HP yesterday announced that they are releasing their public cloud in public beta. During the media blitz preceding the announcement, Zorowar Biri Singh SVP and GM for HP Cloud Services (disclosure: a friend of mine from before he joined HP) told Business Insider about how they plan to compete with AWS. He told them that they are not going to enter the price race with AWS.
Are you guys going to be competing on cost or are you going to be a premium cloud?
Singh: We’re not going to compete on price. We’re happy to have AWS lead the way there if that’s what they want to do.
I think this is a smart move on HP’s part. I am not going into the discussion on whether HP’s Cloud will dislodge AWS as the leading public cloud provider and other debatable issues. Rather I am going to use this example to highlight a bigger point I am making to service providers who are talking to me about their infrastructure strategy. I always advise them to not indulge in price war with Amazon. Irrespective of how big or small the organization is, it is going to be difficult to win that war with Amazon. I would even take a controversial position that no one can win the price war with Amazon. Period. Having said that how can service providers compete in a market where AWS is a leading IaaS provider?
My advise: Don’t focus on the commodity part and focus on the higher value part. Infrastructure is fast moving towards commodity. However, the value added services on top of infrastructure like SLAs, Geographical Presence (Federation), etc. are open to competition. Any service provider (be it HP or a small provider with a few racks in a colocation provider) should focus on Amazon’s weak spot, the enterprise market. Yes, AWS has more than 1 Billion marketshare in the IaaS market but it is still a small pie in the infrastructure market. As organizations move from traditional infrastructure to infrastructure services a.k.a cloud, the market becomes wide open. Since AWS is yet to gain the credibility in the enterprise side of the market (where the money is), the opportunities are wide open. By targeting this segment and differentiating from AWS on higher order services, any service provider can compete with AWS. From this lens, HP’s move is a smart one. Will they succeed? That is a question for another day and it is too early to tell. #endoffridayrant
Disclosure: I advised HP on their cloud strategy briefly without any financial renumeration. HP is also a sponsor of Deploycon 2012, a conference I am running through my research firm.