magic quadrant for cloud infrastructure as a service magic quadrant for cloud infrastructure as a...

28/08/2013 Magic Quadrant for Cloud Infrastructure as a Service

www.gartner.com/technology/reprints.do?id=1-1CKSZ0E&ct=121022&st=sg 1/17

Magic Quadrant for Cloud Infrastructure as aService

18 October 2012 ID:G00237002

Analyst(s): Lydia Leong, Douglas Toombs, Bob Gill, Gregor Petri, Tiny Haynes

VIEW SUMMARY

Cloud compute infrastructure as a service (a virtual data center of compute, storage and network

resources delivered as a service) is a still-maturing, rapidly evolving market. Each service provider

has a unique offering, and the sourcing of these services must be done with care.

Market Definition/Description

Cloud infrastructure as a service (IaaS) parallels the infrastructure and data center initiatives of

IT. Cloud compute IaaS constitutes the largest segment of this market (the broader IaaS market

also includes cloud storage and cloud printing). Only cloud compute IaaS is evaluated in this Magic

Quadrant; it does not cover cloud storage providers, platform as a service (PaaS) providers,

software as a service (SaaS) providers, cloud services brokerages or any other type of cloud

service provider, nor should it be considered to be an evaluation of the broad, generalized cloud

computing strategies of the vendors.

Cloud compute IaaS (hereafter referred to simply as "cloud IaaS" or "IaaS"), in the context of this

Magic Quadrant, is defined as a standardized, highly automated offering, where compute

resources, complemented by storage and networking capabilities, are owned by a service

provider and offered to the customer on demand. The resources are scalable and elastic in near-

real-time, and metered by use. Self-service interfaces are exposed directly to the customer,

including a Web-based UI and, optionally, an API. The resources may be single-tenant or multi-

tenant, and hosted by the service provider or on-premises in the customer's data center.

This Magic Quadrant primarily evaluates cloud IaaS providers in the context of the fastest-growing

use case among Gartner clients: the desire to have a "data center in the cloud," where the

customer retains most of the IT operations responsibility. Gartner's clients are mainly enterprises,

midmarket businesses and technology companies of all sizes, and the evaluation focuses on

typical client requirements.

What Cloud IaaS Use Cases Are Covered by This Evaluation?

Gartner's market structure for cloud IaaS (defined in "Market Insight: Structuring the Cloud

Compute IaaS Market") segments the market by two axes: single application needs versus needs

that encompass multiple unrelated workloads; and the level of managed services. Unmanaged

solutions do not have formal IT operations management; self-managed solutions require the

customer to be responsible for all management at the guest OS layer and above; core foundation

managed solutions make the provider responsible for the guest OS and most security functions;

application stack managed solutions make the provider responsible for everything through the

middleware layer. The eight segments of the full market are:

Single application, unmanaged: developer-centric cloud hosting.

Single application, self-managed: scale-out cloud hosting.

Single application, core foundation managed: simple managed cloud hosting.

Single application, application stack managed: complex managed cloud hosting.

Multiple unrelated workloads, unmanaged: virtual lab environment.

Multiple unrelated workloads, self-managed: self-managed virtual data center (VDC).

Multiple unrelated workloads, core foundation managed: turnkey VDC.

Multiple unrelated workloads, application stack managed: cloud-enabled data center

outsourcing.

This Magic Quadrant represents only a portion of the market. The four segments of this market,

and their use cases, represented by this Magic Quadrant are:

Scale-out cloud hosting. These customers typically have a website or Web application that

they seek to run on dynamically scalable infrastructure. E-marketing sites (especially

marketing microsites), SaaS enablement (that is, a software company sourcing infrastructure

on which it will host its SaaS offering) and Microsoft SharePoint hosting are common use

cases. Technology startups may be wholly dependent on scale-out cloud hosting to run their

customer-facing infrastructure. These applications often have cloud-native architectures.

Virtual lab environment. These customers typically try to provide self-service infrastructure to

a group of technical users, such as developers, scientists or engineers, for the purposes of

test and development, or scientific computing or other batch computing. (See "Virtual Lab

Automation: The Foundation for Private Cloud Infrastructure Service Delivery" for a guide to

evaluating test and development environments; it covers both public and private cloud IaaS.

See "How Cloud Computing Relates to Grid Computing" for details of batch computing on

public cloud IaaS.)

EVIDENCE

Gartner client inquiries in 2011 and 2012.

Service provider interviews and product

demonstrations in 2012.

Surveys of more than 60 cloud IaaS providers

in 2012.

Customer references from the service

providers in 2012.

Hands-on trials of service offerings in 2012.

Public information, such as U.S. Securities and

Exchange Commission filings, press releases,

vendor websites and community support

forums.

EVALUATION CRITERIA DEFINITIONS

Ability to Execute

Product/Service: Core goods and services

offered by the vendor that compete in/serve the

defined market. This includes current

product/service capabilities, quality, feature sets,

skills and so on, whether offered natively or

through OEM agreements/partnerships as defined

in the market definition and detailed in the

subcriteria.

Overall Viability (Business Unit, Financial,

Strategy, Organization): Viability includes an

assessment of the overall organization's financial

health, the financial and practical success of the

business unit, and the likelihood that the

individual business unit will continue investing in

the product, will continue offering the product and

will advance the state of the art within the

organization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities

in all presales activities and the structure that

supports them. This includes deal management,

pricing and negotiation, presales support, and the

overall effectiveness of the sales channel.

Market Responsiveness and Track Record: Ability

to respond, change direction, be flexible and

achieve competitive success as opportunities

develop, competitors act, customer needs evolve

and market dynamics change. This criterion also

considers the vendor's history of responsiveness.

Marketing Execution: The clarity, quality,

creativity and efficacy of programs designed to

deliver the organization's message to influence

the market, promote the brand and business,

increase awareness of the products, and establish

a positive identification with the product/brand

and organization in the minds of buyers. This

"mind share" can be driven by a combination of

publicity, promotional initiatives, thought

leadership, word-of-mouth and sales activities.

Customer Experience: Relationships, products

and services/programs that enable clients to be

successful with the products evaluated.

Specifically, this includes the ways customers

receive technical support or account support. This

can also include ancillary tools, customer support

programs (and the quality thereof), availability of

user groups, service-level agreements and so on.

Operations: The ability of the organization to

meet its goals and commitments. Factors include

the quality of the organizational structure,

including skills, experiences, programs, systems

and other vehicles that enable the organization to

operate effectively and efficiently on an ongoing

basis.

Completeness of Vision

Market Understanding: Ability of the vendor to

understand buyers' wants and needs and to

translate those into products and services.

Vendors that show the highest degree of vision

listen and understand buyers' wants and needs,

and can shape or enhance those with their added

vision.

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Self-managed VDC. These customers seek self-provisioned, self-managed and cost-effective

infrastructure as an alternative to buying their own equipment, virtualizing it and placing it

into co-location or into their own data center. These customers typically begin by running a

variety of non-mission-critical business applications within the VDC, but may eventually

intend to move as many workloads as possible into the VDC.

Turnkey VDC. These customers seek all the capabilities of a self-managed VDC, but want

someone else to be responsible for securing that infrastructure and handling routine, non-

value-added operations. Usually, they want management through the OS level, including OS

patch management, and often want managed security services as well. Many of these

management functions can be partially, if not fully, automated; at present, they generally

require some human intervention by the service provider, but we expect them to become

fully automated in the future. These customers do not want to give up control, and they view

these functions as things that simply ought to be part of the service — they accept people

performing these functions as a temporary substitute for automation. These customers

typically run a variety of business applications, some or all of which may be mission-critical;

they may eventually intend for cloud IaaS, in conjunction with co-location, to replace their

existing data center infrastructure entirely.

This Magic Quadrant strongly emphasizes self-service and automation in a standardized

environment. It is focused on the needs of customers whose primary need is self-service cloud

IaaS, although it may be supplemented by a small amount of co-location or dedicated servers.

Organizations that need significant customization or managed services for a single application, or

which are seeking cloud IaaS as a supplement to a traditional hosting solution ("hybrid hosting"),

should see "Magic Quadrant for Managed Hosting" instead. Organizations that do not want to

self-service, but that rather want to use underlying cloud-enabled system infrastructure, should

consult our Magic Quadrants for data center outsourcing and infrastructure utility services instead

(published regionally for North America and Europe).

This Magic Quadrant evaluates only solutions that are delivered in an entirely standardized

fashion — specifically, public cloud IaaS, along with private cloud IaaS that leverages the same or

highly similar platform. While the providers in this Magic Quadrant do offer custom private cloud

IaaS, we have not considered these offerings in our evaluations. Organizations that are looking

for custom-built, custom-managed private clouds should use our Magic Quadrants for data center

outsourcing and infrastructure utility services instead (see above).

Understanding the Vendor Profiles, Strengths and Cautions

IaaS providers that target enterprise and midmarket customers generally offer a high-quality

service, with excellent availability, good performance, high security and good customer support.

Exceptions to this will be noted in this Magic Quadrant's evaluations of individual providers. Keep

the following in mind when reading the vendor profiles:

Most of the evaluated providers are oriented toward the needs of traditional IT operations,

with an emphasis on control, governance and security, and the ability to run both new

applications and legacy workloads. The providers that are oriented toward the needs of

developers are noted as such; these providers typically emphasize easy access to

infrastructure for individuals who are building new applications.

Most of the providers evaluated have a "reliable cloud," achieved through redundant

infrastructure in conjunction with virtual machine (VM) clustering; they are thus able to offer

a very high SLA for infrastructure availability — often as high as 99.999% (sometimes

expressed as a 100% SLA with a 10-minute exclusion). Offerings without VM clustering or an

equivalent technology that provides higher levels of infrastructure availability than can be

expected from a single physical server are referred to as "best-effort cloud." In general,

monthly availability SLAs of 99.95% and higher are the norm, and are typically higher than

availability SLAs for managed hosting. Service credits for outages in a given month typically

cap at 100% of the monthly bill. This availability percentage is typically non-negotiable, as it

is based on an engineering estimate of the underlying infrastructure reliability.

Very few of the providers in this Magic Quadrant have an SLA for compute or storage

performance. However, most of the providers do not oversubscribe compute or RAM

resources; providers that do not guarantee resource allocations are noted explicitly. Storage

performance varies considerably between providers.

Many providers have additional SLAs, covering network availability and performance,

customer service responsiveness and other service aspects.

Infrastructure resources are not normally automatically replicated into multiple data centers

unless otherwise noted; customers are responsible for their own business continuity. Some

providers offer optional disaster recovery solutions.

Most of the providers offer either a shared resource pool (SRP) pricing model or are flexible

on how they price the service. In the SRP model, customers contract for a certain amount of

capacity (in terms of CPU and RAM), but can allocate that capacity to VMs in an arbitrary way,

including being able to oversubscribe that capacity voluntarily; additional capacity can usually

be purchased on demand by the hour. Providers that are paid by the VM, rather than on an

SRP model, are noted as such. All the providers offer per-hour metering.

Most of the providers allow customers to choose arbitrary-size VMs — any combination of

vCPUs, RAM and VM storage, subject to some limits. Providers that do not allow this are

explicitly noted as offering fixed-size VMs.

Most of the providers are able to offer an option for single-tenant VMs within a public cloud

IaaS offering, on a fully dynamic basis, where a customer can choose to place a VM on a host

that is temporarily physically dedicated to just that customer. These VMs are typically more

expensive than VMs on shared hosts. Providers that do not have this option are noted as

such.

Some of the providers are able to offer "bare metal" physical servers on a dynamic basis.

Due to the longer provisioning times involved for physical equipment (two hours is common),

the minimum billing increment for such servers is usually daily, rather than hourly.

All the providers offer an option for co-location, unless otherwise noted. Many customers

have needs that require a small amount of supplemental co-location in conjunction with their

cloud — most frequently for a large-scale database, but sometimes for specialized network

equipment, software that cannot be licensed on virtualized servers, or legacy equipment.

Marketing Strategy: A clear, differentiated set of

messages consistently communicated throughout

the organization and externalized through the

website, advertising, customer programs and

positioning statements.

Sales Strategy: The strategy for selling products

that uses the appropriate network of direct and

indirect sales, marketing, service, and

communication affiliates that extend the scope

and depth of market reach, skills, expertise,

technologies, services and the customer base.

Offering (Product) Strategy: The vendor's

approach to product development and delivery

that emphasizes differentiation, functionality,

methodology and feature sets as they map to

current and future requirements.

Business Model: The soundness and logic of the

vendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's

strategy to direct resources, skills and offerings to

meet the specific needs of individual market

segments, including vertical markets.

Innovation: Direct, related, complementary and

synergistic layouts of resources, expertise or

capital for investment, consolidation, defensive or

pre-emptive purposes.

Geographic Strategy: The vendor's strategy to

direct resources, skills and offerings to meet the

specific needs of geographies outside the "home"

or native geography, either directly or through

partners, channels and subsidiaries as

appropriate for that geography and market.



Co-location is specifically mentioned only when a service provider actively sells co-location as

a stand-alone service; a significant number of midmarket customers plan to move into co-

location and then gradually migrate into that provider's IaaS offering.

Most of the providers offer optional managed services on IaaS. However, not all offer the

same type of managed services on IaaS as they do in their broader managed hosting or

data center outsourcing services. Some may have managed services provider (MSP) or

system integrator (SI) partners that provide managed and professional services.

All of the providers have a public cloud IaaS offering. Many also have a "cookie cutter"

private cloud offering, where every customer is on standardized infrastructure and cloud

management tools, although this might or might not resemble the provider's public cloud

service in either architecture or quality. A single architecture, feature set and cross-cloud

management, for both public and private cloud IaaS, make it easier for customers to combine

and migrate across service models as their needs dictate, and allows the provider to

leverage its engineering investments more effectively. All of the providers also offer custom

private clouds unless otherwise noted.

All the providers offer an option for private network connectivity (usually in the form of

Multiprotocol Label Switching [MPLS] or Ethernet purchased from the customer's choice of

carrier), unless otherwise noted. Most of the providers support the use of Internet-based

IPsec VPN. All the providers allow customers to have VMs with only private Internet Protocol

(IP) addresses (no public Internet connectivity), and also allow customers to use their own

IP address ranges, unless otherwise noted. Some providers may enforce secure access to

management consoles, restricting access to VPNs or private connectivity.

All the providers evaluated claim to have high security standards. The extent of the security

controls provided to customers varies significantly, though. Most providers offer a firewall

(intrusion detection system/intrusion prevention system) as part of their offering, although a

few offer only access control lists (ACLs) and a few offer no self-service network security at

all. Most providers offer additional security services. All of the providers evaluated can offer

solutions that will meet common regulatory compliance needs, unless otherwise noted.

All the providers allow customers to bring their own VM images, unless otherwise noted. This

allows a customer to create snapshots of existing VMs within their own internal data center,

and then directly import them into the provider's cloud, rather than having to start from the

provider's own VM image library. This also allows the import of VM appliances and other

prepackaged VM images from independent software vendors (ISVs).

Very few of the providers offer availability and performance monitoring, visible in their

customer portal, as part of their self-service IaaS offering. Some providers may offer

monitoring as an option, and many will include it with a hybrid hosting or other managed

services offering.

All the providers evaluated offer a portal and self-service mechanism that is designed for

multiple users and that offers hierarchical administration and role-based access control

(RBAC). However, the degree of RBAC granularity varies greatly. We strongly recommend

that customers that need these features, but want to use a provider that doesn't have

strong support for them, evaluate a third-party management tool, such as RightScale or

enStratus.

We consider enterprise-class support to require 24/7 customer service, via phone and email,

along with an account manager. Most providers include this with their offering. Some offer a

lower level support by default, but allow customers to pay extra for enterprise-class support.

All the providers evaluated will sign contracts with customers and can invoice; while some

may also offer online sign-up and credit card billing, they recognize that enterprise buyers

prefer contracts and invoices. Some will sign "zero dollar" contracts that do not commit a

customer to a certain volume.

All the providers evaluated are believed to be financially stable, with business plans that are

adequately funded. Customers should not need to worry about them going out of business.

However, many of the smaller providers are likely to be potential acquisition targets; an

acquisition can cause significant changes in the strategy and direction of a business, and

may result in a service transition period if the merged companies consolidate their platforms.

Many of the providers have white-label or reseller programs, and some may be willing to

license their software. We mention software licensing only when it is a significant portion of

the provider's business; other service providers, not enterprises, are usually the licensees.

We do not mention channel programs; potential partners should simply assume that all

these companies are open to discussing a relationship. (See "Infrastructure as a Service in

the Cloud Services Value Chain" for details.)

Format of the Provider Descriptions

When describing the providers, we briefly summarize the nature of the company, where the data

centers that host their cloud IaaS offerings are located, and their range of service offerings. We

specifically note other cloud-related services, such as cloud storage, as well as the availability of

managed services, even though those service offerings are not specifically evaluated in the

context of this Magic Quadrant, because they are capabilities frequently requested by customers

in conjunction with cloud IaaS. (See "Market Insight: Customers Need Hybrid Cloud Compute

Infrastructure as a Service" for details.)

We also state the basis of every provider's virtualization technology and, if relevant, their cloud

management platform (CMP). For many customers, the underlying hypervisor will matter,

particularly for customers that intend to run commercial software on IaaS. Many ISVs support only

VMware virtualization, and those vendors that support Xen may support only Citrix XenServer, not

open-source Xen (which is often customized by IaaS providers and is likely to be different from

the current open-source version).

Services that use VMware's virtualization technologies are labeled as follows:

vCloud Datacenter Service. This service has been certified to meet VMware's globally

consistent service definitions, security and regulatory compliance requirements, and

requirements for availability and high performance. It is based on a prescriptive architecture

intended to maximize portability between providers of vCloud Datacenter Service and a

business's own VMware-virtualized data center infrastructure. Only eight providers



worldwide have such a service and several of them do not yet have a significant customer

base on this platform. These providers also meet the requirements for being vCloud

Powered.

vCloud Powered. These providers are part of VMware's service provider partner program. The

service is based on VMware's vSphere and vCloud Director (vCD), exposes the vCloud API,

and supports the Open Virtualization Format (OVF) for image upload and download. Unless

otherwise stated, these providers expose the vCD UI to customers. Because the vCD

features exposed can be customized by the service provider, and the service provider

typically needs to provide an array of features not included in vCD (such as monitoring),

there is still significant differentiation between vCloud Powered providers. In a vCloud

Powered offering with the vCD UI exposed, vCD is used to drive self-service management

and provide a service catalog. vCD is a key part of VMware's strategy for driving adoption of

hybrid internal-external cloud IaaS, and facilitates interoperability between VMware-

virtualized infrastructures, regardless of whether they are internal to a business or offered

by a service provider. vCD provides the capability to manage very complex infrastructure

needs, but also requires a greater investment in training and setup time from an IT

administrator in order to facilitate easier self-service for users.

vCloud Express. vCloud Express is a VMware-defined offering targeted at developers and

small businesses, with online sign-up, credit card payment, self-service and by-the-hour

service.

VMware-virtualized. This service uses VMware's hypervisor, but is not a vCloud Datacenter,

vCloud Powered or vCloud Express service. Many such offerings are high-quality services

from early, market-leading innovators; these providers typically entered the market before

vCD became available and have elected to continue to develop their own technology.

Recommended Uses

For each vendor, we also provide a recommendation for use. The most typical recommended uses

are:

Cloud-native applications. These are applications that are specifically architected to run in a

cloud IaaS environment, using cloud transaction processing (TP) principles.

E-business hosting. These are e-marketing sites, e-commerce sites, SaaS applications, and

similar modern websites and Web-based applications. They are usually Internet facing. They

are designed to scale out and are resilient to infrastructure failure, but they might not use

cloud TP principles.

General business applications. These are the kinds of general-purpose workloads typically

found in the internal data centers of most traditional businesses; the application users are

usually located within the business. Many such workloads are small, and they are often not

designed to scale out. They are usually architected with the assumption that the underlying

infrastructure is reliable, but they are not necessarily mission-critical. Examples include

intranet sites, collaboration applications such as Microsoft SharePoint, and many business

process applications.

Enterprise applications. These are general-purpose workloads that are mission-critical, and

may be complex, performance-sensitive or contain highly sensitive data; they are typical of a

modest percentage of the workloads found in the internal data centers of most traditional

businesses. They are usually not designed to scale out, and the workloads may demand

large VM sizes. They are architected with the assumption that the underlying infrastructure is

reliable and high-performance.

Test and development. These workloads are related to the development and testing of

applications. They are assumed not to require high availability or high performance.

Batch computing. These workloads include high-performance computing (HPC), "big data"

analytics and other workloads that require large amounts of capacity on demand. They do

not require high availability, but may require high performance.

In the case of all vendors, the recommended use is specific to the four market segments

evaluated within this Magic Quadrant — scale-out cloud hosting, virtual lab environment, self-

managed VDC and turnkey VDC. This means that even if a provider excels in one aspect of a

nonevaluated segment, such as complex managed cloud hosting, this will not be mentioned as a

recommended use. We may mention hybrid hosting as a recommended use, however, as

customers may blend solutions (for instance, an entirely self-managed front-end Web tier on

public cloud IaaS, but managed hosting for the application servers and database), even though

hybrid hosting is often primarily a complex managed cloud hosting use case.

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Magic Quadrant

Figure 1. Magic Quadrant for Cloud Infrastructure as a Service



Source: Gartner (October 2012)

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Vendor Strengths and Cautions

Amazon Web Services

Amazon Web Services (AWS) is a cloud-focused service provider with a very pure vision of highly

automated, cost-effective IT capabilities, bought without any need to commit to a contract. Its

Elastic Compute Cloud (EC2) is a fixed-size, paid-by-the-VM, Xen-virtualized, public cloud IaaS. It

has groups of data centers, which it calls "regions," in the U.S., Brazil, Ireland, Japan and

Singapore, along with one region that is dedicated to the U.S. federal government. It also offers

object-based storage with an integrated content delivery network (CDN), Hadoop as a service,

database as a service, and a number of PaaS-like services. It does not have any private cloud

offerings. It does not offer co-location, but customers can cross-connect in the data centers of

select partners (notably Equinix).

Strengths

AWS is the market share leader, and a thought leader; it is extraordinarily innovative,

exceptionally agile and very responsive to the market. It has the richest IaaS product

portfolio, and is constantly expanding its service offerings and reducing its prices.

AWS has by far the largest pool of capacity, which makes it one of the few infrastructures

suitable for batch computing, especially those workloads that require short-term provisioning

of hundreds of servers at a time. AWS also offers specialized infrastructure options for high-

performance computing and big data applications, along with a "spot pricing" market for

compute capacity.

AWS has a very large technology partner ecosystem. Many software vendors have specially

licensed and packaged their software to run on EC2, either independently or via the AWS

Marketplace, easing deployment and eliminating some of the challenges associated with

licensing software to run in the cloud. Its API is supported by many third parties that provide

associate management tools, and many open-source and commercial CMPs are compatible

with its API.

AWS has been aggressively expanding its targeting of enterprises. It has been doing so by

both broadening its technical capabilities and increasing its go-to-market partnerships with

system integrators. It has obtained many security and compliance-related certifications and

audits. Customers may be able to access these audits under a nondisclosure agreement, but

cannot conduct their own independent audits.

AWS has multiple "availability zones" (AZs) within its regions. These AZs are effectively

multiple data centers in close proximity to one another. Its services are designed to make it

easier to run applications across multiple AZs; customers are responsible for architecting

their applications for high availability. However, new capabilities are rolled out region-by-

region, so not all regions have identical capabilities.

Recommended uses: Cloud-native applications, batch computing, e-business hosting, general

business applications, and test and development.

Cautions

AWS is a best-effort cloud. Its weak, narrowly defined SLA requires that the customer runs

workloads in at least two AZs within a region; a violation requires that connectivity to both

AZs be unavailable. The SLA does not include Elastic Block Store (known as EBS), which most

customers use for persistent storage. However, unlike most other providers, AWS does not

have any SLA exclusions for maintenance windows, and it offers continuous availability on its



portal and API.

AWS is a price leader, but it charges separately for optional items that are often bundled

with competitive offerings, including enterprise-grade support. Prospective customers should

be careful to model the costs accurately, especially network-related charges, to normalize

comparative costs based on actual compute performance, and to compare the costs of

reserved and unreserved capacity.

AWS does not offer any managed services, although they are available through MSP

partners (such as Datapipe) and SIs (such as Capgemini, Wipro and Cognizant). As it

expands its service portfolio, it is adding offerings that automate some aspects of

infrastructure management, such as its Relational Database Service.

AWS has a field sales and solutions engineering organization, but it does not consistently

satisfy prospects that need consultative sales. For better terms and conditions, customers

should sign an Enterprise Agreement, which is typically a zero-dollar contract. Invoicing is

available on request, but AWS's billing reports are difficult to understand and audit.

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Bluelock

Bluelock is a small, independent cloud-IaaS-focused provider that targets the midmarket and

enterprise markets. It offers a vCloud Datacenter Service for both public and private cloud IaaS,

with optional managed services. Its data centers are located in the U.S.

Strengths

Bluelock has a track record of successfully serving production use cases, including complex

and mission-critical needs. It is one of VMware's closest service provider partners, and is

usually one of the first service providers to implement new VMware products and version

upgrades.

Bluelock has strong multicloud capabilities. In addition to supporting vCloud Connector, it

also supports vCloud Global Connect, which allows federation between participating vCloud

Datacenter Service providers.

Bluelock offers two tiers of service, a "5-series" aimed at production workloads, and a "2-

series" aimed at development workloads; the latter uses oversubscription and has a lower

SLA.

Bluelock has a tool in its portal called Portfolio, which provides monitoring and is focused on

IT financial management of IaaS resources, helping customers to understand where they are

spending money and how they can optimize their resource usage.

Recommended uses: E-business hosting, general business applications, enterprise

applications, and test and development.

Cautions

Bluelock is a small provider and, while it is financially stable, its size and excellence of service

make it a prime target for acquisition.

Bluelock is trying to compete with much larger vendors, but its more limited engineering

resources mean that it has little margin for error in execution if it wants to keep up its pace

of innovation.

Bluelock has concentrated on quickly delivering VMware's technologies and services and its

road map continues this pattern. It is highly dependent on VMware's release cycles and

technological innovation.

Bluelock's data centers are in Indianapolis, Indiana, and Salt Lake City, Utah, which are not

major network hub cities. This impacts Internet performance, and does not offer the breadth

and depth of connectivity options available at major carrier-neutral exchange points.

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CSC

CSC is a large, traditional IT outsourcer with a broad range of data center outsourcing

capabilities. It offers a vCloud Datacenter Service, a VCE Vblock-based cloud IaaS architecture in

three variants — public multitenant in a CSC data center (CloudCompute), and private single-

tenant in a CSC data center or in the customer's own data center (BizCloud) — and optional

managed services. It offers both paid-by-the-VM and SRP pricing. API access is only offered in

BizCloud. CSC has multiple cloud data centers in the U.S., as well as in Australia, Canada,

Germany, Luxembourg, Singapore, Switzerland and the U.K.

Strengths

CSC is one of the few providers to have a standardized architecture across both public and

private cloud offerings, as well as a single rate card across all of these offerings — while the

pricing is the same, the minimum commitments vary.

Contrary to most other traditional data center outsourcers, CSC has fully embraced the

highly standardized, highly automated cloud model, successfully blending the benefits of a

true cloud service into an enterprise-ready offering. It has a strong road map focused on

bringing enterprise-class IT operations management tools, including automated managed

services, to cloud IaaS. It is also building infrastructure utility services for specific applications

on top of the platform.

CSC has developed a portfolio of cloud-related professional services, including Smart Start, a

proof-of-concept program intended to help a customer achieve a "quick win" in moving an

application onto IaaS, and then methodically migrating other workloads over time. In

general, it is generous about offering trials to prospective customers.

Recommended uses: General business applications, test and development, cloud-enabled

data center transformation, and transition.

Cautions

Cloud computing is driving a radical reinvention of the way that CSC delivers services,



including significantly broadening the range of companies that CSC targets with its offerings.

The cloud division is run as its own business unit, which gives it greater agility but also

sometimes brings it into conflict with its slower-moving and more conservative parent

company. CSC's drive and innovation in this market might be diluted by interference from

other parts of the company, and it can be impacted by the challenges facing CSC as an

overall corporation.

While CSC's road map is ambitious, and it has done an excellent job of quickly delivering a

successful competitive cloud IaaS offering, it is only just beginning to launch its offerings for

automated IT operations management.

CloudCompute is a best-effort cloud, without VM HA. Capabilities are introduced into

BizCloud first, before being later rolled out into CloudCompute, so CloudCompute offers a

subset of the BizCloud features.

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Dell

Dell is a large diversified technology company. It offers a vCloud Datacenter Service for public

cloud IaaS in both pay-by-the-VM and SRP pricing models, as well as a VMware-virtualized

"Dedicated Cloud" solution with single-tenant compute, from data centers in the U.S. and the U.K.

Strengths

Dell has a realistic, logical strategy of building integration between its hardware platforms

and its cloud offerings over time. These are planned integrations, however, and Dell has yet

to establish a track record in this regard. Since Dell has a hardware business, it potentially

has a lower cost base for some hardware components that power its cloud services.

Dell has a very large sales force, with global reach, along with well-established channels. It

has been very successful at signing up customers for its platform, although it must still prove

that it can retain and grow those customers beyond their initial pilot deployment.

Recommended uses: Test and development and pilot projects for existing Dell hardware

customers.

Cautions

Dell is a very recent entrant to the market, and it has not yet established a track record. Its

public cloud IaaS offering contains a minimal feature set, and it is missing traits that are

critical to enterprise customers, such as the ability to meet compliance requirements and the

ability to use customer-provided IP addresses. It oversubscribes its infrastructure. Its road

map for service enhancements is weak.

Dell does not seem to have settled on a cloud IaaS platform strategy. Its current approach

divides the needs of typical existing business workloads from the needs of new applications,

with different architectures, CMPs and offerings for each, rather than moving toward the

single integrated offering that enterprises desire.

Dell entered the data center outsourcing business via its acquisition of Perot Systems, and

its broader cloud strategy cuts across the company. However, self-service cloud offerings are

primarily being driven out of Dell proper, which has less experience with recurring-revenue

services. Dell's cloud support organization and related back-office systems are nascent.

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Dimension Data

Dimension Data is a large system integrator and value-added reseller. It entered the cloud IaaS

market through the 2011 acquisition of OpSource. It offers VMware-virtualized paid-by-the-VM

public cloud IaaS, as well as SRP-priced private cloud IaaS, with optional managed services, from

data centers in the U.S., Australia, the Netherlands and South Africa. It does not have a single-

tenant VM option in its public cloud. It does not offer any co-location, but it does have cross-

connect options for customers who want to connect to a co-location provider.

Strengths

Dimension Data's offering is designed to compete against best-effort cloud IaaS offerings,

with very aggressive prices. However, it is a reliable cloud, and has excellent SLAs, including

100% availability. In addition to its own API, it offers AWS API compatibility.

Dimension Data's Managed Cloud Platform (MCP) is a single unified architecture across its

public and private cloud offerings — one of the few providers to provide such an architecture.

The MCP is also offered via resale and white-label. Dimension Data can enable federation

across MCP clouds.

Dimension Data has launched Cloud Software, a set of partnerships with ISVs. It offers

Dimension Data-tested and -licensed software from those ISVs, on demand. Depending on

the software, the price may be hourly or monthly.

OpSource had a long history as a SaaS hoster, and Dimension Data has retained these

capabilities. Its rich suite of offerings for that market includes not only infrastructure, but also

an on-demand billing platform, custom application management and help desk support.

Recommended uses: E-business hosting, cloud-native applications, general business


Cautions

Dimension Data is still integrating OpSource into its overall portfolio. Although this

integration is mostly complete, and we do not foresee any business disruptions as a result,

there are still business risks, particularly as Dimension Data phases out the OpSource brand.

At the moment, the OpSource and Dimension Data brands are used inconsistently

throughout the customer experience.

While Dimension Data's offering is VMware-virtualized, it is not vCloud Powered. Instead,

Dimension Data is doing extensive software development of its own, allowing it to drive a

faster pace of innovation and better control it costs. Although it is able to invest in the



necessary engineering resources, this also represents a new way of doing business for

Dimension Data, which has historically been an integrator of technology, not a developer of

technology.

Dimension Data is owned by NTT Group. While NTT has deliberately chosen Dimension Data

to be its most agile business, with minimal interference from the parent, Dimension Data's

future ability to move quickly is likely to depend on continued non-interference.

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Fujitsu

Fujitsu is a large diversified technology company. It has many cloud platforms, including Fujitsu

Global Cloud Platform (FGCP), multiple local cloud platforms (FLCPs) based on a reference

architecture, and multiple private cloud offerings. FGCP is a paid-by-the-VM, Xen-virtualized, public

cloud IaaS, offered in data centers in Japan, Australia, Germany, Singapore, the U.K. and the U.S.

Individual FLCP regions have different capabilities. Managed services are optional. Although

Fujitsu has received vCloud Datacenter Service Provider partner status, it has not yet launched

this offering.

Strengths

Fujitsu has a long history in IT services and data center outsourcing. It has a large global

sales force, is the leader in IT outsourcing in Asia/Pacific and has a strong European

presence. This gives it a large existing base of captive customers into which it can sell cloud

services, and it is successful at extending existing Fujitsu relationships into cloud deals. It

has very responsive support, and good account management.

Fujitsu is a global vendor of hardware and software, and consequently could have a lower

cost base for many hardware components, when compared to most other cloud providers.

Fujitsu's strategy of allowing its regions to pursue their own cloud strategies has enabled

certain regions, such as Australia, to develop offerings tailored to the needs of the local

market, at a faster pace than Fujitsu has been able to do so as a global entity.

Fujitsu rolls out FGCP features first in Japan, then extends them to its other regions.

Furthermore, Fujitsu in Japan offers additional cloud capabilities — Japan-based

organizations or projects targeted at the Japanese market should investigate what

capabilities are specifically available in Japan, such as object-based storage, database as a

service, and Hadoop as a service.

Recommended uses: General business applications, and test and development.

Cautions

The FGCP is missing some features that are important to customers, such as the ability to

have single-tenant VMs, virtual console access to VMs and the option to bring your own VM

images. Users are likely to find its portal UI to be non-intuitive, and its provisioning times are

lengthy compared to other providers. It cannot meet common compliance requirements.

Fujitsu's strategy of allowing regional control means that development efforts are

fragmented across the globe. As such, service offerings may differ in each region, making it

difficult for Fujitsu to fully leverage engineering resources and to achieve economies of scale,

although Fujitsu has recently strengthened its global cloud strategy and management.

Fujitsu is developing much of its own technology, and thus will be challenged to maintain a

competitive level of engineering investment and pace of development. We believe that its

global strategy is primarily focused on leveraging its cloud IaaS platforms to win managed

services business, although it is also pursuing the self-service business.

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GoGrid

GoGrid is a small, independent cloud-IaaS-focused provider. It offers fixed-size, paid-by-the-VM,

Xen-virtualized IaaS as both public cloud and private cloud, with optional managed services, in

data centers in the U.S. and the Netherlands.

Strengths

GoGrid is among the top five public cloud IaaS providers by VM count. Although it has a

competitively priced, best-effort, developer-centric IaaS offering, it has excellent SLAs that

include 100% availability. It is one of the few providers that has a standard architecture

across its public and private cloud offerings.

The GoGrid Exchange allows software vendors to license and package their software to run

on GoGrid, easing deployment and eliminating some of the headaches associated with

licensing software to run in the cloud. It has a unique multipartner compensation model,

allowing partners to build on top of each other's software stacks.

Recommended uses: Cloud-native applications, e-business hosting, and test and

development for individuals or small teams.

Cautions

GoGrid's software is developed entirely in-house. This allows it to innovate quickly and to

drive down its costs, but also provides significant long-term challenges in competing against

providers that can devote significant resources to R&D.

GoGrid's offering lacks some features that are important to enterprise users, such as

granular RBAC, single-tenant VMs within the public cloud, the ability to use customer-

provided IP addresses, and the option to bring your own VM images.

GoGrid has its own API, which is supported by a limited number of third-party tools. GoGrid is

pursuing a strategy of broader interoperability, and its future success will be dependent on

ensuring that it can partake in one or more of the emerging platform ecosystems.

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Joyent

Joyent is a small, independent service provider that is solely focused on cloud services. It offers

fixed-size, paid-by-the-VM public and private cloud IaaS, using KVM. Its data centers are located

in the U.S. and the Netherlands.

Strengths

Joyent places strong emphasis on application performance and it takes a holistic approach to

its delivery, including integrating network-based acceleration. It has particularly deep portal-

based performance analytics, using the DTrace framework for application instrumentation.

Joyent has a unique vision for cloud IaaS and is highly innovative from a technology

perspective. It is developing an integrated technology stack and its infrastructure offerings

verge into the platform space. It is making deep investments in fundamental technologies,

including its own SmartOS operating system, based on Illumos (which is derived from

Solaris). Joyent's cloud uses Solaris Containers. KVM runs natively within a container, thus

providing additional security, resource control and resource visibility within the virtualization

layer.

Joyent has a pure focus on new, cloud-native applications, including mobile applications.

Joyent is one of the top five public cloud IaaS providers by VM count. It has a strategy of

international expansion that targets emerging markets with innovative developer

ecosystems. It is the sponsor of Node.js, and it offers proprietary tools focused on Node.js

operations within its platform.

Joyent intends to derive its future revenue from a mix of offering cloud services directly and

selling its SmartDataCenter software (including via OEM partners such as Dell). It has

launched its Global Compute Network, a cloud federation alliance focused on mobile carriers;

its strategic carrier partners include Telefonica and Bharti Airtel.

Recommended use: Cloud-native applications where visibility into application performance is

crucial.

Cautions

Joyent's feature set is oriented solely toward the hosting use case. It is a best-effort cloud,

and it is highly developer-centric. It emphasizes API capabilities and the enablement of third-

party tools, rather than portal capabilities of its own. It has a single-account model, and

depends on a partnership with enStratus to provide granular RBAC.

The unique nature of Joyent's offering makes it particularly critical for Joyent to develop an

ecosystem around its platform; it must attract ISVs and third-party tools vendors, along with

MSPs and SIs that can provide managed and professional services.

Joyent is focused on developing its own technology, which creates long-term challenges in

competing against providers with greater development resources. That said, it has chosen to

focus its efforts in particular areas, leaving certain capabilities, notably enterprise

management features, to partners such as enStratus.

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OVH

OVH is an independent Web hoster with a focus on small or midsize businesses (SMBs). It offers

paid-by-the-VM, VMware-virtualized public cloud IaaS, as well as a vCloud Datacenter Service for

private cloud IaaS, with optional managed services, from data centers in France and Canada. It

also offers object-based storage.

Strengths

OVH emphasizes self-service and a high degree of automation. It is one of the largest

European cloud IaaS providers, by VM count. It has localized its site and documentation for a

broad range of European languages.

OVH's private cloud IaaS offering is particularly innovative. The offering can be set up within

30 minutes, and it allows customers to dynamically add and subtract hardware from their

capacity pool with hourly billing and provisioning times of under five minutes, thus offering

economics and flexibility comparable to public cloud in a single-tenant environment.

Customers have a choice between vCloud Director and OVH's own, more user-friendly portal.

Recommended uses: General business applications, e-business hosting, and test and

development.

Cautions

OVH primarily targets SMBs, although it does have customers of significant size. Customers

using OVH cloud services should strongly consider OVH's "VIP Support" option, which

provides priority support and a dedicated account manager.

OVH's cloud presence is heavily concentrated in a limited data center footprint. It has also

just launched its Canadian data center.

OVH cannot support common compliance requirements. Its public cloud cannot support

complex network topologies, VMs that only have a private IP address, or customer-provided

IP addresses, although these capabilities exist in its private cloud.

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Rackspace

Rackspace is an independent Web hoster with a long track record of leadership in the managed

hosting market. It offers a fixed-size, paid-by-the-VM, Xen-virtualized public cloud IaaS (Cloud

Servers), with optional managed services, from data centers in the U.S. and the U.K. It also offers

object-based storage (Cloud Files) with an integrated CDN (via a partnership with Akamai),

database as a service, and cloud PaaS (Cloud Sites). It is a founder and the initial primary

sponsor of OpenStack, an open-source cloud management platform, and its Cloud Builders

business provides traditional commercial open-source support and professional services around it.



Strengths

OpenStack's broad community of participating vendors is likely to make it a key cloud

infrastructure ecosystem, in competition with VMware, Microsoft and Amazon. It should

eventually allow Rackspace to introduce service enhancements at an improved pace and

expand third-party management tools support. Rackspace intends to use OpenStack to

enable it to offer hybrid clouds to customers who want OpenStack both in their internal data

centers and in Rackspace data centers.

Rackspace Cloud Servers is an easy-to-use service with a basic feature set, and excellent

customer support. It has one of the lowest entry price points, making it attractive for initial

experimentation with cloud IaaS.

Rackspace has a large base of existing managed hosting customers that it can sell cloud

into. Although most such customers currently opt for VMware-virtualized dedicated servers

rather than using Cloud Servers, and Rackspace does not offer the full range of its managed

services on Cloud Servers, the RackConnect hybrid offering may nevertheless be attractive

to cost-sensitive customers.

Recommended uses: Hybrid hosting where cloud IaaS is supplementary to a primarily

dedicated infrastructure; and test and development for individual developers and small

teams, where simplicity and ease of use are critical attributes.

Cautions

OpenStack is an emerging technology whose future direction is still uncertain. Rackspace

recently relinquished most of its control over the project by launching the independent

OpenStack Foundation (of which it remains a platinum sponsor). OpenStack's evolution may

not necessarily align closely with Rackspace's needs — it is possible that OpenStack could be

successful without it leading to Rackspace's success.

Rackspace Cloud Servers is a developer-centric, best-effort IaaS. While it has the second-

largest market share in public cloud IaaS, it has appealed primarily to small businesses

seeking a replacement for low-cost mass-market hosting. It is missing many features that

are part of the offerings of most of the evaluated providers, and which are vital for many

enterprise use cases. For instance, it cannot support customer-provided IP addresses,

granular RBAC, single-tenant VMs, or the ability to import a customer's own VM images.

Rackspace is currently in a transitional stage, running two public cloud IaaS technology

platforms simultaneously — the previous proprietary Cloud Servers platform and the new

OpenStack-based platform launched in August 2012. Some features are only available on

one of those platforms. Rackspace's pace of new feature introduction has accelerated

significantly since the new platform's launch. Existing Cloud Servers customers will eventually

need to migrate to the new OpenStack offering.

Rackspace has a diverse set of cloud-related businesses and will be challenged to manage

the broad range of demands on its management team and its engineering resources. It must

devote significant resources to OpenStack development, while also investing in its own

proprietary, differentiated capabilities.

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Savvis

Savvis, a CenturyLink company, is a Web hoster with a long track record of leadership in the

hosting market. It has a suite of both public and private VMware-virtualized IaaS offerings with

optional managed services, under the Symphony brand, offered in data centers in the U.S.,

Canada, Germany, Hong Kong, India, Japan, Singapore and the U.K. It also offers database as a

service and co-location.

Strengths

Savvis has a very broad, multitiered IaaS product portfolio that can address a diverse range

of customer needs, and a well-established track record of delivering enterprise cloud

services for production and mission-critical needs. It has a particular emphasis on broad,

deep security features. It offers its own custom portal, although Symphony Virtual Private

Data Center (VPDC, its public cloud offering) also has a vCloud Director portal option.

Most Web hosters do not offer their managed hosting customer portal to self-service, cloud-

only customers. Savvis is one of the few that does. Its customer portal has one of the most

comprehensive feature sets in the hosting industry and is, consequently, exceptional for the

cloud IaaS market.

While Savvis is increasingly focused on using the cloud as a means to enter the data center

outsourcing market, it nevertheless has a competitive feature set for self-service, and

successfully blends the self-service and managed services models across a hybrid solution

portfolio. The existing Savvis base of managed hosting and co-location customers, along with

the CenturyLink customer base, provides Savvis with cross-selling opportunities.

Recommended uses: General business applications, enterprise applications, and test and

development.

Cautions

Savvis has an extremely diverse product portfolio, with multiple flavors of single-tenant and

multi-tenant IaaS. This can be confusing to prospective customers, and it can be difficult to

decide which solution or combination of solutions is right for one's needs. It also proliferates

narrow point solutions, rather than creating a unified platform that can be used to deliver a

variety of flexible solutions.

CenturyLink acquired Qwest and Savvis in 2011. While it is focused on integrating Qwest,

Savvis has been left as a largely unchanged stand-alone entity, except for the integration of

Qwest's hosting assets. But once CenturyLink finishes "digesting" Qwest, it may reassess its

strategy for its Savvis assets.

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SoftLayer



SoftLayer is an independent Web hoster with a focus on SMBs. CloudLayer, its paid-by-the-VM,

Citrix-Xen-virtualized, public and private cloud IaaS, is offered in data centers in the U.S., the

Netherlands and Singapore. It also offers OpenStack object-based storage with an integrated

CDN (via a partnership with Internap).

Strengths

SoftLayer is a thought leader in automated, highly standardized infrastructure services,

provisioned on demand. It has an excellent portal, which offers integrated management

across all its offerings.

CloudLayer has a particularly clean service composition, with a range of options that can be

added on a per-instance, paid-by-the-hour basis, including aspects such as the type of

monitoring and the automated response to a failure detected by that monitor. Instances can

be either VMs or dedicated servers, and it emphasizes that "bare metal" physical servers can

be managed with the same elasticity as VMs.

CloudLayer has an array of paid-by-the-hour, per-instance security options, including the

option to integrate with third-party authentication (such as VeriSign Identity Protection).

SoftLayer also offers free vulnerability scanning and payment card industry (PCI) compliance

scans (in partnership with McAfee).

Recommended uses: E-business hosting, general business applications, self-managed hybrid

hosting, batch computing, and large-scale use cases such as gaming where "bare metal" is

desirable.

Cautions

SoftLayer is strongly focused on self-service for SMB customers, although it has begun to

target large-scale enterprise deals that need more consultative sales, a deeper level of

support and greater flexibility from a service provider. Its feature set and road map,

however, are focused on the needs of SMBs.

Although SoftLayer has historically targeted technology businesses, it has previously

principally targeted IT administrators rather than developers. It now has active developer

outreach efforts, but its proprietary API has not gained widespread third-party tools support.

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Terremark

Terremark, a Verizon company, encompasses Verizon's data center, cloud and security

businesses. Its Enterprise Cloud brand encompasses multiple VMware-virtualized offerings — the

standard Enterprise Cloud (public cloud from the original Terremark), Private Edition (public cloud

with single-tenant compute), Managed Edition (formerly the Verizon Computing as a Service public

cloud offering), Express Edition (vCloud Express-based paid-by-the-VM public cloud), Public Sector

(U.S. federal government community cloud) — delivered from data centers in the U.S., Brazil, Hong

Kong, the Netherlands and the U.K. Managed services are optional. Terremark also offers co-

location.

Strengths

Terremark, via the standard Enterprise Cloud service, is the market share leader in VMware-

virtualized cloud IaaS. It has the longest track record in the market for enterprise-class

public cloud IaaS, and among the best feature sets.

Terremark can address hybrid hosting use cases via the Enterprise Cloud Managed Edition,

which can offer "bare metal" physical servers on daily metering. This service also bundles in

managed services, but it has fewer self-service capabilities.

Terremark is developing a next-generation, unified platform that will launch in 2013. This

new platform will enable Terremark to address a much broader range of use cases, and

consolidates its development efforts onto a single hypervisor-neutral platform.

Terremark's CloudSwitch acquisition gives it a tool that can be used to facilitate migration

from, and interoperability with, other cloud environments, including AWS. It is using

management talent acquired from CloudSwitch to drive its future strategy.

Recommended uses: General business applications, and test and development.

Cautions

Until Terremark launches its new unified platform, customers must be careful to match the

service they choose to their particular use case. Customers should also be aware that while

Terremark is continuing to enhance existing offerings, its engineering focus has shifted to

the new platform.

Although Terremark has always done a significant amount of software development, rather

than being wholly reliant on VMware, it is staking its future success on rapid innovation

driven by agile development. This is an unusual strategy for a company that is owned by a

carrier, and it is highly dependent on Verizon's willingness to interfere minimally with

management.

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Tier 3

Tier 3 is a small, independent service provider that is solely focused on cloud services. It offers

paid-by-the-VM, vCloud Powered public cloud IaaS from data centers in the U.S., Canada,

Germany and the U.K. It also offers database as a service, and is venturing into Cloud Foundry-

based PaaS. It is responsible for Iron Foundry, the .NET extension of Cloud Foundry.

Strengths

Tier 3 combines a good set of features on a well-engineered platform, with an easy-to-use

self-service portal. Although it is a vCloud Powered offering, its core architecture and

software platform contain substantial custom engineering of its own, and it has an

innovative and ambitious road map. It can offer a "premium" tier of VMs that are

automatically replicated into a second data center, a unique feature. It has an exceptionally



strong SLA.

Tier 3 has a scriptable templating feature called Blueprints. Blueprints can be used to

provision complex, multi-data-center infrastructure configurations incorporating VMs, network

elements and applications. For instance, one of Tier 3's provided Blueprints can provision

highly available Microsoft Exchange Server using data availability groups.

Tier 3 is becoming a hypervisor-agnostic provider, with the intent to provide a unified

interface to clouds that are built using multiple different CMPs. It is emphasizing white-label

and reseller capabilities, and the ability to federate between different Tier 3-based clouds.

Recommended uses: E-business hosting, cloud-native applications, general business


Cautions

While Tier 3's offering is vCloud Powered, it does not expose the vCD UI. Consequently,

customers do not receive the full extent of vCD's self-service capabilities. However, Tier 3

offers many additional features that are not part of vCD, and it is trying to strategically

reduce its dependence on VMware.

Tier 3 has limited brand awareness, marketing budget and sales capacity. It will be

challenged to grow its business in an increasingly noisy, crowded market, and its global

expansion will be highly dependent on partners.

Tier 3 is a small but innovative service provider with a pure cloud IaaS business, which

makes it a highly attractive target for acquisition.

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Virtustream

Virtustream is a small, independent service provider that is solely focused on cloud services. It

offers hypervisor-neutral public and private IaaS on its xStream platform, available from data

centers in the U.S. and the U.K. Managed services are optional.

Strengths

Virtustream's founders have backgrounds in VMware and SAP consultancies, and the

company has a strongly consultative approach, as well as particular expertise in SAP. Its

cloud is targeted primarily at production applications, but in an unusual approach, it is

targeting both traditional enterprise workloads, including ERP applications, as well as cloud-

native applications.

Virtustream has developed its own cloud platform technology, and uses a single unified

architecture across public and private offerings, both within its own data centers and within

customer data centers. While much of its infrastructure is VMware-virtualized, it can also

support other hypervisors, and it is compatible with the AWS API.

Virtustream's micro-VM technology allows it to charge for resources consumed, rather than

resources allocated, and to offer policy-based service-level management and application

performance SLAs. It has focused on meeting enterprise security and compliance needs, and

it will be one of the first IaaS providers to support Intel's Trusted Execution Technology

(TXT).

Recommended uses: Enterprise applications, general business applications, e-business

hosting and cloud-native applications.

Cautions

Although Virtustream supports a solid set of self-service features, it primarily targets

complex, mission-critical applications where it is likely that the customer will purchase

professional services assistance for implementation, and managed services on an ongoing

basis.

Virtustream is a small but innovative service provider, and may be an attractive target for

acquisition. Its strategy will require it to attract and retain significant engineering talent as

well as application expertise. It will be challenged to grow its brand awareness and to

manage the lengthy sales cycles that will be common in its target use cases.

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Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets

change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or

MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one

year and not the next does not necessarily indicate that we have changed our opinion of that

vendor. This may be a reflection of a change in the market and, therefore, changed evaluation

criteria, or a change of focus by a vendor.

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Added

Dell

Dimension Data (replacing OpSource, which it acquired)

Fujitsu

OVH

Virtustream

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Dropped

We dropped several vendors from this Magic Quadrant because we changed the inclusion criteria



to limit the evaluation to the top 15 vendors by market share, rather than using a minimum

amount of revenue; this reduced the number of included vendors from 20 to 15. All of the vendors

that were dropped qualify for this Magic Quadrant on all criteria except for market share, and

should still be considered in competitive evaluations. The dropped vendors are:

AT&T

Carpathia Hosting

Datapipe

Hosting.com

IBM

iland

NaviSite

Tata Communications

Virtacore Systems

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Inclusion and Exclusion Criteria

To appear in this Magic Quadrant, vendors had to meet, as of June 2012, the following criteria:

They must sell public cloud compute IaaS as a stand-alone service, without the requirement

to bundle it with managed hosting, application development, application maintenance or

other outsourcing. They may, optionally, also sell a private version of this offering that uses

the same architecture but is not multi-tenant.

The service must be enterprise-class, offering 24/7 customer support (including phone

support), SLAs, the ability to scale an application beyond the capacity of a single physical

server, an allowable VM size of at least eight compute units and 15 GB of RAM, the ability to

support secure connectivity to the infrastructure, and support for role-based access control.

They must offer this service in a minimum of two data centers, located in different

metropolitan areas.

They must be among the top 15 global providers, by Gartner-estimated market share for the

evaluated services (public cloud IaaS and standardized private cloud IaaS).

Vendors Considered, but Not Included

This Magic Quadrant is global, but many of the providers are based in the U.S. This is a reflection

of the way the market is evolving. The market has matured more quickly in the U.S. and the bulk

of revenue comes from U.S.-based customers and flows to U.S.-based companies — U.S.-based

IaaS providers typically derive 20% or more of their revenue from customers outside the U.S.

However, most of the providers in this Magic Quadrant offer their services on a global basis; most

have at least one data center in North America, Western Europe and Asia/Pacific.

In the evaluations for this Magic Quadrant, we considered a variety of interesting cloud IaaS

providers but we were unable to include them because they did not have sufficient market share.

The more distinctive providers include:

CloudSigma, which has a unique pricing model with five-minute billing increments and

programmatically accessible, demand-based, dynamic pricing.

FireHost, which specializes in compliant solutions, especially for PCI.

NaviSite, a Time Warner Cable Company, which has a broad and innovative feature set, and

is one of the most capable platforms for enterprise applications.

Peer 1 Hosting, whose Zunicore cloud IaaS offering has HPC options, including nVidia GPUs in

"bare metal" physical servers.

There were also providers that did not have public cloud IaaS offerings in general availability by

June 2012, but had launched betas. Such providers include Microsoft (which introduced a

persistent VM capability into Windows Azure, thereby giving it full IaaS functionality along with

PaaS), Google (which introduced Google Compute Engine, an IaaS offering) and HP (which

introduced HP Cloud Compute).

We excluded PaaS providers from this Magic Quadrant, even though some businesses may use

PaaS in a very IaaS-like manner. However, these PaaS offerings do not allow customers to obtain

raw VMs that can be loaded with arbitrary OSs, middleware and applications, which is a

requirement for being considered as IaaS. For PaaS providers, see "Platform as a Service:

Definition, Taxonomy and Vendor Landscape, 2012."

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Evaluation Criteria

Ability to Execute

Gartner analysts evaluate technology providers on the quality and efficacy of the processes,

systems, methods or procedures that enable IT providers' performance to be competitive, efficient

and effective, and to positively affect revenue, retention and reputation. Ultimately, technology

providers are judged on their ability to capitalize on their vision, and on their success in doing so.

We evaluated vendors' Ability to Execute in this market by using the following criteria:

Product/Service: Service providers were evaluated on the capabilities of their cloud IaaS

offering to support the four use cases being evaluated. We evaluated the breadth and

depth of the feature set, self-service capabilities, automated system management and

suitability to run a broad range of workload types.

Overall Viability (Business Unit, Financial, Strategy, Organization): Providers were evaluated on:



the success of their cloud IaaS business, as demonstrated by current revenue and revenue

growth since the launch of their service; their financial wherewithal to continue investing in

the business, and to execute successfully on their road maps; and their organizational

commitment to this business, and its importance to the company's overall strategy.

Sales Execution/Pricing: Providers were evaluated on their ability to: address the range of

buyers for IaaS, including developers and business managers, as well as IT operations

organizations; adapt to "frictionless selling" with online sales, immediate trials and proofs of

concept; provide consultative sales and solutions engineering; be highly responsive to

prospective customers; and offer value for money.

Market Responsiveness and Track Record: The market is evolving extremely quickly and the

rate of technological innovation is very high. Providers were evaluated on how well they

have historically been able to respond to changing buyer needs and technology

developments, rapidly iterate their service offerings, and deliver promised enhancements

and services by the expected time.

Marketing Execution: Providers were evaluated on: their mind share and brand awareness in

the market; their ability to convey marketing messages based on their ability to deliver real

business value, not empty hype or misleading "cloudwashing;" and the clarity and accuracy

of their marketing messages, compared with their actual service offering.

Customer Experience: Providers were evaluated on: the quality and responsiveness of their

account management and technical support; the ease of use of their self-service

functionality; the capabilities of their customer portal (additional functionality such as

monitoring, reporting and trouble ticketing); the usefulness of their documentation and

customer communications; the quality of their SLAs; ease of doing business with them; and

overall customer satisfaction.

Operations: Providers were evaluated on: their ability to meet their goals and commitments,

including their track record of service delivery; the quality of their response to outages; and

their ability to meet timelines that are communicated to customers and to the market.

Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product/Service high

Overall Viability (Business Unit, Financial, Strategy, Organization) standard

Sales Execution/Pricing standard

Market Responsiveness and Track Record high

Marketing Execution standard

Customer Experience standard

Operations standard


Completeness of Vision

Gartner analysts evaluate technology providers on their ability to articulate logical statements

convincingly about current and future market direction, innovation, customer needs and

competitive forces, as well as how they map to Gartner's position. Ultimately, technology

providers are assessed on their understanding of the ways in which market forces can be

exploited to create opportunities.

We assessed vendors' Completeness of Vision in this market by using the following criteria:

Market Understanding: Providers were evaluated on their understanding of the wants and

needs of three different buying constituencies in this market — enterprises, midmarket

businesses and technology companies of all sizes — both currently and in the longer term as

the use of IaaS matures.

Marketing Strategy: Providers were evaluated on their ability to articulate their position in the

market and their competitive differentiation, and to communicate these messages clearly and

consistently, both internally and externally.

Sales Strategy: Providers were evaluated on their understanding of the buying centers for

the market, and the way that these different buying centers want to engage with sales, as

well as their strategy for adapting their sales force, online channel and partner channels to

the IaaS market.

Offering (Product) Strategy: Providers were evaluated on the breadth, depth, quality and

differentiation of their service road maps, as relevant to the four use cases under evaluation,

with an emphasis on self-service, automated IT operations management and overall feature

set.

Business Model: Providers were evaluated on their overall value proposition and their

strategy for providing solutions for the use cases under consideration, not just raw

infrastructure elements. This included evaluating how IaaS fits into their broader product

portfolio and product strategy.

Vertical/Industry Strategy: Providers were evaluated on their ability to offer targeted services

for particular verticals, such as government, biotech, media and entertainment, and retail.

This includes sales and marketing to such verticals, their ability to meet specialized

compliance needs, and vertical-specific solutions.

Innovation: Providers were evaluated on the level of investment in the future of their

business, and the quality of those investments, whether financial or human capital; this

includes aspects such as the deployment of engineering resources, investments in new

technology, mergers and acquisitions, and partnerships and alliances.

Geographic Strategy: Providers were evaluated on their ability to expand their offering

beyond their home region, serving the needs of multinational businesses, as well as

adapting their offerings to other geographies. In particular, this included their strategy for



international sales and support, as well as their data center footprint and

internationalization efforts.

Table 2. Completeness of Vision

Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding high

Marketing Strategy standard

Sales Strategy standard

Offering (Product) Strategy high

Business Model standard

Vertical/Industry Strategy low

Innovation high

Geographic Strategy low


Quadrant Descriptions

Leaders

Leaders have distinguished themselves by offering an excellent service and having an ambitious

future road map. They usually serve a broad range of use cases well, although they do not excel

in all areas, and they are not necessarily the best providers for a specific need. They have a track

record of successful delivery, along with many referenceable customers.

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Challengers

Challengers are well-positioned to serve current market needs. They deliver a good service that is

targeted at a particular set of use cases, and they have a track record of successful delivery and

many referenceable customers. They typically have a road map that is well focused on the

customer segments that they serve, but it is not broadly ambitious, although they are making

significant investments in the business.

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Visionaries

Visionaries have an ambitious vision of the future, and are making significant investments in the

development of unique technologies, but the service that they deliver today is best for a narrow

range of use cases.

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Niche Players

Niche Players may be excellent providers for the use cases in which they specialize, but may not

serve a broad range of use cases well, or have a broadly ambitious road map. They may be

relatively new entrants to this market.

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Context

When people think about "cloud computing," cloud IaaS is often one of the first things that comes

to mind. It's the "computing" in cloud computing — on-demand compute, storage and network

resources, delivered on-demand, in near-real-time, as a service. There has been tremendous

hype surrounding these services, but there are a number of use cases for which cloud IaaS

delivers excellent business value. Although the market is immature, it is evolving rapidly; it is

beginning the journey up the Slope of Enlightenment on Gartner's "Hype Cycle for Cloud

Computing, 2012." Unfortunately, there is a great deal of market confusion and many providers

articulate their offerings poorly. Therefore, care should be taken in sourcing these services.

The common use cases for cloud IaaS are: development and testing environments; high-

performance computing and batch processing; Internet-facing websites and Web-based

applications (which may or may not have architectures specifically designed for the cloud); and

non-mission-critical internal business applications. Initially, most businesses choose use cases

that are peripheral to their organization's IT needs, but over time, adopt cloud IaaS for

mainstream business applications as well, including mission-critical applications, mirroring the past

decade's adoption pattern of virtualization in the data center. Many businesses, especially in the

midmarket, will eventually migrate away from running their own data centers in favor of relying

primarily on infrastructure in the cloud.

Although, at present, sourcing cloud IaaS is typically a tactical decision, many organizations are

also looking for long-term strategic partners. However, we believe that the market is too

immature for strategic choices to be made at this stage, and we recommend that prospective

customers focus on finding the cloud provider that matches their specific use case, and likely their

anticipated use cases for the next year. In many cases, businesses may have to use multiple

cloud IaaS providers to meet the needs of a set of diverse use cases.

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Market Overview

Cloud IaaS is computing resources, along with associated storage and network resources, offered

to the customer via self-service in a highly-automated way, on-demand and in near-real-time. In

IaaS, the provider manages the data center facilities, hardware and virtualization, but everything

above the hypervisor layer — the OS, middleware and application — is managed by the customer,

or is an add-on managed service from the provider or another third party. This market is wholly

separate and distinct from cloud PaaS and SaaS.

Cloud IaaS is owned, built, and operated by a service provider, but it may be delivered on-

premises within a customer's data center or hosted in the provider's data center. It may be

"public" (multi-tenant) or "private" (single-tenant), although, in practice, there is no consistency in

the application of these labels, and most hosted offerings use some degree of shared resources

in services labeled "private."

Cloud IaaS is not a commoditized service, and even providers with very similar offerings and

underlying technologies often have sufficiently different implementations that there is a material

difference in availability, performance, security and service features. See "Evaluating Cloud

Infrastructure as a Service" and its related reports to understand the range of options available

in this market.

What Type of Workloads Are Being Placed on Cloud IaaS?

There are three broad categories of customer needs in cloud IaaS:

The hosting of a single application, or a closely related group of applications

A VDC that will serve a broad range of different workloads

Batch computing

Hosting is the most common need. For instance, a media company with a marketing microsite for a

movie, a software company offering SaaS and a retailer needing a lightweight version of its e-

commerce site for disaster-recovery purposes are all examples of customers with hosting needs

that can be fulfilled by IaaS. These are generally production applications, although there is some

test and development as well. Some of these customers have mission-critical needs, while others

do not.

Customers with a broad range of unrelated workloads are less commonplace, but are growing in

importance, particularly in the midmarket, where IaaS is gradually replacing or supplementing

traditional data center infrastructure. The VDC is typically used very similarly to the organization's

internal virtualization environment — primarily for less mission-critical production applications, or

test and development environments — but is increasingly being used to run more mission-critical

applications.

The least common need, but one that nevertheless drives significant revenue for the small

number of providers that service this portion of the market, is batch computing. For these

customers, IaaS serves as a substitute for traditional high-performance computing or grid

computing. Customer needs include rendering, video encoding, genetic sequencing, modeling and

simulation, numerical analysis and data analytics. Other than the need to access large amounts of

commodity compute at the lowest possible price, with little concern for infrastructure reliability,

these customers typically have needs very similar to those of VDC customers, although some HPC

use cases benefit from specialized hardware such as GPUs and high-speed interconnects.

What Are the Key Market Aspects of Which Buyers Should Be Aware?

One size does not fit all. As the IaaS market matures, clarity is emerging about the range of

different customer needs. Workloads vary in their availability and performance needs, and in the

general complexity of the overall application infrastructure. Customers vary in the importance that

they place on security, customer service and ease of use. Customers also vary in how much they

want to manage themselves, versus how much they want the IaaS provider to manage for them.

While some providers are beginning to address differentiated customer needs in a targeted

fashion, most service providers still take a "one size fits all" approach, which can make it difficult

to determine if a particular provider is the right one for a particular set of business and technical

needs.

IaaS can be used to run a broadening range of workloads. Service providers are moving toward

infrastructure platforms that can offer physical (non-virtualized) and virtual resources, priced

according to the level of availability, performance, security and isolation that the customer selects.

This allows customers to run both "cloud native" applications that have been architected with

cloud transaction processing principles in mind (see "From OLTP to Cloud TP: The Third Era of

Transaction Processing Aims to the Cloud"), as well as migrate existing business applications from

their own virtualized servers in internal data centers into the cloud, without changes.

Public and private cloud IaaS are converging. Service providers are increasingly using dynamic

physical and logical isolation mechanisms to create "private" infrastructure within a shared, multi-

tenant capacity pool. This allows economies of scale while enabling customers to meet a broader

range of security and compliance requirements. See "Best Practice: Evaluate Isolation

Mechanisms in Public and Private Cloud IaaS" for details on this convergence and how to choose

the level of isolation that you need. We believe that over time, the leading providers will offer a

single, highly flexible platform across both their own data centers and customer data centers. As

a result, this 2012 Magic Quadrant covers not only public cloud IaaS, but standardized private

cloud IaaS as well.

The buying centers for IaaS are diverse. The early adopters in the IaaS market were developers. As

the market matures, developers remain an important audience, because a great deal of IaaS

adoption is business led — driven by business managers who hold the budget, need greater

agility and have shorter time frames than IT Operations is able to accommodate, and who

therefore turn to application developers and enterprise architects for a solution. This is

particularly true for the single-application, "hosting" side of the market. IT Operations is, however,

increasingly involved in IaaS sourcing, and is likely to be the primary buying center for multiple-



application needs. IaaS providers vary in their ability to target these different buying centers.

Furthermore, most providers focus on either a developer audience or an IT operations audience,

and their feature set and style of service are oriented accordingly.

More aspects of IT operations management are being automated, so that IaaS offers value beyond

self-service provisioning. For companies with reasonable access to capital and which already have

an IT operations team, today's IaaS offerings may not represent cost savings for typical business

workloads. Self-service provisioning in the public cloud is often not a significant improvement over

a well-managed virtualized infrastructure within an internal data center. To truly drive value to

customers, cloud IaaS providers must expose superior IT operations management tools to

customers, and find ways to reduce the burden of operations, starting with automated patch

management and backups. Manual managed services are frequently used to substitute for

automated offerings. Evolving toward the delivery of automated IT operations management, in

conjunction with self-service tools and reports, is critical for leadership in this market. Similarly,

providers are increasingly offering programmatic (API) access to their infrastructure, which

enables customers, as well as third parties, to build management tools for their platforms.

Customers do not usually save money by using cloud IaaS. While many customers first investigate

using IaaS to achieve cost savings, most customers buy IaaS to achieve greater business agility,

or to gain access to infrastructure capabilities that they do not have within their own data center.

IaaS can drive significant cost savings when customers have short-term, seasonal, disaster

recovery or batch computing needs. It can also be a boon to companies with limited access to

capital and to small companies, especially startups, which cannot afford to invest in infrastructure.

(See "Cloud Computing Can Be the Singular Solution for at Least Five Use Cases" for details.) For

larger businesses with existing internal data centers and IT operations teams, IaaS for steady-

state workloads is often no less expensive, and may be more expensive, than an internal private

cloud. While provider efficiencies will increase over time, and automated managed services will

substantially drive down the cost of infrastructure management, the state of technology has not

yet advanced to that point.

There are many providers, but they vary widely in quality. There are many competitors in the

market; new entrants continue to launch offerings and existing providers are expanding the

market segments that they serve. Many providers are more interested in managed services than

in the highly automated, self-service market, and consequently the quality of their technology and

their investment in engineering varies greatly. Moreover, many of the newer market entrants are

very large IT companies with a great deal of sales reach, which has enabled them to rapidly take

market share. Yet these companies do not necessarily have superior offerings. Indeed, many of

the better providers are actually smaller, highly innovative companies. Nevertheless, this is

becoming a scale business, and many providers will be challenged to execute well in the rapidly

evolving market. Most providers are able to deliver a basic offering — with reasonable availability,

performance and security, and good customer support — but many have limited differentiation

and value-add beyond the ability to provision resources quickly. Therefore, significant due

diligence must be taken to evaluate providers thoroughly.

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