Cloud Hosting: Lessons from the trenches


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OnApp Keynote presented at WHD 2011 by OnApp CVO Carlos Rego

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Cloud Hosting: Lessons from the trenches

  1. 1. Lessons from the trenches(and how to build a profitable cloud hosting business)<br />Carlos Rego, Chief Architect, OnApp<br />@nullmind<br /><br /><br /><br />
  2. 2. What is OnApp? <br />Cloud deployment & management software for hosting providers<br />
  3. 3. What does OnApp do?<br />Commodity hardware<br />Elastic cloud<br />On demand resources<br />End users<br />VM Deployment<br />VM Management<br />VM HA/Failover<br />User management<br /> Utility Billing<br />
  4. 4. Company info<br />50+ employees in US and EU<br />Build as internal project for VPS.NET (UK2Group)<br />60,000+ VMs live on OnApp<br />120+ client clouds deployed<br />Adding 1-3 clouds per day<br />
  5. 5. With OnApp you…<br />Get online in less than 48 hours<br />Use your existing hardware<br />Get the first 100 cores for free<br />Only pay $10/core after<br />Get free 24/7 support<br />Are fully integrated with WHCMS/UBER/Hostbill<br />
  6. 6. What is OnApp? <br />Cloud Deployment Scenarios<br />
  7. 7. Different deployment scenarios<br />By-the-hourpublic cloud hosting<br />Cloud VPS hosting<br />All working out of the box…<br />Hybrid cloud hosting<br />Private Clouds<br />
  8. 8. By-the-hour cloud hosting<br /><ul><li>Sell Virtual Machines to customers who pay hourly for cloud resources
  9. 9. Set different prices for RAM, CPU and storage (incl. IOPS), VMs, IPs etc.
  10. 10. Set up different availability zones with different pricing
  11. 11. Competing with AWS/Rackspace</li></li></ul><li>Cloud VPS hosting<br /><ul><li>Group cloud resources into nodes that you can sell on a monthly plan basis
  12. 12. Your customers use nodes as the building blocks for their VMs
  13. 13. The node-based approach makes cloud hosting extremely simple for end users
  14. 14. Competing with VPS.NET/Slicehost/Linode</li></li></ul><li>Hybrid cloud hosting<br /><ul><li>Allocate hypervisors on a 1:1 basis: each customer gets a dedicated hypervisor for their hosted service, centralized storage
  15. 15. Failover is provided by the rest of the cloud (for example, one HV might act as failover for 5 "live" HVs)
  16. 16. Competing with SingleHop/StormOnDemand/Iweb</li></li></ul><li>Virtual private clouds<br /><ul><li>You can group hypervisor, network and storage resources into a single private cloud resource
  17. 17. Customers get all the benefits of a private cloud, backed by the resources of the whole cloud
  18. 18. This brings the cost of private clouds down for customers, too
  19. 19. Compete with the likes of Amazon Web Services...and enterprise service providers</li></li></ul><li>So, what have we learned...<br />…from 100+ cloud deployments ?<br />
  20. 20. Vendor & analyst chatter<br />EC2<br />Azure<br />Cloud OS<br />Cloudware<br />Interoperability<br />Cloud Oriented Architecture<br />Cloud Storage<br />Portability<br />Consumption Based Pricing<br />
  21. 21. This is what they told us…<br />
  22. 22. They’ll tell you that it is very expensive…<br />
  23. 23. Or very complicated…<br />=<br />=<br />
  24. 24. That it will solve all problems<br />
  25. 25. Or that cloud is just the same old same old…<br />
  26. 26. What we thought hosts cared about<br /><ul><li>Security
  27. 27. Interoperability
  28. 28. Compatibility</li></li></ul><li>What hosts actually care about<br /><ul><li>Low entry costs
  29. 29. Time to market
  30. 30. Density/profitability</li></li></ul><li>What challenges do cloud hosts face?<br />Storage:<br /><ul><li>#1 concern
  31. 31. 100+ clouds, close to 50 different storage configs
  32. 32. Ability to use multiple tiers of storage
  33. 33. Billing for IOPS</li></li></ul><li>What challenges do cloud hosts face?<br />Traditional storage vendors<br /><ul><li>Not always a fit for mass-market hosts
  34. 34. The industry is crying out for storage innovation</li></li></ul><li>What challenges do cloud hosts face?<br />Infrastructure:<br /><ul><li>Ability to use existing infrastructure
  35. 35. Capitalizing on depreciated hardware
  36. 36. Ability to mix ‘old’ & new gear</li></li></ul><li>What challenges do cloud hosts face?<br />Billing:<br /><ul><li>New billing structures
  37. 37. Charging per hour, per minute
  38. 38. Or should they?</li></li></ul><li>What challenges do cloud hosts face?<br />Support:<br /><ul><li>Finding, hiring, training staff for cloud hosting services
  39. 39. “Support us like we support our clients”</li></li></ul><li>What challenges do cloud hosts face?<br />Cloud hosting business plan:<br /><ul><li>Hosts need to pay attention to their cloud business strategy
  40. 40. ...even more so than usual</li></li></ul><li>Business plan – ARPU & Profits<br />With the cloud:<br />Potential revenue/cab increases – at a higher margin too – BUT with lower ARPUs<br /> >> KEEP AN EYE ON CPAs <<<br />Host<br />Client<br />
  41. 41. Business plan – higher entry barriers<br /><ul><li>Hardware cost of bringing your first dedicated server client live: $2,500
  42. 42. Hardware cost of bringing your first cloud server client live: $25,000</li></li></ul><li>Cloud – the end of overselling?<br />Shared hosting: 540 seat Jumbo jet = 700 passengers<br />Dedicated server hosting: 540 seats = 540 passengers<br />Cloud hosting:540 seats = 4-500 passengers <br />Underselling??<br />
  43. 43. What does the future hold?<br />
  44. 44. OnApp New Features…April 14th<br /><ul><li>Autoscaling
  45. 45. Let client VMs scale up and down (and out) automatically
  46. 46. Firewalls
  47. 47. Control a VM’s firewall settings from the GUI
  48. 48. Very granular metering, tiered storage and IOPS billing
  49. 49. Loadbalancers
  50. 50. Offer your clients free VMs (£995 value). Fullyintegrated in GUI
  51. 51. SSLs
  52. 52. Offer your clients free Globalsign SSL certs for 1 year. One-Click-Installs!</li></li></ul><li>Cloud – 3 phases<br />The Cloud is cool and sexy<br /><ul><li>High margins, high conversions, low CPAs</li></ul>2. The Cloud is commoditized<br /><ul><li>ACPU is a CPU is a CPU = transparency = price erosion
  53. 53. Focus on de-commoditizing your offering</li></ul>3. The Cloud is no longer the cloud<br /><ul><li>It’s how stuff is done…</li></li></ul><li>How should cloud hosts compete?<br /><ul><li>De-commoditize the cloud offer
  54. 54. Add value with partner deals
  55. 55. Target specific niche markets</li></li></ul><li>In summary<br /><ul><li>Cloud is here to stay
  56. 56. It isn’t as complex or expensive as you might think
  57. 57. The time to act is now – late arrivalswill face a much tougher market</li></li></ul><li>Thanks!<br />Don’t be a stranger<br />@nullmind<br /><br /><br /><br />