Could ultimately lead to a more open and competitive IaaS market
I recently wrote about the potential for a cloud-computing arbitrage. Maybe a pipe dream, but it could shift the risk of vendor lock-in off consumers’ and onto providers’ shoulders.
As discussed previously, if more CSPs follow Amazon’s lead and move to variable pricing, this can create an arbitrage market where third party portability providers offer movement to the lowest price CSP at any point in time. Competition for spot pricing shifts the portability-provider value proposition from purely risk mitigation to cost optimization also. This dramatically reduces the complexity of enterprises’ risk/reward calculation, leading to increasing portability services adoption. Increasing adoption incents CSPs to work more closely with portability providers: The more closely aligned they are, the more likely the CSP will see business come their way. This turns the whole model on its head and shifts the risk of lock-in from enterprise to CSP.
Of course there is the potential of enterprise lock-in at the portability provider level. For example, a provider might demand that enterprises conform to VMware VMDK format for virtual machines. To address this, enterprises will need to keep the heat on the providers to use open standards such as the DMTF OVF standard. At the same time CSPs will want to maximize their opportunity by interfacing with all arbitrage players, leading CSPs to push for standardization to lower their risk. The arbitrageurs will receive pressure on both sides to standardize, which will ultimately lead to a more open and competitive IaaS market.
