Australian Special Report
Better late than never
With cloud adoption slow, Microsoft may still triumph Jump
Playing on strengths
Counting on Microsoft's developer base Jump
Where is your data?
Will Australian firms trust offshore datacentres? Jump
Targeting the right market
Not all cloud providers are the same Jump
Surviving the Azure onslaught
Companies need to find their niche Jump
The anti-Microsoft option
How does Google compare? Jump
With [Azure's] .NET functionality, the 50,000 or so .NET developers that exist in Australia automatically become cloud developers overnightGianpaolo Carrera
Better late than never
Microsoft Azure has been launched in Australia this month, but will developers jump onto the new platform given that other competitors are already entrenched?
Cloud providers — companies that offer infinitely scalable amounts of computing power and storage on a pay-per-use basis — can generally be split into three rough categories: software-as-a-service providers, who sell an application to clients hosted on their own servers and generally charge per user; infrastructure-as-a-service providers, offering virtual servers and storage on a per use basis; and platform-as-a-service providers, who present a higher level and more managed infrastructure environment that also offers extra services such as preconfigured databases.
Microsoft's Azure fits in the last category, as it's targeting developers who want to run their applications without worrying about managing how many virtual machines they need for the app to run. It's a useful model, but Microsoft is certainly not the first to offer its like.
Azure was made generally available in November 2009, but it's taken until this month for an Australian launch. Google's Azure equivalent App Engine had already been operating for a year and a half before Azure's November 2009 date. Customer relationship management application platform Force.com had its debut in 2007. Meanwhile, Amazon had been offering its Web Services infrastructure platform since 2006.
"If you look at this on a relative timescale, Microsoft is late in bringing this offering to the market. But if you look at it from an adoption perspective, there have been a lot of offerings available before Azure, but not a lot of adoption," says IDC Australia's associate director for research and consulting Linus Lai.
According to a Longhaus survey released last year of 110 medium to large Australian companies, only 9 per cent had adopted any form of cloud computing.
"Microsoft is entering at a time when we are still at an early adoption stage for the cloud in Australia. So that means they aren't really late to the party," Lai says.
Playing on strengths
Microsoft is an entrenched name in the industry with hordes of developers flocking to its banner. Easing the way for developers to bring their applications to the cloud is the essence of Azure.
Microsoft will have to fight less than other providers to lure developers to its platform, because of the very large number of existing Microsoft developers who will want to use the platform to move their products into the cloud.
"If you think of it with the functionality of .NET, the 50,000 or so developers that exist in Australia who are .NET developers automatically become cloud developers overnight," Microsoft developer and platform evangelism director Gianpaolo Carraro says.
Developers scale the amounts of computer storage they need for their applications by entering a ratio by which they want to change their uptake. Microsoft also aims to make it even easier by offering a cloud-based pay-per-use SQL database, connectivity between Azure and on-premise applications, as well as single sign-on functionality.
Of course, anyone using an infrastructure-as-a-service cloud product from a cloud competitor will be able to install their own SQL database on virtual machines, or write their own single sign-on and app connectivity. However, with Azure, Microsoft has done the leg work for developers, exacting a price for that higher level of support. The idea is that developers can stop wasting time on lower level issues and spend more time on their apps.
"Development houses try to spend most of their time developing the features of their software product themselves, not the infrastructure in terms of the connectivity, the web hosting, the databases," Carraro says.
One such developer is catering specialist CaterXpress. Director Anthony Super says that CaterXpress is currently in the process of moving all its clients using its apps from on-premise servers to Azure, which will mean being hosted on Microsoft's servers in Singapore.
According to Super, this means a 60 per cent saving in costs for the company. "You're looking at the monthly expenditure on running our own equipment at the moment, not even to mention the labour costs on top of that versus a fully managed version of Windows Azure," he says.
CaterXpress has had to ask its clients if they were willing to have the app hosted overseas, but Super says there has as yet been "no hesitation" because of the more rigorous redundancy and back-up Azure offers. Geography isn't relevant, he believes. "I guess because we deal with small-to-medium-sized businesses those sort of questions just aren't asked."
If some of the customers don't agree, CaterXpress will simply keep them running on the in-house servers, but those customers won't be receiving the cost savings that CaterXpress will pass onto the others.
Where is your data?
One of the biggest issues with cloud computing is companies' concern about where their data will be hosted.
Microsoft doesn't have a datacentre in Australia, which means that any data on Azure has to be hosted overseas. The Redmond giant realises that some companies may feel squeamish about where their data is located.
"The environment that you would have on-premises at a customer site is very similar to the environment that is offered on SQL Azure, which means that you can move applications from the cloud to on-premises or from on-premises to the cloud with very little, if any, changes, because underlying technology is the same. It's .NET, it's Windows Server, it's built using Visual Studio in both cases," Carraro says. "It's really a matter of building the app you need and then deciding if [it should] run on cloud or on-premises.
"This is very compelling for software vendors because some of their customers prefer an on-premises version of their application for various reasons and some customers prefer to have it in the cloud."
Despite this, preference for locally-hosted data leaves the door open for other providers that offer a cloud service hosted in datacentres around Australia. Lacking in scale that Microsoft or Amazon offer, on-premise prices often run at a premium, but customers may be prepared to front extra for the feeling of security.
"We find that when we talk to clients, that seems to be something that's really important. Certainly in the government market, achieving a cloud-like business model is on the caveat that they can have an Australian datacentre," Longhaus research director Sam Higgins says.
Fujitsu launched a local cloud offering last month hosted in its Australian datacentres, although it has also just announced a global platform so that customers can scale up into a more public cloud if they want to.
Its local offering is aimed at Australian enterprises with 1-2000 employees and up, according to Fujitsu Australia general manager solutions Cameron McNaught.
"We see a huge advantage of investing and deploying the cloud in Australia. The feedback we had when we did our market testing towards the end of last year was that the domestic angle was extremely important and the number one factor for customers deciding whether they would use cloud or not was where would their data be located," he says.
It isn't just non-critical systems that companies are considering moving. "We're seeing a lot of interest around not just development and testing environments but also around production IT moving into cloud."
McNaught says that when comparing unit prices, a local-based cloud will go for a light premium, but if bandwidth costs are taken into account along with other costs of having an offshore cloud, he thinks it will be on par.
Targeting the right market
Not all cloud developers are looking for the same customers. With cloud still gaining momentum in Australia, there are many opportunities for carving out a niche in the market.
While Microsoft is directly targeting developers, who might service enterprises or SMBs, Fujitsu has its eye directly on the enterprise market.
Each company must negotiate with Fujitsu for the service. "It's very much an enterprise market and it's not a price-book type advertisement we're going for."
Other companies providing similar cloud products hosted in Australian datacentres are Melbourne IT (its product, based on VMware's vCloud Express, is still in beta), Ultra Serve-subsidiary Rejila and Canberra-based Cloud Central. They all provide their pricing upfront, which Fujitsu said shows that they are after smaller companies.
"We see it as a different market because your sign-up method is through credit card. The customers that we'll bring on with [our offering] will be customers who are verified by Fujitsu and then come into an enterprise-ready cloud," McNaught says. His definition of enterprise-ready is having high availability, security and dual datacentres providing the service. Fujitsu's cloud availability is advertised as 99.999 per cent.
Yet Fujitsu's model didn't impress Cloud Central's founder Kristoffer Sheather. "I think that model's old-fashioned really. The new way of doing things is low friction. The pricing's out in the open. Everyone knows what everyone else is getting and you can actually sign up to the services very rapidly. Cloud should be about getting on board rapidly. If you have to go through a negotiation process that sort of takes the nature of cloud away. I'd sort of question how cloudy that really is," he says.
Cloud Central's uptime is 99.9 per cent, although customers can negotiate higher availability. Sheather's customers are small- and medium-size enterprises at this point. He is also looking to expand into local government.
Surviving the Azure onslaught
Some providers will be threatened by Microsoft's entry into the market, so they must develop strategies to survive.
Many local providers don't offer development platforms, like Microsoft, but more an infrastructure platform that can house a development tool set for those projects. If developers want to do this, it will mean more work on the infrastructure side. However, Sheather believes some will still decide to go with companies like his rather than Microsoft.
The reason being that companies like his allow their customers to choose an operating system besides Windows.
"We have Windows Server 2008 and SQL Server 2008 on the Windows side of things," Sheather says. "We also have Linux machines as well: Linux software templates for developers ... your Debian and CentOS links, Ubuntu links and MySQL for databases and PostgreSQL.
"It's going to have broader appeal than a platform that's just targeted at Microsoft developers," he says.
Indeed, Longhaus' Higgins believes that the survival of many Australian companies can depend on them offering non-Microsoft infrastructure-as-a-service.
"Microsoft's entry [has] put further pressure on traditional hosting companies, like SmartyHost, Hostworks, MelbourneIT, Bulletproof and Macquarie Telecom to name a few. First they had to deal with Microsoft's BPOS offering via Telstra competing with their traditional Managed Exchange and SharePoint businesses, now they face pressure for basic server and database hosting," Higgins says.
Such firms often don't have defined service levels, whereas Microsoft does, Higgins says. If they don't increase their economies of scale, the non-Microsoft route might be their only path, the analyst believes.
"It would not surprise me if we see some merger and acquisition activity in the local hosting market as more and more larger players enter the market like Microsoft," he says. "That said, many of Australia's larger hosting firms still have the advantage of local datacentres, which will continue to appeal to many local firms in the short term."
The anti-Microsoft option
Google is one of the first names that comes to mind for cloud, because of the success of its Gmail and Google Apps products. But does that mean the search giant will win in the enterprise market?
While Google's is a high-level platform, like Microsoft's, its developers can use Python or Java. Google Australia's engineering director Alan Noble says it's a more "pure" cloud offering because it's not catering for developers of "legacy" platforms such as Windows.
"Java has been the workhorse language for web applications for a very long time now and Python is quite appealing to — I guess you could say — the script crowd; the people who just want to get something up and running very quickly," Noble says.
App Engine also provides tools for developers to help them create their apps on the platform (for example, image tools or services for processing or manipulating large blocks of data).
Developers select a quota for how much processing power they will allow their app to use. If it reaches the quota, it will be throttled and it's up to the administrator to self-serve themselves more quota.
"This actually happened to me," Noble says. "We quickly knocked up an application to do a real-time map of the bushfires in Victoria. And we didn't initially ask for enough quota. This is a classic example of an application which goes from having one query per second to 100 queries per second."
When the app received so much attention, Noble simply put in a request for more capacity online.
Google's success in promoting adoption cloud-based services such as Gmail and Google Apps, especially in universities as well as in companies such as AAPT, makes it seem like it should be well ahead of its competitors with its App Engine. Yet Google might not be fighting in the same ring as Microsoft, according to Higgins.
"We hear very little about Google App Engine from end users or local vendors," he says. Higgins goes on to say that Google's choice of languages excludes many enterprise-level apps that might be expected in the cloud. "Google App Engine is very much just an invitation to write code 'the Google way' in the cloud," he says. He believes Microsoft is more flexible with what its developers put on its platform.
And, as with any other development platform, keeping a broad range of developers happy is key, or the platform will be empty. So, despite its lateness into the fray, adoption and reach may mean Microsoft is onto a good thing. Add its reach to the fact that other companies, such as Salesforce.com, VMware and Amazon, are still bringing out new cloud offerings, it seems the game is not over yet.