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Cloud App Store Hype

I’m not convinced it is something that is going to create a dramatic market shift within the enterprise

With the rise of virtual appliances as a software delivery and deployment model, people are beginning to talk about the idea of cloud computing app stores (a la iTunes) where admins can find virtual appliances and then easily deploy them onto a cloud or a server in their data center.

Although this idea sounds cool (”Hey, I can search for apps like I’d search for songs on iTunes and then deploy them almost instantly!”), I’m not convinced it is something that is going to create a dramatic market shift within the enterprise.

Why not?

iPod 5th Generation white.

First let’s think about why customers would be inclined to use a virtual appliance or app store:

  • Easily demo software on their own environment or in the cloud:  The virtual appliance model is clearly a great way for an IT guy or developer to test new apps.  You can try before you buy, and you don’t need to requisition any hardware to test.
  • Pay-per-appliance instead of pay-per-physical server: A pay-per-appliance model makes more sense in the virtual world than does the old licensing model of per-CPU or per-server.
  • Choice: App stores are a place where the big vendors’ marketing muscle won’t matter as much.  Customers will be exposed to new vendors and solutions.

And some reasons why customers wouldn’t want to use virtual appliances or app stores:

  • Lack of Control: Larger companies will have strict standards on what kind of applications and OS’s go into their environment.  Typically, they are going to want control of the hardware, the application, and everything in between.  Using a virtual appliance means giving up much of the control enterprise IT is used to having on the entire stack.
  • Good config management and deployment tools beat virtual appliances any day of the week:  The virtual appliance value proposition is eliminated if you’ve got robust config and deployment systems (think Opsware, Puppet, etc) that let you deploy fully customized app stacks (w/custom OS) in minutes.  Why sacrifice the ability to customize when you don’t have to?

Why are the appliances and app stores good for vendors?

  • Lead gen: Download of virtual appliance = sales lead for appliance vendor
  • Makes software pre-sales process easier: Instead of putting a sales engineer onsite for a couple days to help setup a customer demo, give the customer a virtual appliance that they can get up and running in an hour or less.
  • Best practices:  The vendor can ensure the configuration of the appliance conforms with best practices.  This will prevent some folks from shooting themselves in the foot by not selecting manufacturer suggested default settings. (Although certainly the ’suggested’ settings are a really bad idea for certain use cases – a longer story which I won’t dig into here)
  • Makes cloud more useful:  Helps cloud customers deploy apps faster.
  • Long tail:  Exposes lesser known or upcoming vendors to IT buyers.

Seems to me like virtual appliances are a great sales/marketing tool for vendors large and small, but not something that will fundamentally change how enterprise IT is delivered.  SMBs on the other hand…maybe there is a play there.

Thoughts?

Read the original blog entry...

More Stories By John Gannon

John Gannon is an Associate at L Capital Partners, a $165-million fund looking to advance companies with the potential to take groundbreaking products to market. He blogs at http://johngannonblog.com. Prior to joining L Capital Partners, John worked with Highland Capital Partners and Chart Venture Partners to identify and evaluate new opportunities in the enterprise IT sector. He also served as a consultant advising startup companies on business development, product strategy and venture capital fundraising. He currently sit on the board of advisers of VAlign Software.

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