On app Ditlev Bredahl
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Lessons from the trenches( d h b ild fi bl l d h i b i )
Lessons from the trenches( d h b ild fi bl l d h i b i )(and how to build a profitable cloud hosting business)(and how to build a profitable cloud hosting business)
Cloud Expo Europe London 2nd February 2011Cloud Expo Europe, London, 2nd February 2011
Ditlev Bredahl, CEO, OnApp
@ditlev@ditlev linkedin.com/in/ditlevlinkedin.com/in/ditlev
Ditlev Bredahl, CEO, OnApp
@ditlev linkedin.com/in/ditlev@ditlev@ditlev linkedin.com/in/ditlevlinkedin.com/in/ditlev
facebook.com/ditlevfacebook.com/[email protected]@onapp.com
@ditlev linkedin.com/in/ditlev
facebook.com/[email protected]
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What is OnApp?
Cloud deployment & management p y gsoftware for hosting providers
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What does OnApp do?
Commodity hardware Elastic cloud On demand resources End users
VM DeploymentVM DeploymentVM ManagementVM HA/Failover
User managementUtilit BilliUtility Billing
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Company info
+45 employees in US and EU+45 employees in US and EU+45 employees in US and EU
45 +,000 servers deployed45 +,000 servers deployed45 +,000 servers deployed
10 +0 client clouds deployed10 +0 client clouds deployed10 +0 client clouds deployed
~Adding 1 cloud per day~Adding 1 cloud per day~Adding 1 cloud per day
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So, what have we learned...
… +from 100 cloud deployments ?
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Vendor & analyst chatter
EC2EC2
AzureAzure
I biliI biliCloud OSCloud OS
CloudwareCloudwareInteroperabilityInteroperability
Cloud Oriented ArchitectureCloud Oriented Architecture
CloudwareCloudware
Cloud Oriented ArchitectureCloud Oriented Architecture
PortabilityPortability Cloud StorageCloud Storage
Consumption Based PricingConsumption Based Pricing
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This is what they’ll tell you…
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They’ll tell you that it is very expensive…
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Or very complicated…
=
=
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That it will solve all problems
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Or that cloud is just the same old same old…
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What we thought hosts cared about
Security Security
I t bilit Interoperability
Compatibility
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What hosts actually care about
Low entry costs Low entry costs
Ti t k t Time to market
Density/profitability
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What challenges do hosts face?
Storage:
#1 concern
100+ clouds, close to 50 different storage configsdifferent storage configs
Ability to use multiple tiers of Ability to use multiple tiers of storage
Billing for IOPS
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What challenges do hosts face?
Traditional storage vendorsTraditional storage vendors
Not always a fit for mass Not always a fit for mass-market hosts
The industry is crying out for storage innovationstorage innovation
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What challenges do hosts face?
Infrastr ct reInfrastructure:
Ability to use existing Ability to use existing infrastructure
Capitalizing on depreciated hardwarehardware
Ability to mix ‘old’ & new gear Ability to mix old & new gear
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What challenges do hosts face?
BillinBilling:
New billing structures New billing structures
Charging per hour per minute Charging per hour, per minute
Or should they? Or should they?
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What challenges do hosts face?
Support:Support:
Finding hiring training staff for cloud hosting servicesFinding, hiring, training staff for cloud hosting services
“Support us like we support our clients”Support us like we support our clients
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What challenges do hosts face?
Cloud hosting business planCloud hosting business plan:
Hosts need to pay attention to Hosts need to pay attention to their cloud business strategy
...even more so than usual
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Business plan – ARPU & Profits
H Cli$35,640
$33,391 $35 000
$40,000
$700
$800Host Client
$25,000
$30,000
$35,000
300
99
$500
$600
$10,080 $8 030$10 000
$15,000
$20,000 300
$200
$300
$400
$8,030
$0
$5,000
$10,000 300
100$0
$100
$200
Dedicated Cloud
Monthly revenue Gross prof it
Dedicated Server Cloud Server
WebServer 1 WebServer 2 Load balancer
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Business plan – ARPU & Profits
H Cli$35,640
$33,391 $35 000
$40,000
$700
$800Host Client
With the cloud:With the cloud:
$25,000
$30,000
$35,000
300
99
$500
$600
Potential revenue/cab increases – at a Potential revenue/cab increases – at a
$10,080 $8 030$10 000
$15,000
$20,000 300
$200
$300
$400higher margin too – BUT with lower ARPUs
higher margin too – BUT with lower ARPUs$8,030
$0
$5,000
$10,000 300
100$0
$100
$200
>> KEEP AN EYE ON CPAs <<>> KEEP AN EYE ON CPAs <<
Dedicated Cloud
Monthly revenue Gross prof it
Dedicated Server Cloud Server
WebServer 1 WebServer 2 Load balancer
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Business plan – higher entry barriers
Hardware cost of bringing your first dedicated server
Hardware cost of bringing your first cloud server client y
:client live $2,500y
:live $25,000
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Cloud – the end of overselling?
Shared hosting:Shared hosting: 540 seat Jumbo jet = 700 passengers
Dedicated server hosting: 540 seats = 540 passengers540 seats = 540 passengers
Cloud hosting:540 seats = 4-500 passengers
Underselling??
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What does the future hold?
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Cloud – 3 phases
1 The Cloud is cool and sexy1. The Cloud is cool and sexy
• High margins, high conversions, low CPAs
2. The Cloud is commoditized
• A = =CPU is a CPU is a CPU transparency price erosion
• Focus on de-commoditizing your offeringg y g
3. The Cloud is no longer the cloud
I ’ h ff i d• It’s how stuff is done…
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How will hosts compete?
De-commoditize the cloud offer
Add value with partner deals
Target specific niche markets Target specific niche markets
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In summary
Cloud is here to stay
It isn’t as complex or expensive as you It isn t as complex or expensive as you might think
The time to act is now – late arrivalswill face a much tougher market
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!Thanks!Thanks!Thanks!Thanks
Ditlev Bredahl, CEO, OnAppDitlev Bredahl, CEO, OnApp, , pp
@ ditlev@ ditlev linkedin.com/in/ditlevlinkedin.com/in/ditlev
, , pp
@ ditlev linkedin.com/in/ditlev
facebook.com/ditlevfacebook.com/[email protected]@onapp.com facebook.com/[email protected]