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6 Cloud Upstarts To Watch

Watch out, Amazon Web Services. These younger cloud companies bring new architectures and provisioning methods to the game.

Virtustream, from its earliest days, has attracted financial backing as a potential savvy service supplier. In 2010, Intel Capital was an investor to the tune of approximately $5 million; in September 2013, SAP invested $40 million to aid Virtustream's efforts to host SAP Hana and applications. Why does Virtustream attract the money -- $120 million in all, or about the same amount as invested in Joyent? Rodney Rogers and Keith Reid, co-founders, co-CEOs, and chairman and chief technology officer, respectively, both come out of Adjoined Consulting, which helped companies manage outsourcing and technology issues. Both have experience in application integration, one of the next hurdles that will determine which cloud vendors continue to attract workloads and which fall by the wayside.

Virtustream built up its xStream cloud management platform for its public cloud operation, then made it available as a package for private enterprise cloud operation. In December 2011, it bought Enomaly, with its Elastic Computing management platform that can farm out small units of work to different clouds and manage them. It includes the SpotCloud marketplace, where available capacity can be listed by a primary provider, partners, or even, someday, enterprise private clouds.  

Virtustream has built-in a capability to run VMware's ESX Server workloads and OpenStack's KVM workloads, giving it a stake in two of the principal, emerging public cloud architectures. It offers the same SLAs on each.

It's as if Virtustream decided when it was founded in 2009, as the market was first taking shape, to keep maximum flexibility in its approach. Now, that flexibility may serve it well as VMware customers convert datacenters to private cloud, and OpenStack gains credibility among suppliers. Virtustream operates datacenters in San Francisco, Washington, D.C., and London.

ProfitBricks launched in mid-2012, and since then the Berlin-based company hasn't been heard from much. Nevertheless, it brought a new and highly desirable concept to cloud computing upon launch: End-users should be able to configure the server they want, not the one that the supplier has pre-configured for them, and pay for it by the minute, not hour.

In August, it cut prices and now charges half, or US$61.65 a month (versus $111.40), for a virtual server that is the equivalent to an AWS m1 medium server, even though the ProfitBricks server has identical CPU, memory, and storage resources. (It won't necessarily have the rich database, content distribution, and other Amazon services found alongside EC2.)

ProfitBricks allows users to build small up to large-scale, single servers, rather than offering server clusters as its high-performance compute option. That means a customer may scale-up a large database system or SAP application to as far as he is likely to want to go, as opposed to scaling out multiple servers. The largest single ProfitBricks server offered is now 62 CPUs, each equivalent to a current AMD or Intel core, with 240 GBs of memory. ProfitBricks will provide the CPU horsepower from a single host. If a host doesn't have as many CPUs as a customer wants, then the workload is moved to a new host through management software.

"Most applications and services are meant to scale vertically," not scale out horizontally, said Bob Rizika, CEO of ProfitBricks' US division, in an interview earlier this year. The firm has concentrated on a user interface that makes it simple for customers to select the server features they want.

The firm received an additional $19.5 million in venture funding in March from the German firm United Internet AG, on top of $18.8 million it previously received. Its approach to cloud services was one of 10 finalists at the MIT Sloan CIO Symposium's Innovation Showcase this year.

ProfitBricks has space in the Switch Communications datacenter in Las Vegas and in Telemax datacenters in Karlsruhe, Germany.

You don't hear much about Dimension Data, partly because it's an older company founded in 1983 and headquartered in Johannesberg, South Africa, and partly because its cloud services are focused on emerging markets in its parent company's part of the world, that of the Japanese telecom giant, NTT Group. That means its largest presence is in Asia/Pacific nations, the Middle East, and Africa.

In addition, Dimension Data comes out of the world of systems integration and managed hosting, as opposed to being a cloud pure play, and it maintains a mix of businesses to this day. But it's no slouch in providing cloud services, with communications and integration services tied in. As it began to shift its attention to cloud services, it had 11,000 employees and revenues of $4.7 billion in 2010, operating in 49 countries.

It gained the cloud self-provisioning software and cloud management skills through its acquisition of OpSource in 2011. In July 2013 the Tolly Group, employed by Dimension Data, published benchmarks showing Dimension Data outperformed Amazon and other leading cloud suppliers.

It emphasizes SLAs that offer 99.99% uptime, like Amazon, plus 99.95% percent uptime for the network, a Dimension Data addition. It also guarantees a latency of less than one millisecond  in the transfer of data packets between cloud servers on the same internal cloud network. Its SLAs return more value to the business, as opposed to offering straight replacement time, as Amazon does. For example, an outage of four minutes beyond the allowable limit would trigger a 2% reduction in the monthly bill of the customer, even though four minutes doesn't represent 2% of the month.

Dimension Data is zeroed in on enterprise needs, understands the all-important relationship of network availability to cloud computing, and offers firmer SLAs. The ways that it departs from the Amazon model gives it a chance to grow in those parts of the world where Amazon is weakest.  

And PrivateCore makes one more. It's not literally a cloud supplier, but one day clouds may differentiate on the basis of whether they are or are not a PrivateCore-equipped service. PrivateCore is a 2012 startup in Palo Alto, Calif., that was founded to make public cloud suppliers able to guarantee the privacy of the customer's data under all circumstances. It is the brainchild of former security experts at Google, VMware, and IDF. 

Their timing may be good. PrivateCore claims it can guarantee your servers in the public cloud can't be snooped on by the NSA.

As a demonstration, PrivateCore put its vCage software on a Tor server run by the Tor anonymity network in IBM's SoftLayer cloud. VCage protects data in use by encrypting it in RAM to protect it from NSA-style snooping programs.

PrivateCore's vCage "uses a brilliant design created by experts who knew what they were doing" to move security in the cloud forward, claimed German security consultant Felix Lindner, head of Recurity Labs in Germany. The use of data-in-use encryption eliminates the possibility that your data will be handed over to governmental authorities by your cloud provider.

PrivateCore was founded by CEO Oded Horovitz, former senior staff engineer at VMware who led development of vShield, and Steve Weiss, a former Google senior engineer who received a Google Founder's award for designing Google's two-step verification.

Charles Babcock is an editor-at-large for InformationWeek, having joined the publication in 2003. He is the former editor-in-chief of Digital News, former software editor of Computerworld, and former technology editor of Interactive Week.

Emerging standards for hybrid clouds and converged datacenters promise to break vendors' proprietary hold. Also in the Lose The Lock-In issue of InformationWeek: The future datacenter will come in a neat package. (Free registration required.)

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User Rank: Ninja
1/7/2014 | 4:07:08 PM
Quite a few providers allow customizable configurations
It's a bit odd to see ProfitBricks singled out for having customizable machine configurations when Dimension Data, CenturyLink, and SoftLayer all also allow for customizable configurations.  ProfitBricks does have a nifty GUI for designing your deployment layouts, but from a technical standpoint, I don't believe it offers more customization than the others I mentioned.  (Well, it may offer more cores for a single VM than some of the above, but in terms of customization, it seems equal).

It can also be a bit frustrating to read comparisons like these, because what most customers really care about (features: block storage with quick snapshots/restores; also CPU performance, I/O performance & latency, network bandwidth & latency) is never laid out in a particularly clear way. For example, Digital Ocean, from a feature perspective, is somewhere between AWS and VPS hosting, whereas the other providers listed here (that I've tested) are closer to AWS.  (In particular, DO's support for baking and bootstrapping is much more limited, and I don't believe it offers any kind of storage beyond instance storage).  So I'm not quite sure what to watch...
IW Pick
User Rank: Ninja
1/7/2014 | 3:13:39 PM
What about the little guys?
One of the biggest advantages of living in Canada is that we have very few incumbents when it comes to cloud.  That is, when you look at physically hosted services in Canada (as opposed to subsidiaries of US companies), there are few huge companies outside the Telcos that are pushing cloud.  What that means is we have a ton of great startups.  I do a lot of work with these folks and honestly, some of the services that are being created would rival that of some of the bigger players.  Ofcourse, they don't have the marketing dollars those big guys do, but in the end, with the NSA fallout, they might have the upper hand just being branded as Canadian born.  I'd like to think that due to the accessibility of cloud, these newer players could displace the old dinosaurs who are trying to revamp their old business models to keep up with the new cloud models.
User Rank: Strategist
1/7/2014 | 1:48:15 PM
Reliability, security edge shifting toward thye cloud
Cloud outages are heavily publicized; internal enteprrise data center outages are not. If the measure were uptime based on number of applicatoins running, the cloud would comfortably beat most data centers. Security remains an issue that will never be fully resolved. There are exposures. But as cited by Bankim Tejani elsewhere, some security measures can be automated in the cloud. In the long run, that's a big plus for cloud security. Tejani's analysis: http://www.informationweek.com/security/cloud-security/how-cloud-security-drives-business-agility/d/d-id/1113339?piddl_msgid=197256&piddl_msgposted=yes#msg_197256
User Rank: Ninja
1/6/2014 | 2:28:57 PM
Re: Brand Still Matters
I see that SAP has invested in Virtustream. I can see why: SAP needs to get more nimble and utilize virtualization better. That's not their core strength, and as such they need help with that technology. Other big companies could also use Virtusteam's technology to their advantage. 
User Rank: Ninja
1/4/2014 | 6:39:51 PM
Caveat Emptor, Joe
For sure the cloud will bring much tribulation, but a heck of a lot more misery as evidenced by data leaks.  Upstarts (and even established companies) looking to conduct biz on the cheap are train wrecks waiting to happen.  Consumers will have to be a lot more vigilant in deciding which services to patronize, but as usual, Joe Blow Consumer is never truly informed even if he wanted to be because of the allergic reaction certain companies have to full disclosure.
User Rank: Strategist
1/3/2014 | 5:04:36 PM
DigitalOcean "Data leak"
Re: Data Leak.  Agreed, Li Tan, there has to be a public announcement if there's a service provider-supplied best practice that's been shifted to a decision by the end user. I think DigitalOcean has a good future, but using growth as an excuse to revert to a non-best practice amounts to shooting yourself in the foot. Has it irreparably harmed its own reputation or will this blow over before 2014 is out?
User Rank: Apprentice
1/3/2014 | 1:18:47 PM
Vendor Comparisons: The Cloud Wars
I believe that vendor comparisons at this level are almost meaningless. There are differing cloud markets in play, namely, consumers, Small-Medium-Business (SMBs), and Enterprises (I could, but won't, bother to break down Enterprises into multiple sizes).  Most of the vendors mentioned play in one or more of these markets, and their success and credibility is different in each.  Some of these vendors are struggling to define where they want to concentrate their marketing efforts. Plus the vendor landscape is evolving through acquisitions, mergers and partnerships.  Verizon/Terremark, NTT/Dimension Data/OpSource and CenturyLink/Savvis are good examples of Telco's trying to expand their horizons into the Cloud world, while you have AT&T trying to do it internally.  Don't forget Deutsche Telecom and T-Systems who were focused more on the full outsourcing spectrum, but have developed a fairly powerful cloud offering with their "Twin-Core" data center concept. Some of these players are struggling to define what they want to be when they grow up. Integration of the telco and cloud businesses has proven to be elusive.


And, of course, you can't completely ignore the traditional outsourcers who are struggling to get into the cloud game (CSC, Dell/Perot, IBM, HP, XEROX/ACS, etc.).  These providers are used to long-term, fixed-price contracts.  Pay-for-usage models are counter-intuitive to them.


It will be fascinating to see the market battles in the next few years, as the core cloud players (Amazon, Google, Microsoft, Rackspace, etc.)try to move up the enterprise food chain, and the above vendors try to compete.  The core players have established a powerful base that provides them with scale, and therefore, pricing advantages.  But that consistently have problems, as @accident rightly pointed to in his/her comments.  Have the biggies outgrown their ability to manage their environments? Many of the outages are actually caused by changes being made during mid-week, prime hours. The impact of such changes often start off minimal, but the entire environment then degrades into network traffic storms trying to "catch-up", which, in turn, affect many clients.  And, when they have problems, their client communications are horrific, if not, non-existent, usually, a blog site that is updated every 3-12 hours.  Enterprise-class clients will not stand for that kind of service.  The traditional outsourcers and telco's know how to deal with client communications, primarily through dedicated Account Executives and Service Delivery Executives.  I always love to see the defenders say "enterprises have outages, too".  The difference is that when an enterprise has an outage, all hands are dedicated to recovering that enterprise's most critical systems.  The cloud providers, by definition, can't dedicate their resources to one large client. There are no "dedicated" resources.  The outsourcers have a middle ground, namely, having resources working on the general problem, plus dedicated resources, focusing on the individual clients.


The cloud industry, for some time, has discussed the concepts of Public, Private, and Hybrid Cloud models. Large enterprises need (at least, they believe) all three.  Few of the above players have successfully incorporated all three into their quivers under a single management umbrella.  Some are getting very close through acquisition of "cloud management" capabilities.


I have rambled all over the place (I apologize).  I think, someday, we will look back on these coming years as the "Cloud Wars".  Who survives, how long it takes, will customers be the winners, are all unanswered questions.  My bet is, this will be analogous to the battle between mainframes and distributed systems, with the declared death of the mainframe back in 1990.  We will continue to see remnants of all models for a very long time.  Should be fun.
Li Tan
Li Tan,
User Rank: Ninja
1/3/2014 | 3:18:46 AM
Data leak
By reading this post, the fact that DigitalOcean (maybe other vendors as well) did not wipe the storage by default really worries me. This means that there is possible data leak. From end users perspective, by default we consider that when we order a new VM from cloud service provider, it should be in a clean state. But obviously this is not the fact here. Furthermore, some bad guys may try to dig more information from the residue data, which means security breach. Could the cloud service provider at least make a public announcement if they change the default setting like this?
User Rank: Apprentice
1/2/2014 | 2:08:20 PM
Re: Inital AWS appeal was to developers
Do we use the same AWS?   I get nothing but micro outages all day long and in the last year or two have had the worst and longest outages from them.

Here is just the informationweek articles on it:




IIRC you've even had articles on how certain large customers get around these problems.   Any technique could be applied to any host and using multiple hosts. 

When it comes down to it, nobody is perfect and if you put your resources into 1 provider your just waiting for an outage.   Even if that outage is a "planned event" by them.
User Rank: Author
1/2/2014 | 2:05:22 PM
Re: Inital AWS appeal was to developers
The NSA scandal may prove to be the best marketing fuel that a few of these cloud upstarts could ever get -- for free.
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