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Why People Choose Alternative Cloud Providers Over Hyperscalers | Report

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In this episode of TFiR Let’s Talk, Daniel Kirsch, Co-Founder, Principal Analyst, and Managing Director at Techstrong Research, discusses their report for Linode on multicloud and alternative cloud usage. The report provides an insight into the value alternative cloud providers bring to developers and why people are choosing to go with them. He takes us through some of the key findings of the report and the emerging trends they are seeing in cloud adoption.

When describing why people are looking to alternative cloud providers, Kirsch says, “If you’re a customer of one of these big vendors, you can get access to even things like quantum computing on demand. The reality is most people don’t need that.”

In reality, most businesses want access to compute to create an application, a mobile app or run a site. That’s where alternative cloud providers keep things simpler, accessible and more affordable.

Key highlights from this video interview are:

  • We discussed the goal of the report and why it focussed on alternative cloud providers.
  • Over 50% of people said that they view their cloud provider as a current or future competitor.
  • Over 70% of the participants reported using more than one cloud provider.
  • Costs can often be difficult to navigate with the multitude of offerings from hyperscalers.
  • If you combine the usage of the top eight alternative cloud providers, they would come in as the number 4 cloud provider after the big three hyperscalers—AWS, Azure and Google Cloud Platform.

Connect with Daniel Kirsch (LinkedIn, Twitter)

The summary of the show is written by Emily Nicholls.

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Here is the automated and unedited transcript of the recording. Please note that the transcript has not been edited or reviewed. 

Swapnil Bhartiya: Hi, this is your host, Swapnil Bhartiya. Welcome to another episode of TFiR Let’s Talk. Today, we have with us Daniel Kirsch, co-founder, principal analyst, and managing director at Techstrong Research. Dan, it’s great to have you on the show.

Daniel Kirsch: Hi, excited to be here.

Swapnil Bhartiya: Today, we’re going to talk about Techstrong Research report for Linode on multicloud and alternative cloud usage. Before we talk about that, tell us a bit about what was the goal, what was the agent behind this report?

Daniel Kirsch: Techstrong Research is an industry analyst research and consulting firm. We look at a number of different areas, and cloud computing, cloud-native development, is one of those key areas. And of course, cloud is important for DevOps professionals. What we wanted to look at with this report is the rise of alternative cloud providers. And also what are DevOps professionals thinking about when they’re selecting a cloud platform? No one needs new research to tell you that the cloud is on the rise, the cloud is popular. As someone who’s been doing this for over a decade, I’m not going to write a report that says, “Wow, the cloud is important.” What we did in this report is, dug a little bit deeper and looked beyond the big three hypervisors (AWS, Microsoft Azure, and Google Cloud GCP) that everyone is familiar with. As you can imagine, a vast majority of our participants are using one of those big three cloud providers.

Swapnil Bhartiya: Thanks for sharing the idea behind the report. Can you also tell us who were the folks that you surveyed or who participated in this report?

Daniel Kirsch: We have over 500 participants from over 30 different countries. Twenty industries were represented, and participants ranged from everyone from individual contributors, to IT leaders, and also a few business leaders, as well.

Swapnil Bhartiya: Now, let’s talk about some of the key findings from this report.

Daniel Kirsch: What was most striking to me? We threw out a question. I believe the question was, “Do you consider your cloud provider a current or future competitor?” It was an interesting question. I wrote the co-author in Hybrid Cloud for Dummies and Cloud for Dummies. We’re always talking about customers competing with a cloud provider. Oftentimes people use the use case of, you know, Walmart is never going to want to become an AWS customer. So we asked this question, and I was fairly shocked. Over 50% of people said that they view their cloud provider as a current or future competitor. I thought it would be 15, 20%. Over half was surprising.

Daniel Kirsch: I think it comes from a number of different angles. There are the classic examples of Google and AWS, especially, is getting into every single business, whether it’s, you know, everything from, potentially, car manufacturing to car selling, to travel industry, pharmacies. Additionally, they’re also competing with the partner ecosystem. So you have thousands of companies whose revenue model is dependent on being on the partner ecosystem of one of these big three hyperscalers. And in many cases, the cloud providers themselves are building out capabilities that make their partners basically obsolete. So in fact, they’re competing with their partners.

Swapnil Bhartiya: That was one. Anything else that was?

Daniel Kirsch: Another one of the key findings is that Multicloud is here to stay. Over 70% of respondents report using more than one cloud provider. So when various pundits will talk about the need to go with a single cloud or put the vast majority of your workloads and data on a single cloud, what we’re finding is that multicloud is here and it’s here to stay. I think this is because of a number of different reasons. One is that through mergers and acquisitions, you’re acquiring companies that are maybe standardized on a different platform. It’s not so easy to move. If you’re a GCP company and you acquire a company that’s standardized on AWS, it’s not necessarily so easy to move those AWS workloads and data onto your preferred platform.

Additionally, there’s different capabilities. Each cloud provider has different capabilities. You might want to use Azure for some of their machine learning capabilities. You might want to use an alternative cloud provider because it gives you easy access to DevOps environments. You might want to use AWS because of some other database as a service capability, for instance. What we’re finding is that multicloud is growing and it’s really not going anywhere.

And then a third big highlight is… I promised I wasn’t going to say, “Here’s a report to say that the cloud is a big deal or important,” but what I am seeing is an ever-increasing move to the cloud. So we are doing a survey quarter by quarter, year over year, and we’ve seen a double digit increase. Approximately 75% of respondents report that they plan on moving more of their IT infrastructure to the cloud. That’s a double digit increase over the last report that we did last year. That’s a big, big increase and respondents attribute that to providing optionality and also reducing costs.

Swapnil Bhartiya: Excellent. I want to go back to the first point that you talked about, which was that asking participants whether they see their cloud providers as potential competitors. Did you also ask as a follow-up that, okay, you do see them as a competitor, but are you worried or concerned about that? Seeing someone as a competitor is fine, we live in a cooperative or competing world, but are there are also concerns about… Do you dig deep into that, as well, or not?

Daniel Kirsch: We probed in a couple different ways. “Are you concerned that your cloud provider’s going to steal your IP? Are you concerned about ownership over your IP?” You know, some cloud providers it’s questionable. If you develop code on their platform, do you actually own your code? What we found is, there isn’t a single answer. It was across the board. I think that’s because what I touched on earlier. People are looking at their cloud providers as a competitor in a variety of different ways. Even open source providers are looking at… A cloud provider might fork their open source offering. There’s not a single way that cloud providers are competing with customers. It’s a variety. I do think that is a reason why some customers are looking at alternative cloud providers.

Daniel Kirsch: Just to be clear, when I say alternative cloud providers, the top eight that I’m considering are DigitalOcean, Equinix, Hipster, Linode, which was acquired by Akamai, OVH, Rackspace, UpCloud, and Vultr. There’s many other smaller ones, but we’re looking at these smaller alternative cloud providers. And that is one of the reasons why customers are choosing to go with one of them.

Swapnil Bhartiya: One more thing is… Once again, I want to keep the focus on the research, but since you brought up such great point, is that when we do look at hyperscalers, what does happen is they offer way too much than what most folks want. In most cases, you just want compute, you just want network working, you want some storage. In some cases, you might want Kubernetes offering, GP offering, but did you also ask about that complexity? You need to be a mathematician to calculate the cost that you’re going to end up paying in the end. It looks like cheap in the beginning, but those costs do pile up. You can actually buy a mainframe for the one you’ll pay for a cloud for 10 years. Did you also talk about that ease of use simplicity, complexity. Because sometimes all I want is set up a website and run somewhere.

Daniel Kirsch: That’s a huge part of it. If you go to the AWS re:invent conference, for example, they list a huge number of offerings, new APIs, new capabilities. The reality is, the vast majority of companies want access to compute, access to networking, access to storage, and the rest of it they’re not particularly interested in.

Daniel Kirsch: So it comes at a few different angles. One is, if you’re a customer of one of these big vendors, you do have access to things, even like quantum computing on demand. The reality is most people don’t care, don’t need that. There’s also complexity of billing.

Daniel Kirsch: Those platforms, the big three hypervisors and other big cloud platforms, each one bills in a different way. So you need to architect your workloads to optimize the cost structure. Also, the cost of employees who are trained on those different platforms is high, and increasing. So an AWS-certified developer commands a premium because the AWS platform is really challenging. Not to say it’s bad, it’s very powerful. You can do just about anything you can imagine, but as you said, most businesses want access to compute, to create an application, create a mobile app, run a site, and aren’t interested in most of what those vendors have to offer.

Swapnil Bhartiya: Anything else that you want to discuss? We talked about the idea behind the survey. We talked about who you talked to. we talked about some of the key findings, we also drilled down a bit into some of the findings. Anything else that you… This is off camera-comment… that you were like, “Hey, something we should talk about this, also.” You know, we have covered some of the key agenda for today’s discussion.

Daniel Kirsch: I think one area that I find really interesting is the fact that we are talking about the big three hyperscalers. They’re really important, but what’s interesting is if you… Those eight companies that I mentioned earlier. If you combine the usage across all of those eight providers, in the research that we did they come in as the… You’d have to combine their users. They’d come through as the number 4 cloud provider, which I think is interesting. If you look at the alternative cloud market in totality, it is a large part of the cloud ecosystem. And I think the acquisition of Linode by Akamai is interesting, sort of bringing together this idea of content delivery networks and clouds, because while… It’s interesting, a number of people I’ve interviewed for this research say they don’t want really heavyweight clouds that have every possible API, but they do want things to be easier for them.

Daniel Kirsch: So if there’s a cloud provider, for instance, provides a CDN, that’s interesting to them. They won’t necessarily choose it, but it makes their life easy. At the end of the day, the developers and businesses are really focused on outcomes that will impact their bottom line, that’ll improve customer experiences, that’ll improve developer experiences, and, ultimately, the bottom line. So the idea if you’re on one cloud or another, nobody really cares as long as its secure, it acts predictably, it doesn’t make a difference to customers, OnPrem versus cloud or a variety of different clouds.

Swapnil Bhartiya: Dan, thank you so much for taking time out today and share not only the findings of this report, but also share your insights. You know, how this whole field is evolving as you write, to saying the cloud itself is evolving, the importance of multicloud, Hybrid Cloud, and the role that alternative cloud providers play, where a lot of folks, they still want to control their data. They still want to control all those things. Thanks for sharing those insights. And I would love to have you back on the show whenever you come up with the next report. Thank you.

Daniel Kirsch: This was a fun conversation. You can check out our research at techresearch.com. Join me on Twitter @ddkirsch. We’re all over the web and social media.

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