Cloud providers next to the big 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 the CEO of Virtuozzo since 2018, headquartered in Schaffhausen, Switzerland, and employing over 300 staff globally.

Hello Alex, thank you for taking the time to speak with us. Could you briefly share more about Virtuozzo with our readers?

Virtuozzo is a company specialising in providing software solutions for server and container virtualisation. Established in 2000, the company has experienced continuous growth, 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 institutions, and large enterprises. Additionally, Virtuozzo now offers its customers software that allows them to offer similar services to the major hyperscalers (AWS, Azure, Google).

Let's talk a bit about the cloud market. What market share do the major hyperscalers currently hold?

The major hyperscalers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) dominate the cloud market and collectively hold a significant market share. (Editor's note: According to a report by Synergy Research Group 2023, these three companies held a combined market share of approximately 75% in the fourth quarter of 2022. AWS had a share of 32%, followed by Microsoft Azure at 20% and GCP at 6%. Other major providers like IBM, Alibaba Cloud, and Oracle Cloud each had a market share of less than 5%.)

It is evident that the market share of small service providers (SPs) significantly decreased from 2021 to 2022. Therefore, it is essential for service providers to position themselves well for the future in order to capitalise on the current market growth and participate sustainably.

Alex Fine, CEO of Virtuozzo in conversation at CloudFest 2023

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

1. Option: You can enter into a partnership with one of the hyperscalers and resell their infrastructure. This is a simple solution, but there are a few issues with this approach: The first issue is financial: Hyperscale Public Cloud will be very expensive for you and your customers, and as a partner, you will only achieve single-digit margins. The second issue is more commercial in nature: You are bringing your customers into a competitive ecosystem. The third issue is more strategic: The trend towards public cloud is reversing as companies increasingly consider total operating costs and data sovereignty, and instead look for local private cloud providers.

2. Option: Another approach is to build your cloud service with an enterprise cloud platform. VMware is the obvious example. It is a great and proven technology, but designed for enterprises. To make an enterprise cloud platform suitable for service providers, many additional products are required, making life complicated, requiring many qualified and certified employees, and increasing the costs and time to market for your services. If your customers are looking for simple, affordable, and user-friendly cloud services, the enterprise cloud platform may not necessarily be the best approach.

3. Option: Developing software in-house with open-source software: Service providers can rely on open-source software such as OpenStack or Kubernetes to create their own cloud solutions. This software offers many of the same features and capabilities as the cloud offerings of the hyperscalers. However, there are also some disadvantages to consider, 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 and locally executable solution that enables service providers to complement their portfolio with cloud products in no time. Our target audience is companies with 5 to 300 employees.

Can you tell us a bit more about the barriers to entry to using Virtuozzo's solutions as a service provider?

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

What is your view on the consolidation of the hosting market in the last 10 years?

Thank you so much, Alex, for your time!

If you want to learn more about the solutions offered by Virtuozzo and don't want to wait until CloudFest 2024, you can submit an enquiry directly at https://www.virtuozzo.com/.

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

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