IT and Business Insights for SMB Solution Providers

The Future of the SMB Private Cloud

With Intel exiting the private cloud business and few like-for-like alternatives, what’s ahead for the so-called solution in a box? By Al3x@nd3r

When Intel shut down the Intel Hybrid Cloud in May due to weak sales, questions were raised about the potential market for SMB-oriented private cloud services. Is the model already dead, or did Intel just do a poor job of selling it?

Combined with Intel's AppUp software service, the Hybrid Cloud formed a kind of private-cloud-in-a-box solution for SMBs. And with the solution absent from the market, there are very few like-for-like alternatives. That may not be of great concern to channel pros, however, as there is no shortage of cloud options for companies of all sizes. In fact, London-based IT research firm TechNavio predicts the overall cloud market will reach $80 billion by 2016, of which private clouds will be a notable part due to adoption by SMBs.

Akash Saraf, CEO of Pittsburgh-based Zenith Infotech Ltd., which offers a private cloud and BDR solutions, believes that private cloud will be a small fraction of that $80 billion, but still expects it to be worth several billion dollars. "We are seeing a lot of good growth. We are extremely bullish on this market."

Saraf says Zenith has about 1,200 North American customers signed up for its private cloud service, though he acknowledges that they are mostly enterprises. "I don't expect the real small SMB to look at it. The sweet spot is companies with 25 to 200 employees. They are big enough to need something custom and have a growing desire to keep it in house. That's also the threshold that the costs cross paths between hosted solutions and keeping it in the cloud."

With regard to Intel's private cloud, Saraf suggests that the company was too big to focus on a noncore-business cloud offering.

Seth Robinson, director, technology analysis, for Downers Grove, Ill.-based IT industry association CompTIA, has a different take, pointing to two significant failures on the chip maker's part. To start, says Robinson, the company failed to realize that people aren't looking for a solution in a box yet and are focusing on specific best-of-breed services from different vendors. Second, he questions Intel's expertise to lead a private cloud effort. "Those two things made it pretty tough going for them and they realized that fairly quickly. I don't know if the failure says anything about the demand or the demand going forward. It just didn't fit their model or the business."

As far as the future of SMB-oriented cloud services, Robinson agrees with Saraf in principle, though he's not ready to make predictions about the future of private cloud specifically. "There is a definite market out there for someone to offer a service, [but] is it just outsourcing an SMB's IT and running it in a virtualized environment? Those worlds are coming closer together: virtualized IT/private cloud. The demand is there for that."

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