things going for them Scale Scale Scale 2. Geographical reach (with easy access) 3. Unmatched product breadth...all of which are almost impossible to compete against.
23 Gartner s view on IaaS
24 Quick look at the IaaS opportunity
25 Dedicated server market 5% CAGR
26 Shared hosting market 7-9% CAGR
27 Cloud IaaS market 70% CAGR
28 So Cloud is probably the largest commercial opportunity in the history of our industry and we left it to a bookshop?
29 #2 Commoditization IaaS business model becomes commoditised very fast. AWS only accelerates that process It can easily become a question of price/gb/cpu/hour Loss of the goodwill company has build up Very hard to differentiate, and compete in the arms race against AWS Most only focus on price and CPAs
30 Decrease prices/margin Increase CPA / Marketing Binary business model
31 Ditlev, I m following the same tried and true marketing tactics so why isn t it working?
32 (Mass market) Service Providers are selling the same bottled water, with same messages and at more or less same price...
33 Where s Waldo Marketing
34
35 #3 CAPEX Huge concern for boot strapped IaaS providers Not enough resources to deal with scale Not able to attract/pay for high end wide R&D
36 So, what works?
37 20% of OnApp clients are seeing xx% monthly growth rates
38 Why do they grow? They have decommoditized themselves!! By building highly specialized server images By focusing on slim verticals By moving into new geographical markets By building bespoke integrations with 3rd party products...by not trying to compete with AWS/etc
39 So...? Yes, specializing rather than generalizing, works Not trying to compete with big guys on price/cpas, works Building niches that are not reliant on CAPEX intensive investments, but on domain knowledge, works...but that is not very scalable?
40 Final point: THE HOLY GRAIL
41 The Holy Grail of hosting... Federation! Only by teaming up across datacenters, service providers and ISVs can we compete By utilizing each others competencies and allowing competitors to burst into unmonetized infrastructure and resources No CAPEX concerns Scale, Geo Reach, Product Breadth!
42 Building a large pool of resources
43 Together we can compete against AWS We would have more scale than AWS We would have wider product breadth than AWS We would have deeper geographical reach than AWS ( And btw, the same goes for Akamai)
44 Gartner s view on IaaS As a pool they would be able to compete
45 Concluding So Leverage your current infrastructure Extend your reach by federating Grow your business without growing CAPEX OnApp is happy to help
46 Q&A Thank you!
47 Q&A 1. Why I haven t I mentioned security? 2. Where was Waldo? 3. How important was Amazon s user story? 4. Real life Examples of de commoditization? 5. Isn t this federation talk a bit naive? 6. Isn t OnApp already commoditized?
48 Security?
49 Security discussion is 75% scam... There is a whole generation of security consultants that has been out of a job since Y2K now they are back in business Data does not like to move Security important? Yes, obviously, but at the point of moving out of internal facility not from an IaaS/virtualisation perspective. back
50 Waldo?
51 back
52 How important was the use case to AWS?
53 AWS use case AWS had a great story: We eat our own dogfood, and look at how successful we are Though, some say they actually only moved in Also, when they had Amazon.com was never down... BUT the use case was key to their launch
54 an example...
55
56 Otto Frederick Rohwedder s bread slicer, 1912
57
58
59 back
60 How can you decommoditize your business?
61 An example
62
63 And to the other extreme
64
65 Both of those guys have decommotized their offering by adding or taking away features
66 Make your product stand out, build something where price/cpa is not key and where market transparency is limited
67 Final example (my favorite)
68
69 back
70 Never gonna happen
71 Ditlev you are naive... Yup, I know but I truly think this is a turning point in our industry. If we do not act radically now, we will see a consolidation of facebook like proportions that will be really hard to reverse. Federating across our infrastructure IS the right thing to do but may not be possible to do... back
72 OnApp is next?
73 Where does this put OnApp? Yes, we are next in line... But we hope to play a role in the 3rd phase of the cloud and be part of the underlying infrastructure... ideally with the use of a federative approach back
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