From The Expert Feature Article
September 29, 2014

The Cloud Gold Rush - Is On!

Cloud has matured over the last 5 years and so has the perception around its value. Distributors, resellers, telecom carriers, managed service providers, professional service teams, global enterprises, SMBs, and even individual consumers, are all cloud participants in an exponentially multi-billion industry.

The digital land grab is on, profits are soaring, and the value to the Fortune 100 or an individual customer is so great that literally no one is ignoring cloud anymore. Valuations on cloud companies often run 10 times revenue, and the tempo and cash amounts of acquisitions continue to set all-time highs, while innovation and talent are the fuel behind some of the most amazing technologies in human history.

The Perception Timeline (News - Alert) of Cloud

  • Cloud started off as vaporware. Everyone said they were going to move to the cloud, but didn’t have a single SKU to do it with!
  • Cloud was the new buzz word for anything hosted on the Internet. Larry Ellison, founder of Oracle (News - Alert), would have quite a bit of fun mocking this concept although in typical Larry fashion, he was already planning on how to cash in.
  • Cloud moved from merely hosting applications to Infrastructure as a Service (“IaaS”). At this point, IT engineers were quick to mock it as “just another way to virtualize”.
  • Cloud soon had an irresistible cost model that even global Fortune 100 enterprises couldn’t compete with. Cost was the primary driver, just as security was the primary concern. As such, cloud companies quickly became $1B+/year entities hosting mostly non-mission critical workloads. 
  • Cloud performance reached new peaks with super-dense compute farms, high speed ultra-low latency networking, and blazing fast infinite storage at rock bottom prices. Alien technologies either invented or used solely within cloud (like distributed object storage and a complex set of “dark arts” tuning across all these technologies) became pervasive. With the ability to blend software innovations with hardware tuning, a revolution in datacenter design was spawned by the cloud, unmatched by the enterprise.
  • As cloud’s adoption grew, the battle of cloud differentiators began in 2014. Noticeable gaps emerged in how clouds either handled or ignored top of mind issues like migration, security, transport/connectivity, support, and cooperation with the channel.  You can read about that here:
  • Cloud then expands internationally as it goes mainstream. Entire companies exist solely in the cloud.  In fact, several of the newest and fastest rising companies are using cloud as one of their many disruptive angles to successfully unseat incumbents across a wide range of business models. As clouds began to meet security, regulatory, and other requirements, mission-critical workloads from banking, healthcare, legal, manufacturing, and other verticals now call cloud their home.
  • As IaaS grew, the symbiotic relationship between servers and desktops became acute in the cloud. VDI failed in the enterprise for many reasons: cost, technical difficulty, lack of software tuning in coordination with a very specific hardware infrastructure (without which it could never scale), and last but not least, VDI was intended as an onsite solution and those resources now live in the cloud. As such, we are now seeing the rapid rise and market acceptance of Desktop as a Service (DaaS) or hosted virtual desktops (HVDs). Today, only Amazon and dinCloud offer the widest range of services in cloud+ virtual desktops. Many cloud service providers do not have a DaaS play. Conversely, many DaaS providers are ala carte, lacking the full cloud service provider portfolio to enable them as a real player.

Channel Cashes In

How cloud service providers include – or exclude – the channel is top of mind for just about everyone. Some clouds have no channel program, others a poor one.

Distributors are trying as they always do with anything new to “stay relevant”. Today, they provide the credit lines, training, and hand holding that many small to medium sized VARs need.   Others like Avant Communications, pick “best of breed” providers to create an overall cloud portfolio as a trusted advisor. Large resellers like CDW (News - Alert), Insight Enterprises, and Tiger Direct have stuck with reselling and applied this to everything cloud -- this is great because customers want the relationship their current reseller has with them as they make the cloud journey. 

Telecom carriers have been acquiring cloud service providers so that the underlying transport and existing connectivity that these carriers have to millions of customers can be exploited.  Professional services players often see a 20 percent increase in revenue plus 5-20 percent commission for putting their customers resources into the cloud, then configuring, optimizing, maintaining, and upgrading them, as always. Not having to drive from client to client in major metropolitan areas, but instead just logging into a cloud reseller portal and then into each individual customer of theirs is saving these companies a fortune.

Managed service providers are taking the first call for support, providing customer specific application assistance, monitoring and patching services, and much more in the cloud. The truth is, that while some customers will always buy direct via the Web, a huge shift towards buying cloud from the channel has taken place in 2014 as moving mission-critical workloads to the cloud became paramount for many CIOs. At the end of the day, as long as technology is still sold to humans, relationships will remain King.


Finding the right cloud for you is often mitigated by engaging your local distributor, like Ingram Micro (News - Alert), Tech Data, Arrow, or Avant. Do you need robust security in the cloud to meet your client’s regulatory requirements? What about virtual desktops? Are best in class migration tools helpful to get your client in the cloud? Do you trust this cloud service provider to pay you commission for as long as the customer is hosted with them or do you fear they will cut you out in the future?

Be sure to choose wisely! And whatever you do, don’t sit on your hands – the cloud gold rush is ON (News - Alert)!

Yours truly,

Dr. Cloud

Edited by Maurice Nagle