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Most market observers see it, and cloud customers do, too: The universe of infrastructure as a service seems to be shrinking. And, as consolidation continues, it's bound to change IaaS market dynamics.
Exactly what those changes will mean, in the long run, remains to be seen. However, at least for now, consolidation in the infrastructure as a service (IaaS) market may lead to fewer choices, and cause more customers to bet on "safe" vendor choices, such as Microsoft Azure, Amazon Web Services (AWS) and Google. It will also stir up new concerns about cloud vendor lock-in.
"It is likely the IaaS market will continue to consolidate because of the intense price competition," said Jeffrey Kaplan, managing director at THINKstrategies, a technology consulting company based in Wellesley, Mass. Consolidation in the IaaS market could hurt customers in two ways, he warned. First, they could face price increases as the number of competitors decline. Second, they may have to change IaaS providers if their vendors are forced to discontinue their services, or are acquired by another provider, he said.
Still, not all cloud users are worried.
"As a Microsoft Azure customer, we continue to see our compute pricing drop across IaaS and PaaS," said Tom Grounds, CIO at Dillon Gage, a metals company based in Dallas, Texas. Grounds said all indications are pointing to the big three -- Azure, AWS and Google -- and his company is less impacted by the consolidation that is going on in the wider marketplace.
"We began executing on our cloud strategy in spring of 2013, selected Microsoft Azure as our platform of choice and continue to focus our efforts there," Grounds said.
In fact, consolidation in the IaaS market could mostly benefit consumers, said Chris Ciborowski, founder and managing partner at Nebulaworks, a consulting firm focused on DevOps and based in Corona Del Mar, Calif. There are many smaller providers that are attempting to compete with major cloud providers like AWS and Azure, but can't match the functionality and robustness of their offerings. Because of IaaS market consolidation, smaller cloud providers must offer feature parity, or provide services at a much lower price, he said.
"Either way, this is a win for the consumer through lower-cost options by the 'big three' [cloud providers] or increased features by smaller providers," Ciborowski said.
Choosing providers, avoiding lock-in in the IaaS market
As with any data center decision -- whether related to a physical data center, a colocation facility or a cloud data center -- it is important to evaluate your vendors carefully.
Tom GroundsCIO, Dillon Gage
"Review not only the technology stack, but also the viability of the vendor for the long haul," Grounds said. Organizations should review a potential vendor's roadmap and ensure it aligns with its future IT plans. If the IaaS offering you're evaluating comes from a business unit that's part of a larger organization, make sure the parent company is investing in the future of the IaaS product.
"Moving data centers, whether physical or virtual, is never a small feat, so plan wisely and the consolidation of the marketplace should have little effect," Grounds said.
The best way to avoid potential consolidation pitfalls is to carefully select your IaaS provider based on the quality of its services rather than price, Kaplan said. In addition, evaluate a potential vendor's competitive strength in the IaaS market, and always have a cloud exit strategy in place.
"You should also be sure you have the appropriate exit clauses in place to permit you to change providers if you're not satisfied with the new supplier, and have a contingency plan in place to allow you to move to another provider," he added.
Regarding vendor lock-in, it is important to use IaaS solely for infrastructure, steering clear of proprietary services and tools, such as relational databases and message queues, Ciborowski said. Unless a company is going all-in with a cloud provider, and thereby accepting lock-in risks, it's also a good idea to layer on applications and services using open source alternatives.
"Taking a layered approach provides abstraction, mitigating lock-in and allowing cross-cloud support and agility," Ciborowski added.
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