Can You Still Differentiate in the Cloud?

Years ago, a channel watcher quipped that a customer could buy NetWare from as many outlets as a thirsty person could acquire a Big Gulp. The point was that local area networking technology had become a commodity and solution providers had better look for other ways to distinguish themselves. So, 20-some years later, has cloud computing gone the way of so many oversized fountain drinks?

Jose Segrera, chief financial officer at Terremark Worldwide Inc. argues the case that  differentiation still exists among cloud computing offerings. During a presentation this week at a Goldman Sachs conference, Segrera asserted a fundamental difference exists between Terremark’s services and those of providers such as Amazon.

He said he sees the cloud as having a retail, “lower end market” and an upscale market in which customers seek to run business-critical applications. In the latter  segment, service-level agreements become central to the offer. That’s where Terremark plays, targeting federal agencies and Fortune 1000 companies.

Segrera said services lacking SLAs may be fine for development and test activities in the cloud. But features such as SLAs and regulatory compliance (Payment Card Industry, HIPAA, etc.) represent “a step up” from retail offerings, he said. It’s a matter of getting what one pays for, he noted.

Naturally, Terremark isn’t the only cloud vendor thinking about service differentiation. Savvis plans to build what it describes as policy and governance components into its virtual private data center platform, which will offer three quality of service tiers. The company holds that other providers have neglected this policy element with respect to resource allocation.

So, cloud vendors endeavor to tweak the packaging of cloud services in hopes of making the provisioning of compute cycles stand out. But will it be long before even the “differentiated” cloud products start looking the same?

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