Should Cloud Computing Startups Beware Amazon’s Virtual Private Cloud? No, Says Cloudswitch

8/27/09Follow @wroush

Sometimes I worry too much about the fortunes of local technology startups. It usually turns out that they can take care of themselves.

When I saw Amazon’s announcement yesterday about its new “Virtual Private Cloud” service—which is intended to make it easier for enterprises with expensive, existing data centers to tap into Amazon’s own, less expensive cloud computing environment—my first thought was, “Well, so much for Cloudswitch.” From the information that the Burlington, MA-based startup has shared about its technology—which, admittedly, isn’t much—it seemed at first blush that Amazon’s new offering might co-opt Cloudswitch’s entire business before the startup even leaves the gate.

Witness Amazon description of VPC as “a secure and seamless bridge between a company’s existing IT infrastructure and the AWS cloud,” which sounds an awful lot like what Ellen Rubin, a co-founder atat Cloudswitch, told me about the company’s focus back in June: she said the company was “solving problems that would make it difficult for a CIO to take advantage of the cloud…issues like security, simplicity, and being able to take what you have already and not make changes to it, but still be able to use the cloud.”

To me, the overlap in the messaging around VPC and Cloudswitch pointed to one of the hazards for startups entering businesses centered around giant vendors like Amazon: you never know when the giant is going to roll over and squash you. (Seattle-based cloud computing startups like Skytap and Opscode are well aware of this, I’m sure.)

Well, it turns out that my concern for Cloudswitch was misplaced. I reached Rubin again yesterday—she’s vice president of product at the venture-backed company, which is still largely in stealth mode—and she says the Amazon announcement is actually good news for her company.

“This is a really great step, in terms of lowering the barriers to enterprise adoption [of cloud computing] in general,” she says. “This is the kind of thing we are really eager to see, because it helps players like us drive that adoption. It’s one of the ways in which people will feel more confident.”

What is Amazon’s announcement really about? It’s apparently geared toward broadening the appeal of Amazon Web Services (AWS)—which basically consist of Internet-accessible, on-demand, pay-as-you-go processing and storage capacity—beyond the hundreds of small companies that already use the Amazon cloud as a substitute for owning and managing their own computing infrastructure, such as servers and networking software. It will do that by making cloud computing a more attractive option for larger companies that have made significant investments in their own IT infrastructures.

Up to now, many potential enterprise users of cloud services like AWS, Google App Engine, and Microsoft’s Windows Azure platform have balked over questions about the security and reliability of cloud-based resources. Amazon says VPC will allow customers to set up isolated areas within Amazon’s Elastic Compute Cloud (EC2) on the fly, connect to those resources securely over an encrypted virtual private network, and run software on EC2 “as if these assets were running within their existing IT infrastructure,” in the company’s words. The company says the system is already being used by clients like Eli Lilly and Intuit.

I think I can be forgiven for wondering whether Amazon VPC might render Cloudswitch’s technology unnecessary: to date, the startup has been tantalizingly vague about what it’s actually building, beyond descriptions like the one on its website about an “innovative software appliance that delivers the power of cloud computing seamlessly and securely so enterprises can dramatically reduce cost and improve responsiveness.”

“We haven’t talked in any detail about what we’re doing, so the words all sound the same from the 50,000-foot level,” Rubin acknowledges. “Things like ‘helping connect the cloud back to the data center’—we are using those terms right now to talk generally about where the company is going. But the specific approach we are taking is fundamentally different from what Amazon is doing, and complementary. What we add is a pretty dramatic set of things in addition to what Amazon is offering with VPC.”

In fact, VPC will make Cloudswitch’s appliance work better, Rubin says. She doesn’t seem worried that the ongoing improvements Amazon is making to its cloud services will narrow the possibilities for the growing ecosystem of infrastructure-as-a-service vendors. “If you ask what is it going to take to get enterprise IT into the cloud, there are still a lot of problems that need to be solved and a lot of room for innovation and breakthrough technology,” she says.

To be sure, it can be nerve-wracking to figure out which customer needs remain unmet in an industry like cloud computing, where a few big players are setting the technical agenda and defining what basic capabilities are available. “When you’re building your business around a big vendor, whether it’s Amazon or Hewlett Packard or VMware, you have to see that their roadmap is going to cut off some opportunities for you, so as a startup you have to constantly be moving and migrating your own roadmap to stay ahead of those changes,” says James Staten, the lead analyst studying the nascent infrastructure-as-a-service industry at research firm Forrester.

That’s why it’s especially important for cloud vendors not to marry their technologies too closely to any one cloud provider, Staten says. “Amazon is a little different than a lot of the other high-tech providers in that they don’t tend to give as much of an advance view of their roadmap to their partners,” he says. “So startups like Cloudswitch in the cloud area should really focus on doing things not just for Amazon’s cloud but on delivering common value across multiple clouds, because that is what will keep them differentiated.”

And that’s just what Cloudswitch is doing—more because it’s what customers want than because of uncertainties about Amazon’s roadmap, Rubin says. “The market has told us—the CIOs and vice presidents of IT that we work with—that it is important to them to have flexibility,” she says. “They are not eager to be locked into a specific platform, and there are different applications that are better suited to different types of environments. So that has always been in the design for the company, but based on what customers tell us they want to do and which clouds are of interest to them.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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