Blog   |   Multi Cloud   |   July 24, 2012

Google, AWS, and IaaS

In June, Google announced that it is seriously entering into the IaaS space. With much fanfare, Google announced that it would offer its service at approximately half the price of similar AWS service. The Google entry has both tactical and strategic significance for IaaS providers, public cloud users, and the general future of cloud computing.
For IaaS providers, the entry of Google means that AWS will eventually face serious competition. The emphasis here is on “eventually.” Currently, AWS has the dominant marketplace position. AWS is the 800 lb. gorilla in the space and that position seems unlikely to change anytime soon. Plainly, AWS holds a significant advantage because of its already established customers base (cost of switching will deter defections) and its more diverse and robust offering of services. So, Google is venturing into AWS’s well-known and well-charted territory. From that perspective, the advantage clearly lies with AWS.
Further, Google is attacking this market from a cost perspective. It seems likely that AWS can competently compete on this level. Google certainly enjoys a bigger bankroll but, AWS enjoys the economy of scale from its present operations. I would anticipate this being a good match with, in the short term, the real losers being smaller IaaS providers who simply cannot compete with the two giants.
Finally, even with the AWS marketplace advantage and knowledge, I would still caution against counting Google out in the medium or longer term. Let’s be realistic. Google is a uniquely powerful enterprise which, given time, can successfully compete with anyone. They have both the intellectual and financial resources. It would be naïve to think that their offering will not quickly improve and that they will start to compete from a quality of offering rather than simple price perspective.
For public cloud users, the entry is terrific news. The immediate benefit is a lowering of costs for public cloud usage. It seems obvious that AWS (and others) will be forced to price-match Google. Beyond a cost perspective, Google’s entry holds the promise of increased functionality and service from all IaaS cloud providers. Although AWS already has an impressive array of services and tools – and a significant lead on its competition –this will spur even greater innovation.
Google will not simply attempt to match the current marketplace offerings. No, we know from experience that Google will attempt quantum improvements over the current offerings. We also know that Google will probably succeed in this attempt. So we can conclude that the entry is a genuine win for public cloud users. It will both lower costs and improve service.
Google’s entry does highlight a forward looking question of portability. Specifically, will a cloud user be stuck with their current provider? Do you need to make a bet now – on either AWS or Google? Or, can you take the currently superior AWS offering secure in the knowledge that, if you so choose, you can transfer your deployment swiftly and easily to Google in the future? If forced to wager, I would guess that there will be the availability of portability. It seems likely that either IaaS providers will standardize to the point of making it inexpensive and simple or an effective solution will be provided by 3rd parties.
The Google entry has, perhaps, its greatest significance in the general area of cloud computing. We at Cloud Compliance Inc.  already believed that the future was public, not private, clouds (for some of the reasons why, please see our post of July 6, 2012). Google is now confirming our faith by making a significant wager in that same direction. Google’s entry signals that public cloud computing will continue to decrease in price, improve in service, and increase in accessibility. This will be the most important long-term effect of Google’s entry — the already compelling case for public cloud adoption will become even more striking. Google’s entry insures that public cloud computing will continue to grow in importance.

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