Citrix and Amazon: Not the Best Deal for Service Providers

Maureen O’Gara’s recent Cloudonomics article says: “Citrix has pushed out a cloud solution called Citrix C3 Lab so its followers can use Amazon’s EC2 and S3 as part of their standard technology infrastructure and prototype cloud projects…This week it added XenApp and XenDesktop so service providers can deliver Windows applications and desktops as a service...C3 Lab is supposed to provide an inexpensive, preconfigured environment that starts with access to Citrix XenApp alongside key Citrix C3 technologies such as Citrix Access Gateway and Citrix Repeater.”

From a service provider perspective, the real value from Citrix C3 is the XenServer – a server virtualization solution that allows customers to create truly virtual data center environments.Our partners at Softlayer are using it to run CloudLayer – along with Mezeo, of course.

But here’s the gotcha: if you’re an IT hosting service provider, you have no incentive to use Amazon’s S3.

In fact, you want to use your own storage because storage remains a significant profit center. Why would a service provider want to give away their profit center to Amazon?

Thanks to all the media coverage that Amazon’s Simple Storage Solution (S3) has received, there is a widely-held belief that the total cost of cloud storage is roughly “15 cents a GB/month.

This is a false assumption. What the 15 cents does not include is:

– Price for inbound bandwidth

– Price for outbound bandwidth

– Price for puts/gets

In other words,they rent you a shower for 15 cents, but if you want to use water, you need to pay more, oh! and also to turn on the faucet, and, of course, the soap is extra. So truly, the 15 cent is for the storage alone, not for the total service.

Let’s take a look at what the actual market price is if you, as a service provider, want to provide Cloud Storage with API access as one of your offerings. Based on public information available on their websites, here are our estimates of the all-in price per GB charged by Amazon S3, Nirvanix SDN, and RackSpace CloudFiles to their customers:

As you can see, there is a significant margin opportunity in those prices, even if you offer cloud storage at prices well below the competition. And that’s why, as a service provider, you’ll want to provide your own storage services. There’s a real profit model in storage, and giving it away to Amazon is not exactly a best practice.

The free CloudLayer iPhone application is now live at the iTunes App Store.

You can click on this link to take you right to it in either iTunes or on the iPhone directly.

This will allow you to register for a 1 GB CloudLayer storage service, that includes 1GB of storage.


When Gray Hall and I launched this blog, our first entry included this statement:

“…this phenomenon called cloud computing represents both an exciting opportunity and a significant threat to the IT service provider industry.”

Not all service providers possess the in house capability, or desire, to build the raw infrastructure to deliver a cloud computing service. Almost all of them do, however, know they need to deploy an advanced cloud computing solution, and are looking for partners and solutions to speed their offerings to market. They are doing what they do best, integrating offerings into a cohesive service delivery stack, based on their vision for their current and future customers use of cloud computing. Many do the real customization in the integration of the various infrastructures, designed to meet specific needs.

While we started a couple of months ago, this story began in April 2008, when we coalesced our ideas on the need for deployable cloud computing infrastructure for the IT service provider industry, and started Mezeo (a platform for the deployment of cloud storage). With the launch of CloudLayer, our vision of the marketplace requirements for the delivery of cloud computing by IT service providers goes from theory to fact.

CloudLayer from Softlayer provides a new, significant, differentiated offering in the cloud computing service provider market space, one that will gain consideration versus Amazon Web Services and Rackspace Mosso, as well as others.

Mezeo provides the cloud storage infrastructure that is utilized by SoftLayer as part of the CloudLayer offering. Other suppliers, as well as SoftLayer’s automation and integration, yield the competitive offering.

Everybody wins! Customers have additional choices. Service providers will differentiate with service level, features, and price. Many new infrastructure offerings will race to the market, enabling clouds to be built by many service providers.

Two things I believe we can be sure about are as follows:

First, we still have a lot of sorting out to do on the subject of standards, and how the infrastructure offerings will integrate. This is significant work, and it will enable cloud service offerings to be easily deployed and customized.

Next week, SNIA is hosting a meeting about standards and APIs associated with cloud storage. The SNIA has created the Cloud Storage Technical Work Group (TWG) – the primary technical entity for the Association to identify, develop, and coordinate system standards and interfaces for cloud storage. Read more about the SNIA Cloud Storage TWG, and join a SNIA Cloud Storage Group today!

Unlike the manifesto, this is an open forum, with proven processes from which serious and helpful guidance will likely emerge.

Second, suppliers are readying offerings that range from integration of virtualized processing to file storage, database, billing and provisioning. Many IT service providers are in different stages of deploying their competitive cloud computing service offerings. Competition will increase, and opportunity will accrue to those who quickly and effectively master the deployment and management of these offerings.

In a conversation last week, I was asked a reasonable question: Why did I think IT Service providers of many sizes and skills can take on Amazon Web Services and Rackspace? Why wouldn’t these two large companies just take over the market for cloud computing services?

I have seen the answer, and it is CloudLayer. Today, people are looking at CloudLayer as a new option in the cloud computing service provider space. They’re checking it out, considering it for new solutions. You should check it out to!

The Obama administration is embracing the cloud in no uncertain terms.

The Washington Post reports:

“The Pentagon has awarded another contract for cloud computer — which, roughly speaking, involves putting software tools on the ‘net and delivering them to users only when needed.”

What they’re talking about is the Defense Information Systems Agency (DISA) which awarded a contract to Northrop Grumman and EyeIT, Inc. for the SIMtone cloud computing platform.

If the Pentagon is prepared to test the cloud, isn’t it time for you to think about it? Security is obviously a concern, but the cloud will turn out to be more secure than the current paradigm.

Remember that Pentagon jet-fighter data breach? Security analyst Aamir Lakhani tells us that network security technologies could be set up to limit when and how data is accessed from the cloud and could be designed in a way that any computer accessing the information from the cloud is accessing it from a classified network over an encrypted VPN.

There are other indications the U.S. government is moving to the cloud. Most significant is the experience of the nation’s new CIO – Vivek Kundra – who is a strong proponent of Cloud Computing:

“I’m all about the cloud computing notion… I look at my lifestyle, and I want access to information wherever I am… I am killing projects that don’t investigate software as a service first.”

Here Kundra talks about how he used the cloud in his previous job:

Wait, there’s more.

The federal government’s massive information portal — — will shift to a cloud computing platform this weekend in a move that GSA officials say will slash infrastructure expenses and provide better flexibility.

Tune in next week for news from the US Federal Government Cloud Computing Summit – hosted by, you guessed it, Vivek Kundra.

Here’s a short discussion I had with WHIR TV:

See also: Mezeo Helps Web Hosts Craft Cloud Storage

Leave a Comment