Cloud Computing and the Great Wild West

Earlier this week, I attended the international cloud conference and expo at Javits Convention Center in New York.

Needless to say, cloud computing is “hot” and this show reminded me of an early Comdex drawing over 11,000 attendees. A number of the exhibitors commented that each cloud conference gets progressively better as well as the content and quality of speakers. The general consensus is that it continues to feel like the “wild west” as vendors scramble to position themselves for what is sure to become the next “gold rush”.

As a growth venture capital fund, we are always evaluating new and disruptive market opportunities for deploying growth capital. While some would argue that the conventions of cloud computing have been around a long time, I believe it lacks the innovation that is presently stirring the industry. Unfortunately, this hysteria creates high valuations for investors, but at the same time industry heavyweights who are willing to pay high multiples to play catch up.

It was clear from walking the exhibit floor that vendors are positioned themselves into one of three categories – infrastructure as a service (IaaS), platform as a service (PaaS), or software as a service (SaaS). A large majority were either IaaS or PaaS.

I met with a number of companies including Racemi, Objectivity, CloudTest by Soasta, RightScale, and Savvis.

While some of these companies have been around for a while, the market has created an opportunity for them to reinvent themselves, while creating competitive advantage. One thing is certain, while the public cloud has grown in popularity, the private cloud is still in its infancy and requires industry standards (security, management etc.) before the enterprise will begin to adopt. In the meantime, I expect the heavyweights to stall the market (messaging) to give themselves time to catch up, while creating some interesting inorganic growth opportunities for the market.