If AWS, Azure, and Google Compute Engine are winning IaaS, what does that mean for everyone else?

There's a shakeout on the horizon as smaller players are forced to rethink their plans - which means cloud customers need to beware.

"The sky is not falling - customers are getting great value out of cloud IaaS - but the competitive landscape is shifting," Gartner analyst Lydia Leong said. Image: Shutterstock

Three big players continue to dominate the cloud infrastructure-as-a-service market, and they are forcing smaller players to rethink their strategy.

As s result, the market is now in a state of upheaval, with many service providers forced to change their offerings after failing to gain enough traction.

While global spending on IaaS is expected to reach almost $16.5bn in 2015, an increase of 32.8 per cent on 2014, it is dominated by big names: workloads running on Amazon Web Services, Microsoft Azure, and Google Compute Engine accounted for the majority of public cloud IaaS usage in 2015, according to analysts Gartner. The three vendors are also pushing down the price of cloud computing rapidly - which is good news for customers.

"The sky is not falling - customers are getting great value out of cloud IaaS - but the competitive landscape is shifting," Gartner analyst Lydia Leong said. "Few providers have the financial resources to invest in being broadly competitive in the cloud IaaS market."

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For many IaaS companies, 2014 was a tough year and as a result they either intend to make significant changes to their offerings or move to providing managed services on other vendors' IaaS platforms. "Many providers have indicated that they intend to discontinue or significantly reduce their investment in their cloud IaaS offerings, and others intend to eliminate or replace them," said Gartner.

As such, customers need to be careful that when they sign up to cloud services they know what the supplier has planned.

"We urge buyers to be extremely cautious when selecting providers; ask specific and detailed questions about the provider's roadmap for the service, and seek contractual commitments that do not permit the provider to modify substantially or to discontinue the offering without at least 12 months' notice," said Leong.

According to the analyst house, last year the growth in public cloud IaaS workloads surpassed the growth of on-premises workloads for the first time. It said the most common use cases for cloud IaaS are development and testing environments; high-performance computing and batch processing; internet-facing websites and web-based applications; and non-mission-critical internal business applications.

But this doesn't mean that cloud IaaS is now a commodity, because providers offerings' vary significantly in their features, performance, cost, and business terms. That means users need to be aware of the risk of vendor lock-in.

"Although in theory, cloud IaaS has very little lock-in, in truth, cloud IaaS is not merely a matter of hardware rental, but an entire data centre ecosystem as a service. The more you use its management capabilities, the more value you will receive from the offering, but the more you will be tied to that particular service offering," Leong warned.

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