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Bimodal IT, VMworld, and the future of VMware

In Gartner’s 2014 research for CIOs, we’ve increasingly been talking about “bimodal IT”. Bimodal IT is the idea that organizations need two speeds of IT — call them traditional IT and agile IT (Gartner just calls them mode-1 and mode-2). Traditional IT is focused on “doing IT right”, with a strong emphasis on efficiency and safety, approval-based governance and price-for-performance. Agile IT is focused on “doing IT fast”, supporting prototyping and iterative development, rapid delivery, continuous and process-based governance, and value to the business (being business-centric and close to the customer).

We’ve found that organizations are most successful when they have two modes of IT — with different people, processes, and tools supporting each. You can make traditional IT more agile — but you cannot simply add a little agility to it to get full-on agile IT. Rather, that requires fundamental transformation. At some point in time, the agile IT mode becomes strategic and begins to modernize and transform the rest of IT, but it’s actually good to allow the agile-mode team to discover transformative new approaches without being burdened by the existing legacy.

Furthermore, agile IT doesn’t just require new technologies and new skills — it requires a different set of skills from IT professionals. The IT-centric individual who is a cautious guardian and enjoys meticulously following well-defined processes is unlikely going to turn into a business-centric individual who is a risk-taking innovator and enjoys improvising in an uncertain environment.

That brings us to VMware (and many of the other traditional IT vendors who are trying to figure out what to do in an increasingly cloud-y world). Today’s keynote messages at VMworld have been heavily focused on cost reduction and offering more agility while maintaining safety (security, availability, reliability) and control. This is clearly a message that is targeted at traditional IT, and it’s really a story of incremental agility, using the software-defined data center to do IT better. There’s a heavy overtone of reassurance that the VMware faithful can continue to do business as usual, partaking of some cool new technologies in conjunction with the VMware infrastructure that they know and love — and control.

But a huge majority of the new agile-mode IT is cloud-native. It’s got different champions with different skills (especially development skills), and a different approach to development and operations that results in different processes and tooling. “Agility” doesn’t just mean “faster provisioning” (although to judge from the VMware keynote and customer speakers, IT Operations continue to believe this is the case). VMware needs to find ways to be relevant to the agile-IT mode, rather than just helping tradtional-IT VMware admins try to improve operations efficiency in a desperate grasp to retain control. (Unfortunately for VMware, the developer-relevant portions of the company were spun off into Pivotal.)

Bimodal IT also implies that hybrid IT is really simply the peaceful coexistence of non-cloud and cloud application components — not the idea that it’s one set of management tools that sit on top of all environments. VMware admins are obviously attracted to the ability to extend their existing tools and processes to the cloud (whether service provider IaaS or an internal private cloud), but that’s not necessarily the right thing to do. You might run traditional IT both in non-cloud and cloud modes and want hybrid tooling for both — but you should not do that for traditional-IT and agile-IT modes (regardless of whether it’s non-cloud or cloud), but instead use best-of-breed tooling for each mode.

If you’re considering the future of any IT vendor today, you have to ask yourself: What is their strategy to address each mode of IT? The mere recognition of the importance of applications and the business is insufficient.

(Gartner clients only: See Taming the Digital Dragon: The 2014 CIO Agenda and Bimodal IT: How to Be Digitally Agile Without Making a Mess for a lot more information about bimodal IT. See our 2013 and 2014 Professional Effective Planning Guides, Coming to Terms With the Nexus of Forces and Reshaping IT for the Digital Business for a guide to what IT professionals should do to advance their careers and organizations given these trends.)

The 2014 Cloud IaaS Magic Quadrant

Gartner’s Magic Quadrant for Cloud Infrastructure as a Service, 2014, has just been released (see the client-only interactive version, or the free reprint). If you’re a Gartner client, you can also view the related charts, which summarize the offerings, features, and data center locations in a convenient table format. (The charts are unfortunately less readable than they could be, as our publication system doesn’t allow comments in Excel spreadsheets. Sorry.)

We’re continuing to update this Magic Quadrant every nine months, since the market is moving so quickly. There have been significant changes in vendor positions since the August 2013 Magic Quadrant (the free reprint has expired, but the graphic is floating around, and Gartner clients can use the “History” tab in the online Magic Quadrant tool, which allows you to compare 2012, 2013, and 2014 interactively).

We’ve observed, over the last nine months, a major shift in Gartner’s client base — the desire to make strategic bets on cloud IaaS providers. In general, this reduces the number of significant suppliers to an organization to just one or two (whereas many organizations had as many as four), with the overwhelming bulk of the workloads going to one provider. It also means that clients are interested in knowing not just who is winning right now, but who is going to be the winner in five or even ten years. That’s really the lens that this Magic Quadrant should be viewed through: Who has what it takes to convince the customer that they can serve both current needs and will sustain market leadership over the long term?

Our clients have, since September of 2013 (which seemed to mark a change in Microsoft’s go-to-market approach for Azure), consistently viewed this as an AWS vs. Microsoft battle, with AWS continuing to win the vast majority of business but Microsoft winning significant inroads, especially with later-adopter customers. In recent weeks since the big price drops, lots of clients have been asking about the future of Google, as well, and there are a lot of curiosity questions about IBM (SoftLayer) also, although the IBM questions tend to be more outsourcing and broader-strategy in orientation. Of course, prospects consider other vendors, especially their existing incumbent vendors, as well, but AWS and Microsoft are overwhelmingly the top contenders.

What’s interesting about this year’s Visionaries is that they all have new platforms — CenturyLink with the Tier 3 acquisition, CSC with the ServiceMesh acquisition coupled with the AWS partnership, Google with Google Compute Engine, IBM with the SoftLayer acquisition, and Verizon Terremark with the still-beta Verizon Cloud. (Arguably VMware falls into this bucket as well, despite being a Niche Player this year.) These providers are in the middle of reinventing themselves, most with the idea of battling it out for the #3 spot in the market.

This is not a market for the faint of heart. (I recently asked a large vendor if they intended to compete seriously in the IaaS space, and was told, “Only an idiot takes on Amazon, Microsoft, and Google simultaneously.”) For that matter, this is not a market for the shallow of pocket. You can’t spend your way to success here, but you need engineers, intellectual property, and to be a real #3, substantial capital investment in infrastructure.

There’s also a clear convergence with the PaaS market that’s taking place here. AWS has long offered an array of services that are PaaS elements, as well as many things that sit on the spectrum between pure IaaS and pure PaaS. Microsoft and Google started as PaaS providers and then launched IaaS offerings. The distintions will blur and increasingly become less relevant, as providers fight it out on features and capabilities.

Gartner continues to separate our evaluation of related managed and professional services from the core cloud IaaS platform, because we believe that clients are increasingly choosing a platform, and then choosing consultants and managed services providers (or alternatively, turning to a trusted integrator who helps them choose the right platforms for their needs). I’ll be writing on this more in the future, but keep an eye out for the upcoming regional Magic Quadrants for Cloud-Enabled Managed Hosting for a managed services-oriented view.

Recommended reading for 2014 Cloud IaaS and Managed Hosting Magic Quadrants

If you’re a service provider interested in participating in the research process for Gartner’s Magic Quadrant for Cloud IaaS (see the call for vendors), or the regional Magic Quadrants for Cloud-Enabled Managed Hosting (see that call for vendors), you will probably want to read some of my previous blog posts.

The Magic Quadrant Process Itself

AR contacts for a Magic Quadrant should read everything. An explanation of why it’s critical to read every word of every communication received during the MQ process.

The process of a Magic Quadrant. Understanding a little bit about how MQs get put together.

Vendors, Magic Quadrants, and client status. Appropriate use of communications channels during the MQ process.

General tips for Magic Quadrant briefings and Specific tips for Magic Quadrant briefings. Information on how to conduct an effective and concise Magic Quadrant briefing.

The art of the customer reference. Tips on how to choose reference customers.

Gartner’s Understanding of the Market

Foundational Gartner research notes on cloud IaaS and managed hosting, 2014. Recommended reading to understand our thinking on the markets.

Having cloud-enabled technology != Having a cloud. Critical for understanding what we do and don’t consider cloud IaaS to be.

Infrastructure resilience, fast VM restart, and Google Compute Engine. An explanation of why infrastructure resilience still matters in the cloud, and what we mean by the term.

No World of Two Clouds. Why we do not believe that there will be a separation of the cloud IaaS offerings that target the enterprise, from those that target cloud-native organizations.

Cloud IaaS market share and the developer-centric world. How developers, rather than IT operations admins, drive spend in the cloud IaaS market.

Foundational Gartner research notes for cloud IaaS and managed hosting, 2014

With the refresh of the Magic Quadrant for Cloud IaaS, and the evolution of the regional Magic Quadrants for Managed Hosting into Magic Quadrants for Cloud-Enabled Managed Hosting, I am following my annual tradition of highlighting researching that myself and others have published that’s important in the context of these MQs. These notes lay out how we see the market, and consequently, the lens that we’re going to be evaluating the service providers through.

As always, I want to stress that service providers do not need to agree with our perspective in order to rate well. We admire those who march to their own particular beat, as long as it results in true differentiation and more importantly, customer wins and happy customers — a different perspective can allow a service provider to serve their particular segments of the market more effectively. However, such providers need to be able to clearly articulate that vision and to back it up with data that supports their world-view.

This updates a previous list of foundational research. Please note that those older notes still remain relevant, and you are encouraged to read them. You might also be interested in a previous research round-up (clients only).

If you are a service provider, these are the research notes that it might be helpful to be familiar with (sorry, links are behind client-only paywall):

Magic Quadrant for Cloud IaaS, 2013. Last year’s Magic Quadrant is full of deep-dive information about the market and the providers. Also check out the Critical Capabilities for Public Cloud IaaS, 2013 for a deeper dive into specific public cloud IaaS offerings (Critical Capabilities is almost solely focused on feature set for particular use cases, whereas a Magic Quadrant positions a vendor in a market as a whole).

Magic Quadrant for Managed Hosting, North America and Magic Quadrant for European Managed Hosting. Last year’s managed hosting Magic Quadrants are likely the last MQs we’ll publish for traditional managed hosting. They still make interesting reading even though these MQs are evolving this year.

Pricing and Buyer’s Guide for Web Hosting and Cloud Infrastructure, 2013. Our market definitions are described here.

Evaluation Criteria for Public Cloud IaaS Providers. Our Technical Professionals research provides extremely detailed criteria for large enterprises that are evaluating providers. While the customer requirements are somewhat different in other segments, like the mid-market, these criteria should give you an extremely strong idea of the kinds of things that we think are important to customers. The cloud IaaS MQ evaluation criteria are not identical (because it is broader than just large-enterprise), but they are very similar — we do coordinate our research.

Technology Overview for Cloud-Enabled System Infrastructure. If you’re wondering what cloud-enabled system infrastructure (CESI) is, this will explain it to you. Cloud-enabled managed hosting is the combination of a CESI with managed services, so it’s important to understand.

Don’t Be Fooled By Offerings Falsely Masquerading as Cloud IaaS. This note was written for our end-user clients, to help them sort out an increasingly “cloudwashed” service provider landscape. It’s very important for understanding what constitutes a cloud service and why the technical and business benefits of “cloud” matter.

Service Providers Must Understand the Real Needs of Prospective Customers of Cloud IaaS. Customers are often confused about what they want to buy when they claim to want “cloud”. This provides structured guidance for figuring this out, and it’s important for understanding service provider value propositions.

How Customers Purchase Cloud IaaS, 2012. A lifecycle exploration of how customers adopt and expand their use of cloud IaaS. Important for understanding our perspective on sales and marketing. (It’s dated 2012, but it’s actually a 2013 note, and still fully current.)

Market Trends: Managed Cloud Infrastructure, 2013. Our view of the evolution of data center outsourcing, managed hosting, and cloud IaaS, and broadly, the “managed cloud”. Critical for understanding the future of cloud-enabled managed hosting.

Managed Services Providers Must Adapt to the Needs of DevOps-Oriented Customers. As DevOps increases in popularity, managed services increasingly want their infrastructure to be managed with a DevOps philosophy. This represents a radical change for service providers. This note explores the customer requirements and market implications.

If you are not a Gartner client, please note that many of these topics have been covered in my blog in the past, if at a higher level (and generally in a mode where I am still working out my thinking, as opposed to a polished research position).

Last call for vendors for 2014 Cloud IaaS Magic Quadrant

We began the call-for-vendors process for Gartner’s 2014 Magic Quadrant for Cloud Infrastructure as a Service, as well as the regional Magic Quadrants for Cloud-Enabled Managed Hosting, in December. (See Doug Toombs’s call for vendors for the latter.)

The pre-qualification survey, which is intended to gather quantitative metrics and information about each provider’s service, is going out imminently. We sent out contact confirmations on December 26th to all service providers who are currently on our list to receive the survey. If you haven’t received a contact confirmation and you want to receive the survey, please contact Michele Severance (Michele dot Severance at Gartner dot com), who is providing administrative support for this Magic Quadrant. You must be authorized to speak for your company. Please note we cannot work with PR firms for the Magic Quadrant; if you are a PR agency and you think that your client should be participating, you should get in touch with your client and have your client contact Michele.

This year, we are doing an integrated survey process for multiple Magic Quadrants. The cloud IaaS MQ is, in many ways, foundational. Cloud-enabled managed hosting is the delivery of managed services on top of cloud IaaS and, more broadly, cloud-enabled system infrastructure. Consequently, this year’s survey asks about your platforms, your managed services levels, and how those things combine into service offerings. Because the survey is longer, we’re starting the survey process earlier than usual.

The survey is an important part of our data collection efforts on the markets, not just for the Magic Quadrants. We use the survey data to recommend providers throughout the year, particularly since we try to find providers that can exactly fit a client’s needs — including small niche providers. Far from everything fits into the one-size-fits-all mold of the largest providers.

The Cloud IaaS MQ continues to be updated on a 9-month cycle, reflecting the continued fast pace of the market. It will have similar scope to last year, with a very strong emphasis on self-service capabilities.

The best guide to this year’s Magic Quadrant is last year’s Magic Quadrant. Read the interactive MQ if you’re a client, or the free reprint if you’re not.

Please note that receiving a survey does not in any way indicate that we believe that your company is likely to qualify; we simply allow surveys to go to all interested parties (assuming that theyâre not obviously wrong fits, like software companies without an IaaS offering).

The status for this Magic Quadrant will be periodically updated on its status page.

Shooting squirrels from the roof

I’ve been spending the last week revising the combined service-provider survey for our Magic Quadrant for Cloud IaaS, and the new regional Magic Quadrants for Cloud-Enabled Managed Hosting.

With every year of revision, the way I ask questions becomes lengthier and more specific, along with the boldfaced “THESE THINGS DO NOT COUNT” caveats. These caveats almost inevitably come from things vendors have tried to claim count as X, with varying degrees of creativity and determination.

I consider my behavior part of a category I’ll call “shooting squirrels from the roof”. It comes from a story that a friend once told me about a rental agreement on a house. This rental agreement had all the usual stipulations about what tenants aren’t allowed to do, but then it had a list of increasingly specific and weird directives about what the tenant was not allowed to do, culminating in, “Tenant shall not shoot squirrels from the roof.” You just know that each of these clauses came from some previous bad experience that the landlord had with some tenant, which caused them to add these “thou shalt not” behaviors in great specificity to each subsequent lease.

So, I use the phrase “shooting squirrels from the roof” to denote situations in which someone, having been burned by previous bad experiences, tries to be very specific (often in a contract) to avoid being burned in that way again.

When I look at customer contracts for managed hosting and indeed, for services in general, I sometimes see they’ve got “shooting squirrels from the roof” contract clauses, specifying a list of often-bizarre, horrible things that the provider is not allowed to do. Those customers aren’t crazy (well, at least not entirely); they’ve just been burned before. No doubt if you’re in the services business (whether IT or not), you’ve probably had this experience, too.

Where are the challengers to AWS?

This is part of 2 of my response to Bernard Golden’s recent CIO.com blog post in response to my announcement of Gartner’s 2013 Magic Quadrant for Cloud IaaS. (Part 1 was posted yesterday.)

Bernard: “What skill or insight has allowed AWS to create an offering so superior to others in the market?”

AWS takes a comprehensive view of “what does the customer need”, looks at what customers (whether current customers or future target customers) are struggling with, and tries to address those things. AWS not only takes customer feedback seriously, but it also iterates at shocking speed. And it has been willing to invest massively in engineering. AWS’s engineering organization and the structure of the services themselves allows multiple, parallel teams to work on different aspects of AWS with minimal dependencies on the other teams. AWS had a head start, and with every passing year their engineering lead has grown larger. (Even though they have a significant burden of technical debt from having been first, they’ve also solved problems that competitors haven’t had to yet, due to their sheer scale.)

Many competitors haven’t had the willingness to invest the resources to compete, especially if they think of this business as one that’s primarily about getting a VM fast and that’s all. They’ve failed to understand that this is a software business, where feature velocity matters. You can sometimes manage to put together brilliant, hyper-productive small teams, but this is usually going to get you something that’s wonderful in the scope of what they’ve been able to build, but simply missing the additional capabilities that better-resourced competitors can manage (especially if a competitor can muster both resources and hyper-productivity). There are some awesome smaller companies in this space, though.

Bernard: “Plainly stated, why hasn’t a credible competitor emerged to challenge AWS?”

I think there’s a critical shift happening in the market right now. Three very dangerous competitors are just now entering the market — Microsoft, Google, and VMware. I think the real war for market share is just beginning.

For instance, consider the following, off the cuff, thoughts on those vendors. These are by no means anything more than quick thoughts and not a complete or balanced analysis. I have a forthcoming research note called “Rise of the Cloud IaaS Mega-Vendors” that focuses on this shift in the competitive landscape, and which will profile these four vendors in particular, so stay tuned for more. So, that said:

Microsoft has brand, deep customer relationships, deep technology entrenchment, and a useful story about how all of those pieces are going to fit together, along with a huge army of engineers, and a ton of money and the willingness to spend wherever it gains them a competitive advantage; its weakness is Microsoft’s broader issues as well as the Microsoft-centricity of its story (which is also its strength, of course). Microsoft is likely to expand the market, attracting new customers and use cases to IaaS — including blended PaaS models.

Google has brand, an outstanding engineering team, and unrivaled expertise at operating at scale; its weakness is Google’s usual challenges with traditional businesses (whatever you can say about AWS’s historical struggle with the enterprise, you can say about Google many times over, and it will probably take them at least as long as AWS did to work through that). Google’s share gain will mostly come at the expense of AWS’s base of HPC customers and young start-ups, but it will worm its way into the enterprise via interactive agencies that use its cloud platform; it should have a strong blended PaaS model.

VMware has brand, a strong relationship with IT operations folks, technology it can build on, and a hybrid cloud story to tell; whether or not its enterprise-class technology can scale to global-class clouds remains to be seen, though, along with whether or not it can get its traditional customer base to drive sufficient volume of cloud IaaS. It might expand the market, but it’s likely that much of its share gain will come at the expense of VMware-based “enterprise-class” service providers.

Obviously, it will take these providers some time to build share, and there are other market players who will be involved, including the other providers that are in the market today (and for all of you wondering “what about OpenStack”, I would classify that under the fates of the individual providers who use it). However, if I were to place my bets, it would be on those four at the top of market share, five years from now. They know that this is a software business. They know that innovative capabilities are vitally necessary. And they know that this has turned into a market fixated on developer productivity and business benefits. At least for now, that view is dominating the actual spending in this market.

You can certainly argue that another market outcome should have happened, that users should have chosen differently, or even that users are making poor decisions now that they’ll regret later. That’s an interesting intellectual debate, but at this point, Sisyphus’s rock is rolling rapidly downhill, so anyone who wants to push it back up is going to have an awfully difficult time not getting crushed.

Cloud IaaS market share and the developer-centric world

Bernard Golden recently wrote a CIO.com blog post in response to my announcement of Gartner’s 2013 Magic Quadrant for Cloud IaaS. He raised a number of good questions that I thought it would be useful to address. This is part 1 of my response. (See part 2 for more.)

(Broadly, as a matter of Gartner policy, analysts do not debate Magic Quadrant results in public, and so I will note here that I’m talking about the market, and not the MQ itself.)

Bernard: “Why is there such a distance between AWS’s offering and everyone else’s?”

In the Magic Quadrant, we rate not only the offering itself in its current state, but also a whole host of other criteria — the roadmap, the vendor’s track record, marketing, sales, etc. (You can go check out the MQ document itself for those details.) You should read the AWS dot positioning as not just indicating a good offering, but also that AWS has generally built itself into a market juggernaut. (Of course, AWS is still far from perfect, and depending on your needs, other providers might be a better fit.)

But Bernard’s question can be rephrased as, “Why does AWS have so much greater market share than everyone else?”

Two years ago, I wrote two blog posts that are particularly relevant here:

These posts were followed up wih two research notes (links are Gartner clients only):

I have been beating the “please don’t have contempt for developers” drum for a while now. (I phrase it as “contempt” because it was often very clear that developers were seen as lesser, not real buyers doing real things — merely ignoring developers would have been one thing, but contempt is another.) But it’s taken until this past year before most of the “enterprise class” vendors acknowledged the legitimacy of the power that developers now hold.

Many service providers held tight to the view espoused by their traditional IT operations clientele: AWS was too dangerous, it didn’t have sufficient infrastructure availability, it didn’t perform sufficiently well or with sufficient consistency, it didn’t have enough security, it didn’t have enough manageability, it didn’t have enough governance, it wasn’t based on VMware — and it didn’t look very much like an enterprise’s data center architecture. The viewpoint was that IT operations would continue to control purchases, implementations would be relatively small-scale and would be built on traditional enterprise technologies, and that AWS would never get to the point that they’d satisfy traditional IT operations folks.

What they didn’t count on was the fact that developers, and the business management that they ultimately serve, were going to forge on ahead without them. Or that AWS would steadily improve its service and the way it did business, in order to meet the needs of the traditional enterprise. (My colleagues in GTP — the Gartner division that was Burton Group — do a yearly evaluation of AWS’s suitability for the enterprise, and each year, AWS gets steadily, materially better. Clients: see the latest.)

Today, AWS’s sheer market share speaks for itself. And it is definitely not just single developers with a VM or two, start-ups, or non-mission-critical stuff. Through the incredible amount of inquiry we take at Gartner, we know how cloud IaaS buyers think, source, succeed, and sometimes suffer. And every day at Gartner, we talk to multiple AWS customers (or prospects considering their options, though many have already bought something on the click-through agreement). Most are traditional enterprises of the G2000 variety (including some of the largest companies in the world), but over the last year, AWS has finally cracked the mid-market by working with systems integrator partners. The projected spend levels are clearly increasing dramatically, the use cases are extremely broad, the workloads increasingly have sensitive data and regulatory compliance concerns, and customers are increasingly thinking of AWS as a strategic vendor.

(Now, as my colleagues who cover the traditional data center like to point out, the spend levels are still trivial compared to what these customers are spending on the rest of their data center IT, but I think what’s critical here is the shift in thinking about where they’ll put their money in the future, and their desire to pick a strategic vendor despite how relatively early-stage the market is.)

But put another way — it is not just that AWS advanced its offering, but it convinced the market that this is what they wanted to buy (or at least that it was a better option than the other offerings), despite the sometimes strange offering constructs. They essentially created demand in a new type of buyer — and they effectively defined the category. And because they’re almost always first to market with a feature — or the first to make the market broadly aware of that capability — they force nearly all of their competitors into playing catch-up and me-too.

That doesn’t mean that the IT operations buyer isn’t important, or that there aren’t an array of needs that AWS does not address well. But the vast majority of the dollars spent on cloud IaaS are much more heavily influenced by developer desires than by IT operations concerns — and that means that market share currently favors the providers who appeal to development organizations. That’s an ongoing secular trend — business leaders are currently heavily growth-focused, and therefore demanding lots of applications delivered as quickly as possible, and are willing to spend money and take greater risks in order to obtain greater agility.

This also doesn’t mean that the non-developer-centric service providers aren’t important. Most of them have woken up to the new sourcing pattern, and are trying to respond. But many of them are also older, established organizations, and they can only move so quickly. They also have the comfort of their existing revenue streams, which allow them the luxury of not needing to move so quickly. Many have been able to treat cloud IaaS as an extension of their managed services business. But they’re now facing the threat of systems integrators like Cognizant and Capgemini entering this space, combining application development and application management with managed services on a strategic cloud IaaS provider’s platform — at the moment, normally AWS. Nothing is safe from the broader market shift towards cloud computing.

As always, every individual customer’s situation is different from another’s, and the right thing to do (or the safe, mainstream thing to do) evolves through the years. Gartner is appropriately cautionary when it discusses such things with clients. This is a good time to mention that Magic Quadrant placement is NEVER a good reason to include or exclude a vendor from a short list. You need to choose the vendor that’s right for your use case, and that might be a Niche Player, or even a vendor that’s not on the MQ at all — and even though AWS has the highest overall placement, they might be completely unsuited to your use case.

The 2013 Cloud IaaS Magic Quadrant

Gartner’s Magic Quadrant for Cloud Infrastructure as a Service, 2013, has just been released (see the client-only interactive version, or the free reprint). Gartner clients can also consult the related charts, which summarize the offerings, features, and data center locations.

We’re now updating this Magic Quadrant on a nine-month basis, and quite a bit has changed since the 2012 update (see the client-only 2012, or the free 2012 reprint).

In particular, market momentum has strongly favored Amazon Web Services. Many organizations have now had projects on AWS for several years, even if they hadn’t considered themselves to have “done anything serious” on AWS. Thus, as those organizations get serious about cloud computing, AWS is their incumbent provider — there are relatively few truly greenfield opportunities in cloud IaaS now. Many Gartner clients now actually have multiple incumbent providers (the most common combination is AWS and Terremark), but nearly all such customers tell us that the balance of new projects are going to AWS, not the other providers.

Little by little, AWS has systematically addressed the barriers to “mainstream”, enterprise adoption. While it’s still far from everything that it could be, and it has some specific and significant weaknesses, that steady improvement over the last couple of years has brought it to the “good enough” point. While we saw much stronger momentum for AWS than other providers in 2012, 2013 has really been a tipping point. We still hear plenty of interest in competitors, but AWS is overwhelmingly the dominant vendor.

At the same time, many vendors have developed relatively solid core offerings. That means that the number of differentiators in the market has decreased, as many features become common “table stakes” features that everyone has. It means that most offerings from major vendors are now fairly decent, but only a few are really stand out for their capabilities.

That leads to an unusual Magic Quadrant, in which the relative strength of AWS in both Vision and Execution essentially forces the whole quadrant graphic to rescale. (To build an MQ, analysts score providers relative to each other, on all of the formal evaluation criteria, and the MQ tool automatically plots the graphic; there is no manual adjustment of placements.) That leaves you with centralized compression of all of the other vendors, with AWS hanging out in the upper right-hand corner.

Note that a Magic Quadrant is an evaluation of a vendor in the market; the actually offering itself is only a portion of the overall score. I’ll be publishing a Critical Capabilities research note in the near future that evaluates one specific public cloud IaaS offering from each of these vendors, against its suitability for a set of specific use cases. My colleagues Kyle Hilgendorf and Chris Gaun have also been publishing extremely detailed technical evaluations of individual offerings — AWS, Rackspace, and Azure, so far.

A Magic Quadrant is a tremendous amount of work — for the vendors as well as for the analyst team (and our extended community of peers within Gartner, who review and comment on our findings). Thanks to everyone involved. I know this year’s placements came as disappointments to many vendors, despite the tremendous hard work that they put into their offerings and business in this past year, but I think the new MQ iteration reflects the cold reality of a market that is highly competitive and is becoming even more so.

Recommended reading for Cloud IaaS Magic Quadrant

If you’re a service provider interested in participating in the Cloud IaaS Magic Quadrant process (see the call for vendors), I’d like to recommend a number of my previous blog posts.

Foundational Gartner research notes on cloud IaaS. Recommended reading to understand our thinking on the market.

Having cloud-enabled technology != Having a cloud. Critical for understanding what we do and don’t consider cloud IaaS to be.

AR contacts for a Magic Quadrant should read everything. An explanation of why it’s critical to read every word of every communication received during the MQ process.

The process of a Magic Quadrant. Understanding a little bit about how MQs get put together.

Vendors, Magic Quadrants, and client status. Appropriate use of communications channels during the MQ process.

General tips for Magic Quadrant briefings and Specific tips for Magic Quadrant briefings. Information on how to conduct an effective and concise Magic Quadrant briefing.

The art of the customer reference. Tips on how to choose reference customers.

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