SpotCloud Launches Today: What Kind Of An Impact Will It Have?

SpotCloud, a compute resources clearing house run by IaaS software provider Enomaly, today announced its public launch. So far SpotCloud was available in private beta with only a select few allowed to test it while Enomaly was busy fine tuning the platform for the public launch. With the public availability of SpotCloud, anyone with excess compute capacity or a credit card can become a buyer or seller. In the Research Report: Cloud Trends in 2011 and beyond, I have highlighted how 2011 will be the year when we will see emergence of marketplaces for unused capacity.

2011 will be the year when the marketplace for excess or unused capacity will take off. Even though there are a handful of providers in the space right now, expect to see more vendors jumping in with emphasis on SLAs, security, etc.. This takeoff can be attributed to many traditional webhosts wanting to gain foothold in a cloud based world and, with the emergence of a federated cloud ecosystem, smaller cloud players will get a channel to monetize their unused capacity. Users will also gain more confidence in using this model to achieve more cost savings. Expect to see government agencies coming out with a similar model for their own consumption.

Even though Zimory tried the idea few years back and failed because they were too early to the market, I think it is now time to once again revisit the idea because IT managers no longer wet their bed worrying about cloud computing. As predicted in the research report, we are already seeing providers coming up with different approaches to marketplaces for selling capacities in the cloud world. Some like SpotCloud offer a marketplace for unused capacity and others like ScaleUp want to enable marketplaces where cloud providers can sell their services. As we move towards a more open and federated cloud ecosystem, the need for exchanges and marketplaces for compute capacities are going to be even more important. SpotCloud takes a very focussed approach in the ecosystem acting as a clearinghouse for excess capacity available for shorter periods. In the coming years, we are going to see more and more companies (including some of the well established infrastructure players) becoming a middlemen for such excess capacity trading.

Initially started with the idea of Spot Markets, an exchange where commodities are traded for immediate delivery, SpotCloud wants to be the trendsetter in this space. SpotCloud wants to allow datacenters, hosting providers, etc. from around the world to trade their unused capacity on their platform so that buyers can rent the compute capacity at a much affordable price for their short term needs.

Some info on how it works

SpotCloud has built their trading platform on top of Google App Engine and uses their Enomaly cloud infrastructure platform to let sellers push the unused capacity. Clearly, the SpotCloud idea is a channel for Enomaly to push their platform in many places where they couldn’t reach in the past. However, SpotCloud is not constrained to Enomaly platform and they will also support VMware (and other cloud providers in the future). Once a prospective seller installs the SpotCloud software, they join the pool of vendors offering compute resources. On the backend, SpotCloud takes care of ensuring QoS (as an assurance to buyers) and the billing. A buyer registers with SpotCloud using a Credit Card. He/She can load up their account similar to a prepaid telephone card, match their needs to the availability in the pool and then buy it for their consumption. The seller gets to stay opaque and the buyer gets some basic information like how much resources are available, cost, location, etc.. The idea here is to make the whole processes of selling and buying compute facilities very easy and seamless, much like buying an EC2 instance from Amazon.

My thoughts on SpotCloud

In this section, I will do a quick analysis of SpotCloud and how it is going to impact the market. Keep in mind that I take a more scientific approach to industry analysis and my views change as I see more concrete evidence pointing to one way or another.

SpotCloud is definitely an interesting idea and, with the proliferation of more and more cloud infrastructure platforms and the onset of open federated cloud ecosystem, there is definitely a strong need for such services. This service is going to be handy for not only regional clouds and small hosting providers, it is also going to be useful for datacenters and enterprises trying to minimize their loss due to unused resources. As Reuven Cohen, CTO of Enomaly, pointed out, we may soon see an emergence of a private clearinghouse for highly regulated industries. I think SpotCloud is well positioned to handle such needs.
Web performance monitoring (like SOASTA) is a good use case for SpotCloud. We will also see some batch jobs being done on SpotCloud. However, SpotCloud is lacking an advantage otherwise available with Amazon Spot Instances. Some of the data processing jobs for which SpotCloud could be useful, can never take advantage of the service because of the cost and time involved in moving the data closer to the compute. So, the number of use cases are very limited for SpotCloud and this could turn out to be a problem for them. However, it is too early to dimiss them and we will have to wait and see innovative use cases that might emerge as SpotCloud becomes more economically attractive.
One of the interesting features about SpotCloud is that sellers can offer their services while remaining opaque (buyers have no information about the sellers or their architecture). This has the advantage of making the process of renting capacity seamless but for many buyers, especially in the enterprise segment, this is also a source concern. Before I put my organization’s data into anyone’s facility, I really want to know who they are. They are not like Amazon or Rackspace where I can simply go ahead based on the trust I have on their brand names. I cannot do the same with the sellers in the SpotCloud ecosystem. Lack of transparency on sellers will be a big deterrent for many in the enterprise side. Remember, SpotCloud only offers QoS and not SLAs. Well, the transient nature of the transaction makes QoS more sensible than SLAs but for enterprises lack of SLAs and the opaque nature of the sellers in the marketplace is a big put off. Unless SpotCloud finds an efficient solution to this problem, they will have trouble attracting enterprise customers. In the absence of large scale enterprise adoption, this service will end up being a clearing house for mom and pop shops needing some quick capacity at a cheaper price. This is clearly a danger for the long term success of SpotCloud and they have to address it sooner than later.
Right now, SpotCloud supports Enomaly platform and VMware but they need to support other cloud platforms to become a huge success, especially they need to support OpenStack. However, they are just starting up and Reuven promised me that they are going to support as many as they can in the future.
There is also a danger of a company like Rackspace (which is increasingly moving up from infrastructure to add value) coming up with a service like SpotCloud. However, SpotCloud can fend it off with their first mover advantage and rapid innovation.

Conclusion

SpotCloud has a great potential to be a trendsetter and a major player in the open federated future many of us are envisioning. However, they do face a steep climb up before they become viable in the long term. It is a good start and we will have to see how they fare in the coming year or two. We will have to wait and see.