Some businesses live or die by the ecosystems they build. What would Expedia and Orbitz be without the airlines and hotels that give them a cut of the revenue from every new customer the travel sites send to them? Comparable symbiotic partnerships are emerging in the cloud provider market, as wholesalers and software vendors build cloud ecosystems with smaller cloud providers and managed service providers (MSPs) hungry for customers but starved for resources.
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Like any business ecosystem, a cloud ecosystem comprises various stakeholders in the industry that benefit from aligning their investments, strategies and/or resources. Although there are some vendor- or provider-neutral cloud ecosystems emerging, such as the British government's recent G-Cloud initiative, some Infrastructure as a Service (IaaS) providers are taking matters into their own hands and organizing these collectives themselves.
A cloud ecosystem should benefit every stakeholder -- from the cloud partner to the MSPs to the enterprise customers, according to James Staten, vice president and principal analyst at Forrester Research. Customers are attracted to a cloud ecosystem's promise of service continuity while participating providers benefit from the exposure, especially if the ecosystem is associated with an influential brand like VMware, Staten said. Ecosystem builders and participating providers also mutually benefit from an expanded footprint, broader service portfolio and quicker time to market without heavy capital investment, he said.
"The main reason to [join a cloud ecosystem] is for the [faster] time to market and for the delivery of a proven solution to your customers," Staten said. "A lot of service providers and hosting companies are in the business of hosting. They don't have engineers for writing their own software, building user interfaces or [scripting] automation or other services required to build cloud services. So, if you're not going to invest in that, it's a whole lot easier to get it from somebody else."
Tier 3 builds cloud ecosystem off its software stack
Tier 3, an IaaS provider based in Bellevue, Wash., announced this week it will sell its proprietary cloud software stack to MSPs and budding cloud providers. Tier 3, which had previously sold IaaS only to business customers, would stitch these new provider nodes into a globally federated cloud.
Adam WrayCEO, Tier 3
Although prospective MSPs and other cloud providers would purchase a license to deploy the software on-premises, Tier 3 would centrally manage it as a service, called Federated Cloud, from its network operations center (NOC). CFN Services, a Herndon, Va.,-based MSP that markets its low-latency network services to the financial services industry and network operators, is the first partner to join Tier 3's cloud ecosystem.
"Our goal is to enable multiple [smaller cloud] providers around the world to have the power of the big boys," said Tier 3 CEO Adam Wray.
Meanwhile, the benefits of a cloud ecosystem are twofold for Tier 3, according to Wendy White, the cloud provider's vice president of marketing.
"Every service provider [that] comes on board brings the capital to set up a new location, so from a go-to-market perspective, it helps us accelerate our footprint without a capital-intensive model," White said. "And, obviously, it's opening up an entirely new revenue stream for us."
To run Tier 3's software, participating MSPs and cloud providers would have to deploy hardware that meets Tier 3's stringent reference architecture. The federated nodes, uniform architecture and centralized management would enable Tier 3 and its partners to pool their computing resources and enforce consistent Quality of Service (QoS), cloud security and cloud service-level agreement (SLA) compliance, Wray said.
"Every node works together, and every node can be seen together," White said. "[Our] platform is running on top of the nodes as an integrated fabric."
Tier 3 is following the footsteps of software vendors that have launched similar cloud ecosystem models, including CA, Citrix, OnApp and VMware, according to Forrester's Staten. To some extent, Tier 3 is also attempting to offer a higher-layer alternative to OpenStack, an open source cloud platform originally designed by Rackspace and NASA, he added.
"It will be interesting to see how the Tier 3 solution resonates with service providers after April, when the OpenStack [project] releases their newest version -- called Essex -- which we feel is the most commercially-viable version of OpenStack," Staten said.
CloudSigma pursues vertical cloud ecosystem
Another cloud provider attempting to forge its own cloud ecosystem is Zurich-based CloudSigma, a wholesale IaaS provider that sells largely to Software as a Service (SaaS) providers. Unlike Tier 3, however, CloudSigma's strategy does not revolve around software stacks or hardware architectures; rather, its cloud ecosystem focuses on a specific vertical market -- the media and entertainment industry.
CloudSigma launched its MediaCloud ecosystem last month, naming as its first partner Attend LLC, a cloud storage provider for media professionals. Ultimately, CloudSigma hopes to create a comprehensive catalogue of SaaS providers that cover every aspect of the industry, according to CloudSigma CTO Robert Jenkins.
Sitting in CloudSigma's 10 Gbps network, MediaCloud partners will enable their customers to "bounce their data between different service providers without having to pay all these data transfer fees and [incurring] latency," Jenkins said.
"What we're really doing is building up an ecosystem of service providers around these big media companies and allowing them to move [their operations] to the cloud," he said. "It's a long-term process, but the benefit is that once you build up this ecosystem, it's a very compelling product."
Whereas Tier 3's "generic" cloud ecosystem may be an uphill battle against "a ton of competition," CloudSigma's strategy is "a master play," said Forrester's Staten.
"[Tier 3 isn't] as focused as they should be," Staten said. "CloudSigma's got it right, and they're also taking a higher margin."
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