Public Clouds Vs. Private Clouds: Where Are The Opportunities?

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One debate rocking the cloud computing industry is whether public clouds or private clouds will be the dominant technology, and which will generate the most revenue for solution providers.

The recent divide between public and private clouds was sparked by industry experts suggesting that private clouds -- clouds behind the corporate firewall accessible only by people within that organization -- will fade over time and are nothing more than a stop-gap before taking it to the public cloud. Public clouds, like those offered by Amazon, Google and others, on the other hand, are clouds accessible by everyone from anywhere. The difference between private and public clouds is similar to the difference between the corporate LAN and the public Internet.

One argument against private clouds is the cost. While users have more perceived control, they pay a higher price, somewhat defeating the potential cost savings that drives companies to the cloud in the first place -- the promise of reduced capital expenditures and a monthly operational expense.

For solution providers, however, private clouds could drive more revenue than their public brethren, but some predict public clouds will be more ubiquitous in the future. This creates an interesting conundrum for solution providers: Where do they focus their attention to generate the most revenue?

"Private clouds will make the most money and drive the most revenue," said Vanessa Alvarez, a Frost & Sullivan analyst who examines cloud computing.

Alvarez broke it down like this: Public clouds are like typical utilities; users are guaranteed a certain level of service, but the playing field is more level, meaning if there's an outage, the users are subjected to the same outage as others using the same cloud. Private clouds, however, are more comparable to solar or wind power in that users have more control, more features and functions, but they pay a premium for the additional perception of security, manageability and reliability.

"Public clouds can offer some level of security and reliability, but private gives you that comfy feeling," she said.

Chris Pyle, president and CEO of Champion Solutions Group and Champion Cloud Services, said a lot of organizations are currently putting in private clouds and, for VARs, that drives a more traditional business model. VARs make money selling private clouds through discovery, assessments, software and hardware sales, implementation and the support that follows. Hooking clients into the public cloud, however, may not drive as much up-front revenue.

"You're not selling hardware, you're not selling software licenses," Pyle said.

Champion vice president of virtualization and cloud computing Kevin Vogl added that public clouds, however, enable solution providers to sell migration services and professional services to drive revenue.

"In the short term, if you're selling hardware, you're making more money," but he said the monthly annuity payments afforded by the public cloud model evens it out.

Basically, he said, there is money to be made in both public and private depending on the business model you have in place to support it.

Eric Berridge, co-founder of New York City-based solution provider Bluewolf, however, said private clouds can in essence defeat the purpose of cloud computing.

"I honestly don't see companies building technically what's called a private cloud," he said. "The rise of a private cloud is acknowledging that all of the integration work that's gone on for years with SOA and everything else has failed."


Next: What About Hybrid Clouds?

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