Amazon CTO Vogels counters 'private cloud' pitch

Amazon executives took aim at the private cloud sales pitch and argued that it amounts to little more than fear, uncertainty and doubt. Can private cloud deployments hit the same server utilization rates as something like Amazon Web Services?
Written by Larry Dignan, Contributor

Amazon executives took aim at the private cloud sales pitch and argued that it amounts to little more than fear, uncertainty and doubt.

Werner Vogels, CTO at Amazon, said the private cloud---the idea that enterprises can run internal clouds as efficiently as a cloud computing provider---is little more than marketing.

Speaking at its enterprise cloud computing powwow for Amazon Web Services, Vogels said the idea of the private cloud, a term you hear from multiple technology giants, is designed to "emotionally keep customers" in the fold. The private cloud is a construct designed to keep companies investing in traditional hardware while dabbling with more on-demand assets.

Vogels' main point to the audience at the New York Marriott Marquis was to highlight key customers such as Lawson Software, Netflix, the Department of Treasury as well as Recovery.gov. Vogels said Amazon is spending heavily on security and reliability and developing Amazon Web Services because "we believe this will be as big as our retail business is now."

In addition, Vogels panned the private cloud argument and called it a "false cloud" designed to "get you to buy more hardware and build your own cloud." Simply put, if your cloud involves capital expenditures, it's not really agile, flexible or cost effective. In a nutshell, you're buying assets that require time and people and cost.

Vogels' argument against the private cloud was also a theme from Adam Selipsky, vice president Amazon Web Services. In an interview, Selipsky outlined the key questions from CIOs. These questions about cloud computing revolve around reliability, security and cost. Selipsky said the conversations with CIOs on those topics are getting easier as technology executives see the advantages of cloud computing.

Those three topics are being utilized by hardware and software companies touting the private cloud. "There's a lot of confusion and FUD about the private cloud," said Selipsky. "If you’re spending capex on assets it's not the cloud."

Selipsky added that many IT vendors are slapping cloud in front of existing products and telling customers that they can deploy a private cloud just as economically as pure cloud players. "That's just not true," said Selipsky, who added that some AWS customers have savings of 95 percent of what they had and 75 percent savings isn't unheard of. On average, savings are anywhere from 30 percent to 50 percent.

Indeed, Newsweek CIO Joseph Galarneau said his costs to run Newsweek.com, which runs entirely on AWS, will be 20 percent to 30 percent lower.

However, Selipsky acknowledged that the hybrid approach to cloud computing will remain for a while in the enterprise. After all, companies aren't going to toss out their depreciated data centers, but the trend has been established---enterprises are increasingly looking at the cloud.

Vogels said the bottom line for pure cloud computing, which features scale, elastic pricing and agility, really comes down to server utilization and economies of scale. If you spend on energy savings, new data centers and virtualization software you throw those advances away if all you get is 10 percent to 15 percent real server cycles. The message: Chances are that enterprises can't deliver the real utilization that the cloud computing providers can.  "You're better selling the cycle at 2 cents than throwing it away," said Vogels.

Now rest assured that Vogels is talking the AWS game. Amazon's infrastructure as a service unit is courting IT executives. But Vogels' riff does highlight the debate over cloud computing. Incumbent IT vendors are slapping the term cloud in front of everything they sell. AWS is working to counter that. Toss in an internal squabble over SaaS pricing and cloud computing is getting pretty interesting.


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