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Why cloud marketplaces are taking off

Just this week two different cloud marketplaces went live, Equinix’s cloud marketplace and Synnex’s CloudSolv. Both claim to bring buyers and sellers of cloud services together under one roof reducing network costs and improving performance of the services available.

Equinix says companies already housed in one of its International Business Exchanges can acquire services from each other, with Equinix facilitating the connection in the middle. Instead of doing an extensive search for a provider of a particular service only to discover they are right next door to you in an Equinix data center, now users can search the marketplace and in an instant, see what’s available. Equinix claims 4,000 companies are housed in its data centers.

A key advantage of finding a provider inside the same data center as you is bandwidth costs and network performance. There’s no need to shell out money for fat pipes to a provider if they are right next door to you, and you can expect much better performance from your neighbor than someone a million miles away.

Similarly, Synnex, the third largest distributor of IT products in the US, launched a cloud application marketplace for its resellers. It runs on a new product from FullArmor Corp. called AppPortal Marketplace.

One of the reasons these cloud marketplaces, sometimes called Cloud Brokerage Services are taking off is the sheer number of companies launching cloud-based services. There are literally thousands of them from industry specific vertical clouds that meet regulatory requirements for those industries, to cloud based IT services (security being a key one), to business functions like CRM as a service i.e., to IaaS and PaaS offerings.

Making sense of who does what and then figuring out which provider to go with is a huge undertaking. These marketplaces go some way toward simplifying that process and hopefully providing a better service as the providers are in a trusted community.

The downside to marketplaces is the fees the owner of the marketplace might charge to be in its club so to speak (i.e. eBay) and the power it gives the marketplace. Amazon for example monitors all the sales data on its site and uses that information to cherry pick popular products in categories it doesn’t normally stock, sometimes undercutting other sellers in its marketplace. It’ll be interesting to see if the cloud marketplaces evolve this way too.

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