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Lessons from the trenches( d h b ild fi bl l d h i b i )
Lessons from the trenches( d h b ild fi bl l d h i b i )(and how to build a profitable cloud hosting business)(and how to build a profitable cloud hosting business)
Cloud Expo Europe London 2nd February 2011Cloud Expo Europe, London, 2nd February 2011
Ditlev Bredahl, CEO, OnApp
@ditlev@ditlev linkedin.com/in/ditlevlinkedin.com/in/ditlev
Ditlev Bredahl, CEO, OnApp
@ditlev linkedin.com/in/ditlev@ditlev@ditlev linkedin.com/in/ditlevlinkedin.com/in/ditlev
facebook.com/ditlevfacebook.com/[email protected]@onapp.com
@ditlev linkedin.com/in/ditlev
facebook.com/[email protected]
What is OnApp?
Cloud deployment & management p y gsoftware for hosting providers
What does OnApp do?
Commodity hardware Elastic cloud On demand resources End users
VM DeploymentVM DeploymentVM ManagementVM HA/Failover
User managementUtilit BilliUtility Billing
Company info
+45 employees in US and EU+45 employees in US and EU+45 employees in US and EU
45 +,000 servers deployed45 +,000 servers deployed45 +,000 servers deployed
10 +0 client clouds deployed10 +0 client clouds deployed10 +0 client clouds deployed
~Adding 1 cloud per day~Adding 1 cloud per day~Adding 1 cloud per day
So, what have we learned...
… +from 100 cloud deployments ?
Vendor & analyst chatter
EC2EC2
AzureAzure
I biliI biliCloud OSCloud OS
CloudwareCloudwareInteroperabilityInteroperability
Cloud Oriented ArchitectureCloud Oriented Architecture
CloudwareCloudware
Cloud Oriented ArchitectureCloud Oriented Architecture
PortabilityPortability Cloud StorageCloud Storage
Consumption Based PricingConsumption 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 Security
I t bilit Interoperability
Compatibility
What hosts actually care about
Low entry costs Low entry costs
Ti t k t Time to market
Density/profitability
What challenges do hosts face?
Storage:
#1 concern
100+ clouds, close to 50 different storage configsdifferent storage configs
Ability to use multiple tiers of Ability to use multiple tiers of storage
Billing for IOPS
What challenges do hosts face?
Traditional storage vendorsTraditional storage vendors
Not always a fit for mass Not always a fit for mass-market hosts
The industry is crying out for storage innovationstorage innovation
What challenges do hosts face?
Infrastr ct reInfrastructure:
Ability to use existing Ability to use existing infrastructure
Capitalizing on depreciated hardwarehardware
Ability to mix ‘old’ & new gear Ability to mix old & new gear
What challenges do hosts face?
BillinBilling:
New billing structures New billing structures
Charging per hour per minute Charging per hour, per minute
Or should they? Or should they?
What challenges do hosts face?
Support:Support:
Finding hiring training staff for cloud hosting servicesFinding, hiring, training staff for cloud hosting services
“Support us like we support our clients”Support us like we support our clients
What challenges do hosts face?
Cloud hosting business planCloud hosting business plan:
Hosts need to pay attention to Hosts need to pay attention to their cloud business strategy
...even more so than usual
Business plan – ARPU & Profits
H Cli$35,640
$33,391 $35 000
$40,000
$700
$800Host Client
$25,000
$30,000
$35,000
300
99
$500
$600
$10,080 $8 030$10 000
$15,000
$20,000 300
$200
$300
$400
$8,030
$0
$5,000
$10,000 300
100$0
$100
$200
Dedicated Cloud
Monthly revenue Gross prof it
Dedicated Server Cloud Server
WebServer 1 WebServer 2 Load balancer
Business plan – ARPU & Profits
H Cli$35,640
$33,391 $35 000
$40,000
$700
$800Host Client
With the cloud:With the cloud:
$25,000
$30,000
$35,000
300
99
$500
$600
Potential revenue/cab increases – at a Potential revenue/cab increases – at a
$10,080 $8 030$10 000
$15,000
$20,000 300
$200
$300
$400higher margin too – BUT with lower ARPUs
higher margin too – BUT with lower ARPUs$8,030
$0
$5,000
$10,000 300
100$0
$100
$200
>> KEEP AN EYE ON CPAs <<>> KEEP AN EYE ON CPAs <<
Dedicated Cloud
Monthly revenue Gross prof it
Dedicated Server Cloud Server
WebServer 1 WebServer 2 Load balancer
Business plan – higher entry barriers
Hardware cost of bringing your first dedicated server
Hardware cost of bringing your first cloud server client y
:client live $2,500y
:live $25,000
Cloud – the end of overselling?
Shared hosting:Shared hosting: 540 seat Jumbo jet = 700 passengers
Dedicated server hosting: 540 seats = 540 passengers540 seats = 540 passengers
Cloud hosting:540 seats = 4-500 passengers
Underselling??
What does the future hold?
Cloud – 3 phases
1 The Cloud is cool and sexy1. The Cloud is cool and sexy
• High margins, high conversions, low CPAs
2. The Cloud is commoditized
• A = =CPU is a CPU is a CPU transparency price erosion
• Focus on de-commoditizing your offeringg y g
3. The Cloud is no longer the cloud
I ’ h ff i d• It’s how stuff is done…
How will hosts compete?
De-commoditize the cloud offer
Add value with partner deals
Target specific niche markets Target specific niche markets
In summary
Cloud is here to stay
It isn’t as complex or expensive as you It isn t as complex or expensive as you might think
The time to act is now – late arrivalswill face a much tougher market
!Thanks!Thanks!Thanks!Thanks
Ditlev Bredahl, CEO, OnAppDitlev Bredahl, CEO, OnApp, , pp
@ ditlev@ ditlev linkedin.com/in/ditlevlinkedin.com/in/ditlev
, , pp
@ ditlev linkedin.com/in/ditlev
facebook.com/ditlevfacebook.com/[email protected]@onapp.com facebook.com/[email protected]
