Published in Silicon Valley Sramana Mitra’s tech industry BLOG, Codero CEO and President, Emil Sayegh talks trends in cloud hosting.
Have a read to learn some more about the cloud industry’s history and some of the trends he has been tracking.
Sramana Mitra: Emil, tell us about Codero and yourself so that our audience can get to know you a bit.
Emil Sayegh: I’m Emil Sayegh. I’m the CEO and President of Codero. By way of a quick introduction, Codero has been around, as a company, since 1992 in various names. It started as a small corner computer reselling shop in San Diego. Quickly, the Internet came about. They got into shared hosting, domain name registration, and web design. The company grew and evolved into dedicated hosting and managed hosting, and later cloud. In 2006, Catalyst Investors out of New York came and purchased them. They divested from the commodity aspects of the company – shared hosting and domain name registration – and sold it to a company called Hostopia. They kept the crown jewels of the company, which is dedicated, managed, and cloud hosting. They renamed the company to Codero in 2009.
I have taken over as CEO of Codero in January of 2012. I have been in the industry for a long time. I was the Vice President of products at Rackspace. Later, I became the General Manager of the cloud business at Rackspace and helped Rackspace enter the public cloud market. From there, I was recruited by HP to build the HP public cloud business. I was there as the Vice President of Cloud Services. From there, I came to Codero.
Sramana Mitra: Sounds like the best place to have this discussion focused on is in the area of cloud hosting. Of course, that has been one of the first major adoptions of cloud – the cloud architecture and technology. Tell us more about the trends you are seeing at this point.
Emil Sayegh: I’d like to just give a quick history of the industry and tell you about the trends and shifts that are happening. What we saw about 10 years ago is the trend to outsource a lot of IT to other providers. Things that normally internal IT would be doing, like running your own servers, are being outsourced to “hosting providers.” Companies like Rackspace prospered during that era. Customers, from small to large companies, saw the advantage of outsourcing to someone that could do it better, cheaper, and faster.
Then, the phenomena called Amazon Web Services (AWS) came about in 2007. Frankly, there was also a tremendous progress in technology which allowed companies to offer private servers in a virtual fashion – not necessarily based on physical gear. AWS leveraged that technology trend and started what is later called the cloud. You had basically an industry that was based on traditional dedicated hosting and then you had AWS disrupting that market. Both groups of players had their own place in serving search and workloads. AWS did great with startups, those front-end web applications, and those customers that needed variant workloads that varied tremendously between times in a day. Traditional hosting companies continue to run more traditional workloads that require higher performance and databases.
Emil Sayegh: Fast forward to 2014, what we are seeing right now in the market is both of these models hitting a point where frankly they’re becoming less useful as a monolithic type of offering. Companies out there want to be able to benefit from the ability to grow very quickly with the cloud offering for the right applications but also need a solid performance of what used to come with dedicated servers for certain applications like databases and Big Data applications. All those applications need very high I/O still need traditional infrastructures.
Now, you’re in a dilemma. I put my front-end web infrastructure on something like Amazon cloud or Rackspace cloud, but then where do I put my high performance computing needs? Very few companies have been able to bridge those two elements. What we’re seeing is the emergence of hybrid cloud, which allows customers to essentially spin up front-end web resources in a cloud environment in a utility-based model and then have their back-end on robust dedicated gears. That is in the use case of e-commerce wherein you need front-end web and back-end databases all combined in one extremely fast network probably encapsulated in a private network.
That’s where we’re seeing the demand of the e-commerce use case shifting. E-commerce customers want a hardware cloud, which allows them to do both – dedicated for high performance workloads and then web front-end on cloud for workloads that require rapid scale and don’t need as much I/O performance.
Sramana Mitra: When you describe this e-commerce use case and the hybrid cloud demand from that particular segment, I imagine there’s also a size segmentation. What threshold of e-commerce activity are we seeing in this kind of behavior? At this point, e-commerce is a very large industry and there are lots of niche e-commerce players that operate in lightweight infrastructure mode. As the business scales, somewhere that is slipping to the phenomenon that you are describing. What is that threshold?
Emil Sayegh: In e-commerce, you’ve small stores that have few hundred transactions a day to those that have tens of thousands of transactions per day. These customers rely on their web presence for their livelihood. Basically, these are pure e-commerce companies. They are transacting close to half a million to a million a month. Those customers are moving away from a monolithic type of architecture of either just a couple of dedicated servers and maybe one database server, to a more hybrid infrastructure where they’re using both cloud and dedicated to basically scale their environment.
I would say it’s that mid-sized customer that is moving more towards that hybrid infrastructure. You do have some of the smaller companies that can operate on just one or two cloud instances and configure one of those cloud instances as a database. It’s not a lot of high transaction load. The I/O contentions are not big of a deal. I would classify that as a serious e-commerce site.
With hybrid, I think you can actually start with hybrid because it’s not that much more expensive. Start with the hybrid from the get-go even if you are someone that was transacting a few hundred dollars a month and then grow with it. It allows you to grow. It allows you to spin up more dedicated or more cloud. We were at Austin. I can’t tell you the number of startups that stopped by and were tired of hosting at Amazon because they don’t understand why their bill is so high. They don’t understand why it’s so complicated. They’re looking at hybrid as a way to have more sanity in their e-commerce infrastructure.