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Cloud upstarts: Too cheap to trust?

Brandon Butler | Dec. 5, 2014
New Amazon competitors offer some compelling deals in the cloud, but at what price?

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Hosting provider launched a $0.99 per month cloud server this fall, which is significantly less expensive than the $0.013 per hour starting price for market-leader Amazon Web Services' on-demand Elastic Compute Cloud (EC2) virtual machines.

SherWeb, another mid-size hosting provider that is pivoting into the Infrastructure-as-a-Service (IaaS) market, launched a Hyper-V/SSD-flash/InfiniBand-fabric/Intel-powered cloud offering that it says beats AWS on a variety of input/output capability benchmark tests. Providers like Digital Ocean, ProfitBricks and Concerto are among others attempting to differentiate their services from AWS, Microsoft and Google on price, performance and usability.

It's a story of David vs. Goliath in the cloud. As the public IaaS cloud computing market matures, incumbents are facing pressure left and right. Smaller and mid-size providers are aiming to steal workloads away, and some offer compelling value, at least on paper.

All of which has cloud users wondering: Are these smaller providers too cheap to trust?

The cloud computing market in recent years has been rife with horror stories of service providers going dark with little or no warning. Nirvanix, the cloud storage company that suddenly went belly up in the fall of 2013 was perhaps the most notorious case. Code Spaces was another example - after getting hacked the company, lost all its data. Cloud storage provider MegaCloud inexplicably went dark in 2013, too.

So at least one worry for customers who use small or mid-size cloud providers is whether you can trust them to be around for the long haul. There are precautions any customer should take, no matter what cloud provider is used. But backers at some of these lesser-known IaaS vendors say it's unfair to compare them to failed businesses. "We've been in business 20 years," says Manoj "Marty" Puranik, president and CEO of

Apples to Oranges
Gartner IaaS analyst Lydia Leong says there's a fundamental difference (other than brand awareness) between big-name vendors Amazon, Microsoft and Google, and the new breed of providers entering the cloud market. Some of these new entrants are more appropriately categorized as virtual private server (VPS) vendors. falls into this realm. Many of these companies have a hosting heritage and now they're rolling out self-provisioned cloud services.

The use cases are different though, Leong says. VPS hosters tend to be ideal for small-use workloads one or two VMs at a time. Some vendors overprovision their servers, allowing them to offer bottom-of-the-market costs. "It's different from enterprise-class IaaS," Leong says.

The bigger issue is that these vendors don't have nearly the product portfolio, nor the breadth and depth of features compared to bigger-name vendors. AWS is the market-leader for a reason: The company has the widest set of cloud-based tools and a network of third-party tools integrated on top of it. It's an apples-to-oranges comparison between AWS and these other vendors. Even Microsoft, which is spending enormous money in the cloud, is still just beginning to turn heads in the IaaS market.


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