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10 cloud computing predictions for 2014

Bernard Golden | Dec. 18, 2013
Cloud computing is increasingly becoming the rule and not the exception for application deployment. This will make 2014 an interesting and disruptive year for vendors, service providers and IT organizations grappling with this change.

VMware is now taking another run at this, with an approach explicitly designed to extend and integrate on-premises environments into a VMware-directed hybrid cloud offering. Certainly, this approach holds a lot of promise. The capability to seamlessly transfer a workload from internal to external environments could solve a lot of headaches for IT organizations.

This approach, dubbed vCHS, can provide benefits beyond simple technology consistency, in that it would enable IT organizations to focus on one set of personnel skills, thereby reducing costs and complexity.

Next year will be important for VMware and its vCHS offering. As noted above, companies are making decisions right now that will set their course for the future. If VMware hopes to play as important a role in public cloud computing as it does in internal data center environments, it needs to be part of those decisions. There's not a lot of time left to gain a spot on short lists. You can be sure that VMware recognizes how important 2014 will be to its future and that it's planning an aggressive campaign to maintain its market-leading position.

10. A Pricing Bloodbath Is Coming to the Public Cloud

Amazon has had a clear field to this point. Most of its competition has, in effect, competed on the wrong front, or at least chosen to try and differentiate on offering aspects about which most adopters are apathetic. One key difference between AWS and most of its competition is cost. While much of Amazon's competition has aligned its pricing with existing hosting models, requiring significant commitments in terms of both amount of resource and duration of contract, Amazon makes it easy to get started for a few dollars, with no commitment at all.

In effect, this has meant that Amazon is competing with itself - and, to its credit, it has reduced prices since it first launched AWS. That field of one is going to expand this year with the arrival of Microsoft and Google. The result will be a ferocious price war, with all three companies repeatedly dropping costs to maintain (Amazon) or attain (Microsoft and Google) market share. Not only is this a battle for market dominance, it reflects the nature of cloud computing: A capital-intensive industry in which maintaining high utilization is critical.

For other cloud providers, witnessing this competitive melee won't just be a jolly spectator sport. Every cloud provider is going to be confronted — on a daily and ongoing basis — with three deep-pocketed competitors one-upping each other every time they drop their prices. Inevitably, other CSPs will suffer collateral damage as potential customers bring the list prices of the big three into contract negotiations and expect them to match what they are offering. For those without low cost of capital and their own deep pockets, next year will be the beginning of a long, slow descent into a financial morass, solved only by industry consolidation or shuttering their offerings.


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