Cloud providers alongside the major hyperscalers

During CloudFest 2023 we had the opportunity to speak with Alex Fine, CEO of Virtuozzo since 2018, about the cloud market, hyperscalers and the future of the hosting market.

Alex Fine has been CEO of Virtuozzo, headquartered in Schaffhausen, Switzerland, since 2018 and the company employs over 300 people worldwide.

Hello Alex, thank you for taking the time for us. Could you briefly tell our readers more about Virtuozzo?

Virtuozzo is a company that specialises in providing software solutions for server and container virtualisation. The company was founded in 2000 and has grown continuously since then, including through acquisitions. Virtuozzo offers a wide range of products and services, including the virtualisation platforms Virtuozzo Containers and Virtuozzo Hypervisor. These enable businesses and service providers to make their IT infrastructure more efficient and flexible by running multiple applications and operating systems on a single physical server hardware. Virtuozzo is used worldwide by thousands of customers across various industries, including hosting providers, telecommunications companies, public sector organisations and large enterprises. Virtuozzo now provides its customers with software that allows them to offer services similar to the major hyperscalers (AWS, Azure, Google).

Let’s talk a little about the cloud market. What market share do the big hyperscalers currently have?

The major hyperscalers such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP) dominate the cloud market and together hold a very large share of the market. (Editor’s note: According to a report by Synergy Research Group 2023, these three companies together held a market share of around 75% in Q4 2022. AWS had a share of 32%, followed by Microsoft Azure with 20% and GCP with 6%. Other large providers such as IBM, Alibaba Cloud and Oracle Cloud each have market shares below 5%.)

It can be seen that the market share of the smaller service providers (SPs) fell significantly from 2021 to 2022. Therefore it is essential that service providers position themselves well for the future so they can capture current market growth and participate sustainably.

Alex Fine, CEO of Virtuozzo, in conversation at CloudFest 2023

What solutions does the market currently offer service providers to build offerings similar to those of the major hyperscalers?

1. Option: You can enter into a partnership with one of the hyperscalers and resell their infrastructure. This is a straightforward solution, but there are a few problems with this approach: The first problem is financial: hyperscale public cloud will be very expensive for you and your customers, and as a partner you will only ever achieve single-digit margins. The second problem is commercial: you place your customers into a competing ecosystem. The third problem is strategic: the trend towards public cloud is reversing, as companies increasingly consider total cost of ownership and data sovereignty and instead look for local private cloud providers.

2. Option: Another approach is to build your cloud service on an enterprise cloud platform. VMware is the obvious example. It is a great and proven technology, but it was designed for enterprises. To make an enterprise cloud platform suitable for service providers, many additional products are required, which makes things complex, requires many qualified and certified staff, and increases costs and time to market for your services. If your customers are looking for simple, affordable and user‑friendly cloud services, an enterprise cloud platform may not necessarily be the best approach.

3. Option: Developing in‑house software using open‑source software: service providers can rely on open‑source projects such as OpenStack or Kubernetes to build their own cloud solutions. This software offers many of the same features and capabilities as the cloud offerings of the hyperscalers. But there are also some drawbacks to note, such as the lack of dedicated technical support, incomplete documentation, potential compatibility issues and occasional delays in updates and new features.

4. Option: Virtuozzo - We offer a fast, locally deployable solution that enables service providers to add cloud products to their portfolio in no time. Our target audience is companies with 5 to 300 employees.

Can you tell us a little more about the barriers to entry for service providers to adopt Virtuozzo's solutions?

The Virtuozzo platform offers service providers a cost-effective, consumption-based pricing model and a range of incentives. Our platform is affordable for every service provider and enables them to offer their customers simple, affordable and user-friendly cloud services.

How do you view the consolidation of the hosting market over the past 10 years?

Many thanks, Alex, for your time!

Anyone who wants to learn more about Virtuozzo's solutions and does not want to wait until CloudFest 2024 can make an enquiry directly at https://www.virtuozzo.com/.

The interview was conducted by Marco Keul, founder and operator of hosttest. It was conducted in English at CloudFest 2023, then translated and adapted.

Source: https://www.srgresearch.com/articles/cloud-spending-growth-rate-slows-but-q4-still-up-by-10-billion-from-2021-microsoft-gains-market-share accessed: 08.05.23