Original PaaS vendors defend their turf

Independent platform-as-a-service providers brace for increasing competition from traditional IT vendors

Independent platform-as-a-service providers acknowledge that theirs is a crowded market, especially with big IT vendors like Oracle, Hewlett-Packard and Dell entering as competitors, but they expressed confidence this week that there is room in the market for many players.

As some of the original PaaS providers who have been operating for a year or more, they said they have more expertise and motivation to offer better services than traditional enterprise vendors that are just entering the market now.

"It doesn't matter that there are so many [competitors]. The potential in the market is so huge. The real challenge is how to get the rest of the developers [not already using PaaS] to benefit from all the innovation going on," said Solomon Hykes, CEO of dotCloud, a small provider of platform services.

PaaS executives spoke this week at the CloudBeat conference in Redwood City, California. Companies like Engine Yard, dotCloud, Cumulogic, Appfog and Heroku, now owned by Salesforce.com, have attracted a loyal following of developers who appreciate that the platform providers let them concentrate on development so they don't have to worry about servers.

"We probably have deployed and scaled more Ruby apps than anyone on the planet," said John Dillon, CEO of Engine Yard. "So developers come to us. We know best."

But traditional IT vendors have taken notice, and now Oracle, Dell, Hewlett-Packard and others say they're building or have recently launched PaaS offerings, and in some cases infrastructure services. They join Microsoft, which already offers a PaaS service with Azure. These large IT providers may be attractive to businesses that have long relationships with them.

The independent PaaS providers seem to hope that their experience and the size of the market, combined with conflicting interests on the part of some big IT vendors, will keep them in business.

Traditional enterprise vendors want first and foremost to preserve their existing businesses, and the result may be services that don't fit the needs of developers, Dillon argued. Those who decide to offer robust services may do so to the detriment of sales of existing on-premise products, putting a strain on their businesses. "There will be some big winners and losers at the big IT vendors," he said.

Others agreed. "If you're going to do a PaaS you have to be about PaaS," Hykes said. But the bigger companies have other priorities. "Look at Microsoft or Google. Google is not about helping developers create software. It's not why they were created," he said. Google offers a platform service through its App Engine.

Meanwhile, independent providers recognize they must increase their scale to compete. "This is a big company game," said Isaac Roth, PaaS master at Red Hat's OpenShift PaaS service. "I don't think you can win as a little company."

While smaller providers have largely figured out how to architect their services, operations takes skill and money. "Operating PaaS at scale and [at] the price points being set is incredibly difficult, and it takes an unbelievable amount of resources," he said.

As an example, Roth said he has a five-person team just to handle security, and his service doesn't even have the kinds of certifications that Amazon, the largest IaaS provider, has. In addition, operating such services requires kernel engineers, Java virtual machine engineers, people who can optimize storage, and many other types of skilled workers.

He expects that the traditional IT vendors just getting into the market will be able to buy their way in by purchasing small operators, or quickly build the technology they need internally.

Big IT vendors have the engineering resources for that type of work. HP, for instance, already has 70 or 80 people just working on contributions to the OpenStack cloud platform, said Patrick Scaglia, HP vice president and CTO of cloud services and applications.

DotCloud is a small provider of PaaS services, and Hykes agreed it is a "big company game."

"But there are two ways to become a big company: You can get bought or grow into one," he said.

An Oracle executive who spoke at the conference seemed to bear out some of the comments made by the startup providers. Rick Schultz, vice president of Oracle technology product marketing, indicated that his company is committed to its cloud service offerings. But he also emphasized that Oracle's software is widely used in cloud offerings from other providers, in what sounded like a defensive strategy for protecting its traditional business.

He was also questioned repeatedly by people in the audience who seemed skeptical about how serious Oracle is about its forthcoming cloud offerings. Oracle CEO Larry Ellison once derided the cloud concept as "nonsense," but Oracle now plans to offer its own PaaS service. Schultz called the decision to launch the service an evolution of Oracle's strategy to sell products that other companies use to build cloud services.

"It's a matter of separating the buzz word of 'cloud' from the realities of the cloud," he said. "What we've tried to do is work with customers to provide them with a road map."

According to surveys Oracle has conducted, 40 percent of its customers have built private clouds and a further 10 percent are planning to do so. Twenty percent are using public clouds, almost double the percentage a year ago, he said.

Ultimately, both small and large PaaS providers face challenges, Engine Yard's Dillon said. Traditional vendors will offer services with one foot in the new world and one in the old, he said. They are saying to themselves, "I'm going to take my old stuff and try to make it fit so it doesn't disrupt my world completely," according to Dillon. But at the same time, startups are struggling with how to scale to meet the demands of larger customers.

"It's a really big market. Lots of people will survive," he predicted.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is Nancy_Gohring@idg.com

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