A Place for Cloud Marketplaces: Part Two

September 5, 2013
John Freimuth

Our first post on this topic recognized the lack of industry consensus surrounding the viability of cloud marketplaces, i.e., virtual markets where cloud service providers can offer their wares to customers or even trade among themselves. In some conceptions, IaaS (Infrastructure as a Service) would even be traded as a commodity, not unlike grain or gold.

To date the benefits of a cloud marketplace are largely based on the ability of buyers to evaluate and choose from multiple options, ultimately making it easier to discover and use services that best meet a customer’s requirements, including but not limited to price. Brokers have also begun to normalize the data and resources being provided in order to support a more accurate comparison of pricing and other services being offered, enabling better apples-to-apples comparisons.

Aside from factors including choice and convenience, cloud brokers have the ability to add value to buyers through management functions. For example, brokers can offer single sign-on, own the contractual relationship and provide a single metered bill and, in some cases, provide first level support. Buyers, of course, may also have the ability to go directly to the cloud service provider for support just as they might go directly to Delta to address lost baggage after purchasing tickets through Travelocity.

Way back in 2007, and again in 2009, Joe Weinman, a senior vice president at Telx and the author of Cloudonomics. predicted the development of a rich financial ecosystem in the cloud, including non-uniform pricing, volume discounts, reservation protocols, oversubscription, space available upgrades, yield management, markets, and dynamic pricing, among others.

Interesting variations on these themes are appearing. Just to pick one example, VMware’s vCloud Hybrid Cloud Service (vHCS) product is intended to satisfy increasing customer demands to reduce the number of 3rd party vendor relationships and thus increase operational efficiencies. vHCS enables the acquisition of IaaS services via VMware, in addition to traditional on-premise virtualized solutions. The underlying compute and storage services for vHCS are provided by VMware’s IaaS partners, making VMware act as an intermediary or broker. VMware enables hundreds of IaaS providers through their vCloud Director platform and has been mindful to not alienate this service provider channel. This is an interesting development; after all, one wouldn’t expect to go to Boeing for assistance in selecting an airline.

In a follow-up blog we will explore how cloud marketplaces can evolve their offering to achieve higher levels of value for buyers and ensure sustained growth for the delivery model.

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