Why Amazon Dedicated Instances Is No Big Deal… and Why it Really Is

29 Mar
Why It’s No Big Deal

I was interested yesterday in the amount of excitement that Amazon’s announcement of dedicated instances caused.  To me this seems like a sensible move from a public cloud provider in order to counter the widespread belief in large enterprises that they need to be physically as well as logically separate.  This represents a maturation of public cloud offerings in much the way I’ve discussed in the past and demonstrates that public clouds can evolve to provide the kinds of additional security enterprises (currently) perceive that they require.  This can only be a good thing as bit by bit public cloud companies like Amazon are removing the FUD generated by IT departments and traditional IT service companies and commoditising this completely unimportant stuff so that we can all move on and talk about the real business opportunities of the cloud.

Beyond the satisfaction of seeing another ‘roadblock’ item ticked off the list, however, in technical terms this seems like no big deal to me.  Essentially Amazon are offering you the ability to have a compute instance that takes up all of the resources on a single physical machine (whether you need all of those resources or not) and so fits into their existing framework of differently sized compute instances.  From that perspective it doesn’t feel groundbreaking as it merely ‘tweaks’ their existing model to mark a physical machine as ‘full’ (I’m obviously over-simplifying but intentionally so).

For these reasons I don’t subscribe to the idea that this ‘breaks’ the cloud model or is in some way not multi-tenant since there are no upfront costs for hardware, you still pay for what you use and the whole platform infrastructure is still shared.  The only difference is that you can choose to have some of your compute instances marked as requiring the resources of a complete physical machine.  Interestingly this is also my understanding of how Azure works – their compute instances are broken down into subsets of a physical machine; if you take the biggest instance you’ve essentially got that machine to yourself (although I guess that’s a side-effect of design rather than a conscious offering as per Amazon).

Why It Really Is a Big Deal

So technically we can consider this move to be a relatively small deal even though it is perceived by many as a potentially game changing additional capability.

And frankly that’s the big deal.

Most ‘private cloud’ initiatives from enterprise IT or traditional IT service vendors start from the perspective of trying to protect existing models by merely adding virtualisation and management to existing estates.  They are trying to extend an old model of enterprise IT in the vague hope that it will give them the same benefits as public cloud.  The two things are not vaguely equivalent, however, and they are hugely underestimating the differences.  There is no way that such efforts will result in something as sophisticated as Amazon’s public cloud, something that has been built from the bottom up as an optimised, integrated and low cost service that commoditises many complex products, processes and infrastructure into a single platform that caters for general usage.  There’s just too much distraction and baggage (systems wise and business model wise) for such efforts to ever succeed.  It’s not even putting lipstick on a pig but more like fluffing its muddy hair a little and half closing your eyes.

On the other hand Amazon have proven that not only are they able to build a platform that can operate at high scale and low cost for a non-enterprise market but that this new model can also be extended to cater for enterprise needs.  And they can do this competitively because they have done the spade work required to serve a lower cost market.  Adding some features to separate tenants using your ability to manage a commodity platform (for example) is much easier than trying to work out how to strip huge costs from traditional models of ownership.  This is the traditional pattern of disruptive innovation where a competitor seen as unfit for purpose by demanding users builds solutions that are far more capable and cost effective for the low end before leveraging these benefits upwards to oust incumbent suppliers at the upper end of the market.

In evolutionary terms cloud is a point of ‘punctuated equilibrium’ where the criteria for fitness to survive changes rapidly – whereas previously an ability to afford the ownership of complex, bespoke IT was a competitive advantage, it has now become a distinct disadvantage for everything except a small set of differentiating processes that represent core capabilities.  Furthermore in such a rapidly changing environment companies like Amazon who are focused around a key part of the emerging value web (i.e. an infrastructural business model focused on a commoditised IT platform) can rapidly evolve based on the selection criteria of the market, leaving traditional participants trapped and encumbered by outmoded business models.

Today this traditional end of the market is populated by enterprise IT departments, software providers, hardware providers and IT service providers – all of whom will increasingly see huge losses of business when judged for fitness against commoditised public cloud platforms.  Essentially many such participants will literally have no competitive offering as they have been prevented from making the shift by their own evolution of traits specialised for a previous environment.  As a result expect to see even more rabid ‘cloud washing’ and pushing of ‘private clouds’ by such vendors as the literal need for them ebbs away – effectively many of them will need to extend existing business for as long as possible while bringing new cloud platforms to market or deciding to cede this business completely.

Effectively companies who to date have been incapable of changing are being eaten from underneath and must decide whether they try to compete (in which case they need significant business, structural and asset realignment) or retreat into other business types that don’t compete with platforms (so consulting or implementation of vertical business services for instance – for IT departments see here for a suggestion).

Why It’s a Really Big Deal For You

For me this announcement is further proof of my long standing belief that you cannot build a successful cloud platform as an extension of old models and from within a business for whom it is not their core concern.  Rather successful providers must be ruthlessly focused on building a new cloud platform that integrates, optimises and simplifies complex technologies into a low cost service.  As a cloud platform consumer you should therefore think very carefully about the implications of this and consider whether buying that hypervisor software, hardware and services for a private cloud implementation will really get you an Amazon of your very own – or just further baggage for your business to drag along.

UPDATE:  Added link to Amazon announcement at the beginning of the post as… I forgot.

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