On October 23rd, 2014, we updated our
By continuing to use LinkedIn’s SlideShare service, you agree to the revised terms, so please take a few minutes to review them.
Lessons from the trenches(and how to b ild a profitable cloud h i b i( dh build fi bl l d hosting business) ) Cloud Expo Europe, London, 2nd February 2011 Europe London Ditlev Bredahl, CEO, OnApp @ditlev linkedin.com/in/ditlev firstname.lastname@example.org facebook.com/ditlev
What is OnApp? Cloud deployment & management p y g software for hosting providers
What does OnApp do?Commodity hardware Elastic cloud On demand resources End users VM Deployment VM Management VM HA/Failover User management Utility Billi Utilit Billing
Company info 45+ employees in US and EU 45,000+ servers deployed 100+ client clouds deployed Adding ~1 cloud per day
So, what have we learned... …from 100+ cloud deployments ?
Vendor & analyst chatter EC2 Azure Cloud OS Interoperability I bili Cloudware Cloud Oriented Architecture Portability Cloud Storage Consumption Based Pricing
This is what they’ll tell you…
They’ll tell you that it is very expensive…
Or very complicated… = =
That it will solve all problems
Or that cloud is just the same old same old…
What we thought hosts cared about Security I t Interoperability bilit Compatibility
What hosts actually care about Low entry costs Ti Time t market to k t Density/profitability
What challenges do hosts face? Storage: #1 concern 100+ clouds, close to 50 different storage configs Ability to use multiple tiers of storage Billing for IOPS
What challenges do hosts face? Traditional storage vendors Not always a fit for mass- mass market hosts The industry is crying out for storage innovation
What challenges do hosts face? Infrastructure: Infrastr ct re Ability to use existing infrastructure Capitalizing on depreciated hardware Ability to mix ‘old’ & new gear old
What challenges do hosts face? Billing: Billin New billing structures Charging per hour per minute hour, Or should they?
What challenges do hosts face?Support: Finding hiring training staff for cloud hosting services Finding, hiring, “Support us like we support our clients” Support clients
What challenges do hosts face? Cloud hosting business plan plan: Hosts need to pay attention to their cloud business strategy ...even more so than usual
Business plan – ARPU & Profits Host H $800 Client Cli$40,000 $35,640$35,000$35 000 $33,391 $700 99$30,000 $600$25,000 $500 300$20,000 $400$15,000 $300 $10,080$10,000$10 000 $8,030 $8 030 $200 300 $5,000 $100 100 $0 $0 Dedicated Cloud Dedicated Server Cloud Server Monthly revenue Gross prof it WebServer 1 WebServer 2 Load balancer
Business plan – ARPU & Profits Host H Client Cli$40,000 With the$800 $35,640 cloud:$35,000$35 000 $33,391 $700 99$30,000 $600$25,000 Potential revenue/cab increases – at a $500 300$20,000 higher margin too – BUT with lower $400$15,000 $300$10,000$10 000 $10,080 $8,030 $8 030 ARPUs$200 300 $5,000 $100 >> KEEP AN EYE ON CPAs << 100 $0 $0 Dedicated Cloud Dedicated Server Cloud Server Monthly revenue Gross prof it WebServer 1 WebServer 2 Load balancer
Business plan – higher entry barriers Hardware cost of bringing Hardware cost of bringing y your first dedicated server y your first cloud server client client live: $2,500 live: $25,000
Cloud – the end of overselling? Shared hosting: 540 seat Jumbo jet = 700 passengers Dedicated server hosting: 540 seats = 540 passengers Cloud hosting: 540 seats = 4-500 passengers Underselling??
What does the future hold?
Cloud – 3 phases1.1 The Cloud is cool and sexy • High margins, high conversions, low CPAs2. The Cloud is commoditized • A CPU is a CPU is a CPU = transparency = price erosion • Focus on de-commoditizing your offering gy g3. The Cloud is no longer the cloud • I’ h It’s how stuff i d ff is done…
How will hosts compete? De-commoditize the cloud offer Add value with partner deals Target specific niche markets
In summary Cloud is here to stay It isn t as complex or expensive as you isn’t might think The time to act is now – late arrivals will face a much tougher market