A big step toward a new phase in cloud competition
Last month Amazon.com introduced Spot Pricing, a new pricing scheme for its Elastic Compute Cloud (EC2). Spot pricing creates a pseudo-market where users can time workload spin-up on EC2 to variable pricing. This is a big step toward a new phase in cloud competition where end-users will choose from multiple providers offering this type of variable pricing. What’s less obvious is this also a step toward resolving cloud service provider (CSP) lock-in.
Vendor lock-in comes from proprietary APIs and orchestration models making dynamic movement of workloads and services between CSPs nearly impossible. To date most of the focus has been on standardization of interfaces and formats. For example, the DMTF is making good progress with its VMAN Open Virtualization Format (OVF) initiative and we’re seeing slow uptake of OASIS’ Service Provisioning Markup Language (SPML). OVF makes virtual machine images and state portable and with SPML users can provision workloads and services across multiple clouds. The challenge with standardization is there is little motivation for CSP adoption—lock-in is a classic competitive technique that reaps great benefit, particularly in a nascent marketplace like cloud computing.
What we need is an economic incentive for CSPs to adopt standardization in lieu of lock-in. The key will be competitors following Amazon’s lead. If they do, I can envision development of an arbitrage market where third-party providers broker computing services. As I’ll discuss in my next post, this model creates an incentive to reduce vendor lock-in and accelerate CSP adoption of standards. Happy New Year!
