Abstract: This is Part II in a blog series by 6fusion Co-founder and CEO John Cowan on the emerging trend of Cloud Brokerage and the impact it will have on the technology industry and markets. Be sure to check out Part I of the series here.

Part II – The Cloud Vendor and the Agnostic Intermediary

I gave a presentation a few months back in which I opened with the following statement:  The future of cloud computing has little to do with technology. Sounds crazy, right?  But before you send me to the virtual nuthouse, let me explain.

What I think is unclear in the emerging Cloud Broker business model is the demarcation point between the business of compute and the technical organization of compute.  The era of Cloud Brokerage will see these two concepts treated and considered as two distinct threads.   The technical organization of compute is what the myriad of cloud software vendors does today.   They are the companies that pitch “hey, buy my software and you too can have a cloud” or “hey, run your apps on our infrastructure and you too can pay for IT like a utility.” The role of this vertical in the industry is about the orchestration and management of the compute resources sitting in customer cabinets and cages across the global data center landscape.  It is about, as some of the more vocal pundits and talking heads espouse, a complete paradigm shift in the way IT is delivered.

But cloud vendors, despite their impressive efforts to convince us otherwise, are, and never will be, Cloud Brokers.

Cloud Brokers will focus on the business of compute rather than the technical organization of compute.    And the business of compute has nothing to do with cloud computing or the technology driving this revolution. The business of compute is about the commoditization of compute, network and storage infrastructure.

There is a big difference.

Analysts and experts measure the market by examining the adoption rates of cloud technologies private and public.  Projections vary widely but I think we can all agree we are already in a Total Addressable Market (TAM) in the billions and on a fast track much higher.

That’s a lot of dough.  But the real TAM for Cloud Brokerage is much, much bigger.

Cloud Brokers will play a catalyzing role in the establishment of a commodities market for computing, just like soybeans, metals or corn.  One of the principal advantages of any commodity market is for businesses to hedge their risk.  It is difficult to argue that such practices could not or should not extend to information technology needs (specifically computing).

In order to truly see this market one must look beyond the resources that are “in the cloud” today.   Businesses in the future will hedge their total risk – the needs of the organization both internally and externally.  That is – the sum total demand for compute resources.  To this end, existing market sizing reports dealing with cloud are inadequate to represent the total opportunity.   Based on publically available data on server and storage shipment tracking I believe the TAM for Cloud Brokerage to be north of $1 Trillion.

As a central figure to the emergence of a commodity market for compute infrastructure, the Cloud Broker must be an entirely agnostic intermediary.  The job of the agnostic intermediary will be to connect those that consume infrastructure and those that produce infrastructure.  It will not be their job to influence, direct, sell or support what the infrastructure is ultimately used for.  Nor will it be their job to influence what infrastructure supplier is used.

Herein lies the demarcation point between those facilitating the future business of compute and those enabling the technological organization of compute.

This may come as a revelation to some, but it won’t be players like Amazon, Rackspace and the ‘Magic Quadrant’ of telcos and co-lo providers that form the commodity market for compute.   Yes, they will no doubt be suppliers to the market.  But they will not be the true market makers.

Today’s leading cloud vendors will learn that you can’t be a retail cloud and an intermediary for a cloud market.  The very concept would be like being an arms dealer for the war in which you take up arms.   It will not work.  While important actors in the emerging story, today’s cloud vendors are merely proving out that there is room for many suppliers in the market.

In Part III of this post I will take a look at the some of the important technologies that will emerge to create what I call “The Market Unified.”

• The Market Unified
• The Immovable Asset Becomes Movable