[ad] How the cloud hosting market is changing


This sponsored post is written by Phil Goldie, Business Group Lead at Microsoft Australia. Click here to find out more about Microsoft’s private cloud solutions.

sponsored post When we talk about cloud computing, often what we’re actually talking about is two ends of a spectrum.

On the one end are the giant public cloud providers. These are global players like ourselves with Windows Azure and others like Amazon, Google and Salesforce. We operate truly huge cloud computing facilities, available globally and serving hundreds of thousands of organisations. This is where you’ll often find the most affordable pricing in the cloud computing landscape, due to the sheer scale of the infrastructure which has been built. There are some fantastic resources available over at our Global Foundation Services site if you’re interested in what this scale actually looks like.

On the other end of the spectrum are private cloud users, who have built their own cloud computing facilities to cater to a single organisation or a small associated group. I’m talking here about private sector corporations, as well as large government departments. It’s in this segment of the cloud landscape where you’ll find the most flexible and customised solutions being used, as organisations gain complete control over their infrastructure.

As you move between the two ends of this spectrum, the easiest way to think about this model is the trade-offs. At the public cloud end you’re getting the best price performance, but you don’t get as much control and customisation – services are built for scale. The reverse is true for private cloud; here you get complete control and customisation. But as an organisation, you’re also facing the task of making a major IT infrastructure investment yourself, as well as the associated ongoing support costs.

However, the truth is that for a vast swathe of organisations interested in consuming cloud computing services, neither of these two poles will precisely meet all of their needs. And so another class of cloud computing players has arisen to meet the needs of the middle: The hosted, or cloud service provider market, which represents many of the advantages of the public cloud model in terms of cost and having a third-party organisation take responsibility for some of your infrastructure, while still offering a degree of flexibility and control which it can sometimes be difficult for the major public cloud suppliers to offer.

And the players can range from the small right up to the huge. In Australia, well-established companies like Dimension Data’s BlueFire, Emantra and OBT compete along with global firms like HP and Fujitsu, as well as providers like Melbourne IT and Macquarie Telecom, with their start-up model in Ninefold. There’s quite a big population of companies in this group, many of whom offer differentiation through their offers – be it pricing, industry and regulatory alignment and other factors such as on-shore hosting.

Now to a certain extent this kind of model has been around for a long time. It’s quite normal for Australian organisations to partner with external service provider organisations in a range of areas. But it’s also true that the cloud hosting market has been evolving in interesting new directions recently — it’s not standing still.

One example of this kind of change is related to charging. While some companies have been offering hosted versions of software suites such as Microsoft Exchange, Dynamics or Lync for some time, for instance, recently they’ve begun offering the ability for customers to pay for access to those services on a per-seat basis, rather than for the whole product or server. In this vein, some of the hosting companies are starting to emulate pricing models which we use for cloud-delivered suites such as Office 365.

Another trend which is gradually starting to make itself felt is the increasing maturation of the way which certain industry verticals deal with cloud computing. As each sector develops firmer regulatory guidelines and practices, it is likely that certain hosting companies will develop specialisations which will let them better serve specific sectors.

One of the chief selling points of a service like Emantra, for example, is that it is strongly based in Australia, with local infrastructure and staff. It has a specialist division based in Canberra and set up to deliver Microsoft-based private cloud services from a local datacentre to the Federal Government. And its facilities have been specifically set up to meet government security standards. HP also has a deep understanding of the needs of the public sector, and is developing a cloud computing service designed to appeal to Australian departments and agencies.

In another example, a hosting company might develop a deep understanding of the requirements of the financial services industry and align its service offerings with the requirements of the Australian Prudential Regulation Authority. This could play out in a very granular fashion; guiding choices around where data is hosted the physical access to datacentre facilities, data retention strategies, the level of cryptography in use and so on. Other hosting companies might develop specialisations helping the resources sector, for example, or catering to retailers.

At the end of the day what all of this change represents is a continually increasing level of choice for end user organisations. There will be high-level choice within the cloud computing community, such as the choice between deploying private cloud, public cloud or hosted infrastructure. And there will also be more granular choices available, such as the choice between different public cloud providers, different hosted cloud providers which may specialise in different niches, and even choices regarding the type of infrastructure you deploy in your private cloud.

In this mix, there is always going to be a strong place for cloud computing providers which sit in the hosted or local partner market, as opposed to the polarised public cloud and private cloud models. And from what we know about the history of technology, it’s clear that greater choice always leads to better outcomes for end user organisations, as well as a greater potential for innovation along the way. For the future of cloud computing and the ability of organisations to use it in the best way possible, this can only be a good thing.

Which do you think has more advantages, the public cloud model, the private cloud model, the hosted cloud model or a mix of some of the above? Post your comments below, and click here to find out more about Microsoft’s cloud computing solutions.


  1. If MS were to open up an Azure POP in Australia, I would migrate all my clients to it in a heartbeat.

    Dear MS: Shut up and take my money!!!

  2. if you want to see startup players with big alliances (AAPT) then look to ones like OrionVM (http://www.orionvm.com.au) for great services and prices. We use them for dev/test hosting (which needs to expand and contract during our product release cycle) and find they are great.

  3. I’ve been following Orion heavily, I understand they apparently have some cool tech handling their IO.. but their pricing is out of line.

    A 1.7gb instance from Ninefold is $74. The closest thing from Orion is a 2gb instance at $200.

    I realise it’s apple and oranges in a lot of these comparisons, but it’s not even in the same ballpark.

  4. Thanks Angus for the post and for the mention. We love supporting the workloads companies like yours, it showcases the flexibility that you can obtain by using IaaS infrastructure and a PAYG model.

    Chad, thanks for following our progress. We are in the process of redesigning the website to better reflect our pricing structure. As we have a very transparent pricing structure (we only charge for memory/storage/transit and IP addresses) we can often appear more expensive when directly compared against our competitors.

    We are similarly priced once you include costs such as template costs, public IP costs, and transit costs. This is on a completely PAYG basis with 1 second billing intervals, which costs us more to provision than a monthly cost due to the overhead of capacity planning and the requirement for burst capacity on the platform. We are able to work out monthly packages if customers contact us.

    I agree that it is an apples vs oranges comparison once you consider cost per transaction, or the fact that we can support larger workloads per instance for database backed applications where IO performance is key.

    We are hard at work building the next version of our platform which introduces the IO performance matching large enterprise grade tiered storage arrays.


  5. This is a very interesting and detailed discussion on recent trends in web hosting solutions. My personal view stands that the role of niche markets will be upgraded and extended with time. Factors such as cost and models like PAYG will still hold a substantial share of the web hosting market, however, due to the increasing popularity and flexibility of cloud hosting, I believe that it will finally win over other hosting solutions, based on its easy-to-use features and simple and straightforward function.
    Of course there is much room for improvement, and cloud hosting providers should develop applications specifically tailored to the needs of different niche markets. Cloud hosting developers should focus their efforts towards the smooth integration of market-specific applications, within the existing computer infrastructure in a company. This means that different cloud hosting applications should be developed, for example in the case of an accountancy firm to that of large-scale farmer.

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