Turning the cloud market upside down: the OnApp Federation is here

Beginning at the beginning
From the day we started, OnApp has been here to help the world's service providers (hosts, telcos and MSPs) compete against the ‘megahosters’ of the world - companies like Amazon, Microsoft, Google.  

We started out by giving our clients a software platform that enabled them to compete with the megahosters on features. With the OnApp software stack, our clients can now offer cloud, dedicated server, storage and CDN services to the market. Our orchestration layer sits on top of their datacenter infrastructure, helping them turn it into revenue.

OnApp software is now deployed inside ~3,000 service providers world-wide, including many of the largest public cloud providers, multinational telcos, and of course a good number of smaller hosts. OnApp is by far the most popular public cloud platform out there. 

We’re super proud and happy that we’ve managed to help so many service providers in the few years we’ve been around... but, the software platform only solves a small part of the challenge that all service providers face. 

It's all about scale & reach
That's because the megahosters don't just compete on features and functionality. They also compete on scale and geographical reach. While the OnApp orchestration platform provides parity in functionality, it does not, by itself, help service providers compete at the same scale, or with the same global presence.

I'm not just talking about smaller hosts. There are plenty of very large service providers, who in the past may have felt able to comfortably meet whatever requirement their customers had for scale, and widespread distributed hosting... but faced with the megahosts, and even armed with their own cutting-edge cloud platform, they have huge challenges too. 

Before I talk about how the OnApp Federation solves that problem, let's look at why scale and reach is such a big deal.  

While cloud as a concept has been discussed and misunderstood for years, one of the persistent elements has always been that cloud infrastructure should be available ‘on tap’, like water or electricity.

As a cloud consumer (be it an enterprise/SME/SOHO infrastructure buyer) you’d expect pretty much unlimited infrastructure being available to you from your cloud provider, without long term contracts. You just pay as you go - and you're only charged for what you actually use.

That goes against the traditional service provider business model, which is largely based on long term recurring contracts with an expectation that only 40-60% of the infrastructure paid for is actually being used. Overselling is very common, and a fundamental part of how the industry works.

Enter the cloud... and a new CAPEX challenge
With cloud hosting, suddenly the model is turned upside down, and service providers are actually forced to ‘undersell’ services. They need to have massive infrastructure sitting idle, waiting for users to scale into or fail over to.

So, while in the traditional model, 40-60% of capacity was being sold and monetized but not consumed… in the cloud, 40-60% of the infrastructure is sitting idle and un-monetized.

The cloud has put immense CAPEX pressure on service providers, and as a result made it really hard to compete with the megahosters on pricing. The megahosters (Amazon, Microsoft, Google etc) have unlimited access to capital and look at this from a very long-term strategic perspective. That's where scale is really key.

Reach out
Geographic reach is a related effect of scale. The megahosters all focus on offering world-wide infrastructure. There are many reasons why this is important, but the main reasons are a) performance in local markets, in terms of latency and throughput; and b) data locality/sovereignty, which is becoming more and more of an issue, with new local legislative data barriers popping up all the time.

SaaS businesses have global client bases, and they need world-wide infrastructure to meet their market demands. As with scale, it is really hard for the traditional service provider to provide infrastructure and services from multiple locations world-wide. It’s simply too expensive and risky for single service providers to launch new points of presence. So, once more, access to capital is key.

Now enter the OnApp Federation...
So, why will the OnApp Federation fundamentally change how our industry works? We’ve tied all our service providers together into a large pool of infrastructure (the OnApp Federation), and created an ecosystem where every provider can buy and sell capacity. We have hundreds of thousands of physical servers, with petabits of bandwidth available on every continent - guaranteeing pretty much unlimited scale, pretty much everywhere.

Sell that idle capacity!
Through our Federation you can sell your spare capacity, that 40-60% of unmonetized servers in your datacenter, by offering it to other service providers.

When you sell your spare capacity, you set your own price and terms, and OnApp takes care of the fulfilment process, including authentication, billing, metering and so on.

Your servers are available for other providers to buy on our Federation marketplace, which means your OnApp install is not only a software platform, but actually a sales channel. It’s a way to de-risk your CAPEX investment and increase the overall utilization rate of your datacenter infrastructure.

Get instant scale and reach
Even cooler: as a service provider buying from the Federation marketplace, you now have access to unlimited infrastructure.

The Federation gives you more scale than any megahoster, more locations (+500) and better world-wide performance, because we're tying together thousands of clouds in hundreds of countries, big and small, with a huge range of infrastructure price/performance options available. 

When you buy infrastructure, the marketplace gives you historical insight into the infrastructure performance - i.e. uptime, throughput and overall performance KPIs - so you can make sure that the services you subscribe to are on par with, or better than your clients require.

The AirBnB of cloud
So what? So, with OnApp, you now have feature parity, more scale and more geographical reach than the megahosters. I like to say that the OnApp Federation is to Amazon what AirBnB is to Hilton. We’ve turned the market upside down, totally eliminated the capital and scale advantages of the megahosters, and empowered other providers to fight back against the accelerated consolidation happening now. That's what :]

OnApp is my sixth startup venture, but it’s the first time I really feel that I am making a difference in a market. And now it’s real, it's here, it's in GA and ready for you to use.

To get started, go here and fill out the form, and our Federation team will be in touch to arrange a demo. There's also a video presentation I did recently with our CVO, Carlos - check it out for a more in-depth version of this article, with slides and 100% more Lego. See you in the Federation soon!