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When Amazon Abandoned Main Street for 'the Skyscrapers of Cloud'

08.21.2012
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In the competitive world of cloud-based computing infrastructure, Amazon remains top dog. It’s highly visible, its footprint is almost global, it incrementally adds features or cuts prices to keep competitors on their toes, and it generally manages to meet most people’s needs, most of the time. It may not always offer the lowest prices, or the best support, or the fastest processing, or the friendliest management console, but it consistently manages to meet customer demand with an offer that is more or less ‘good enough.’ It is a convenient choice, and it’s the standard against which its multitude of competitors will typically be measured. Amazon is Asda or Carrefour or WalMart to the competition’s Tesco, Marks & Spencer, Fortnum & Mason, Whole Foods, and neighbourhood deli.

Amazon is not, of course, the only game in town. Far from it. Rackspace comes a close second by most measures, big names such as HP and Google are becoming increasingly serious contenders, and there is a healthy – and growing – crop of smaller providers that differentiate themselves by geography, by price, by customer domain, by specific features, and more. Indeed, I looked at some of those differentiations recently. But every one of the cloud infrastructure providers with which I have ever spoken shares one recognition; Amazon is the mark against which they are measured. They can be cheaper than Amazon, or provide better support than Amazon, or more SSD options than Amazon, or be closer to the customer than Amazon. Those are all perfectly valid reasons to choose one of the alternatives to Amazon. But that’s what they are; alternatives to Amazon.

It therefore came as something of a surprise to read a recent PandoDaily post by Trevor Gilbert; Amazon May Own the Skyscrapers of Cloud Hosting, But Digital Ocean is Looking to Own Main Street.

Eh? Unfortunately, it gets stranger. Gilbert writes,

But the problem with these companies, which DigitalOcean is looking to address, is that Amazon and Rackspace are geared towards bigger, enterprise-level needs. This means smaller businesses are left in the dark.

Pardon? Smaller businesses don’t use Amazon or Rackspace? Really? I’d agree that Amazon and Rackspace are hard at work persuading enterprise customers to trust and rely upon their public cloud infrastructure. But to suggest that’s what they “are geared towards” ? Surely not.

There can’t be many technology startups from the last few years that didn’t get started in large part because Amazon was there. They don’t necessarily stay with Amazon once they have gained some customers and some confidence, but Amazon’s affordable and accessible infrastructure will get them going. It gets them the proofs of concept and the alphas and the betas that attract the users. Those users then attract the angels and the venture capitalists who provide the money that gives the little startup the wherewithal to make serious decisions about how to scale further.

Writing in the Financial Times, Maija Palmer quotes Lachlan Donald of 99designs,

“Companies had to borrow a lot of money to buy all those servers. It created a barrier to entry that cloud computing has removed,” says Mr Donald. When he helped to launch 99designs, using Amazon Web Services to run the website, the company was set up without any external funding at all.
(my emphasis)

And Joe McKendrick made a similar point, writing for Forbes back in 2011,

There was a time when launching a serious startup required serious capital. Seed money was required for hiring talent, marketing and promotion, office space, and for technology to make it all happen. The technology portion of the equation is suddenly diminishing, dramatically. Thanks to cloud computing and social networking resources, it now costs virtually pennies to secure and get the infrastructure needed up and running to get a new venture off the ground.

Sometimes, like Zynga, startups eventually decide to bring some or all of their computing requirement into their own data centre. Sometimes, increasingly confident startups look for smaller cloud providers more suited to their particular requirements. Swiss cloud provider CloudSigma’s CTO once told me that “more than half our customers migrate off another cloud.”

Today there is almost an expectation amongst investors that the startups pitching to them are already using the cloud to lower costs and accelerate the journey from idea to product. Amazon is a fundamental part of that.

Not every small business is a startup, of course. But here, too, the cloud – and Amazon – is being put to work. Small businesses are identifying needs, and they are spotting cloud-powered solutions. Today. They are not sitting on their hands, bemoaning the lack of a viable cloud provider aimed at them.

When I read Trevor Gilbert’s post, I expressed my disbelief on Twitter. And, despite the inevitable limitations of the 140 character buffer, I’m very grateful to Trevor for engaging in conversation about our different perspectives.  I’m not sure that either of our minds were changed, but I’m certainly glad that Trevor responded.

Amazon & Rackspace clouds “geared towards bigger, enterprise-level needs,” reckons @pandodaily. Huh? SERIOUSLY? bit.ly/MXQA59 {sigh}

— Paul Miller (@PaulMiller) August 14, 2012

 

So, to answer the question posed in my title, I really don’t think Amazon has ‘abandoned Main Street.’ Amazon remains a viable choice  on Main Street and in the gleaming glass towers of big business, but there is plenty of room for differentiation and competition from the likes of DigitalOcean. Why can’t they compete on their actual merits, and avoid sinking so low as to suggest their biggest competitor isn’t even in the market. They are in your market, and they’re there to stay. Get over it, and differentiate.

Corporate skyscrapers look down on Main Street, in this image of Fort Worth by Flickr user Justin Cozart

Published at DZone with permission of Paul Miller, author and DZone MVB. (source)

(Note: Opinions expressed in this article and its replies are the opinions of their respective authors and not those of DZone, Inc.)