Editor’s Note: Alexander Haislip is a marketing executive with cloud-based server automation startup ScaleXtreme and the author of Essentials of Venture Capital and The Modern Business Guide to Panel Discussions. Follow him on Twitter.
Cloud computing has become a lot like the Hotel California: Once you pick a provider you can check out anytime you want – but you can never leave.
You’ve no doubt heard of “cloud lock-in,” the concept that once you architect and optimize your systems on a single infrastructure seller you’re effectively stuck with the choice. It’s an unattractive idea, especially in an industry moving as quickly as cloud computing is.
And the companies paying real money for cloud computing – signing eight- and nine-figure annual contracts – they’re the ones looking for alternatives. They know they’re going to get discounts now that HP, Microsoft, Google and Dell are all in the cloud game.
Once you’ve gone down the road with one provider, rebooting into another cloud must be difficult. Maybe that’s why you see such paradoxical allegiances in the cloud.
Here’s one: Netflix uses Amazon infrastructure, competes with Amazon to deliver streaming video, and pays Amazon massive amounts of cash to handle its data. The fact that Netflix is forking over its data and cash to its competitor ought to raise eyebrows. And not only does Netflix seem to accept this arrangement, it promotes it.
Netflix has been a huge proponent of AWS since 2010, singing its praises on its blog, on stage and in the media. Netflix CEO Reed Hastings even keynoted the Amazon re: Invent cloud conference in Las Vegas this week and brought along 12 other executives to present. And, as its innovations indicate, Netflix has invested a metric ton of development work optimizing on Amazon’s infrastructure.
To be sure, some providers have bolted on all kinds of other in-house applications and services to make their offerings competitive. Have you seen the AWS product list? There’s like 30 add-ons you can get. Want your cloud to look like a pizza with fresh sashimi, pickles and chocolate sauce on top? No doubt Amazon’s got you covered.
Some may compare this strategy to the classic “extend, embrace and exterminate” plan that Microsoft employed so well during the 1990s. But the truth is probably that Amazon has been working with its largest customers to find out what they want and have just let the little customizations snowball over time.
Cloud lock-in becomes a big problem as soon as you go custom. You’ve got to be sure that you can get your feature fix before you sign on with a new cloud dealer.
Of course if anyone could code their own add-ons, it’s Netflix. It’s a hugely innovative cloud company. Maybe one of the most innovative. That’s not a superlative I toss around lightly, especially since I’m working for a pretty damn innovative company myself, but Netflix has earned it. The company has been a pure-blazing hellfire of creation since the beginning of the year, launching Aegisthus, Archaius, Asgard, Astyanax, Blitz4j, Chaos Monkey, Edda, Eureka, Exhibitor, Hystrix and Priam in quick succession.
If you’re like most people, you’ve got no idea what any of those tools does. The short version is that they help you keep your cloud instances up, running smoothly and delivering data you can easily use. They’re mostly for advanced cloud users, like an Audi R18 e-tron Quattro is mostly for advanced car drivers. (If you want to dig into the details, I’ve included a cheat sheet below.)
Netflix’s innovative cloud tools make its reliance on Amazon infrastructure even more bizarre. It must have been a real kick in the teeth to finish migrating to AWS in 2010 and then to see the bookseller enter into the video streaming business at the beginning of 2011.
Maybe it didn’t come as a surprise. Video has been something Amazon was after for at least a decade. It’s recently come to light, thanks to Gina Keating’s excellent reporting in “Netflixed,” that Amazon tried to buy the embryotic Netflix in 1999 – either to raise it as its own or kill it in the crib.
Now Netflix says that Amazon’s entry onto its turf isn’t hurting business, and Wired’s Michael Copeland gives credence to this misguided concept by paraphrasing some Wall Street genius that says “Amazon Isn’t Really in the Netflix Business.” Also, these are definitively not the droids you are looking for.
Amazon does compete with Netflix. I know because I dropped Netflix for Amazon Prime last month. I’m not a heavy movie watcher and I don’t need an infinite selection. In fact, I didn’t even compare what’s available. Amazon Prime came with free shipping, digital storage and other benefits that Netflix just doesn’t have.
Is it a classic case of anticompetitive bundling? I don’t know. I’ll let the economists argue this one in front of the Department of Justice. It’s a safe bet that somewhere there’s a law firm working on this exact argument right now.
As proof of damage, some people will point to the fact that the video rental company has lost two-thirds of its value since Amazon launched its streaming service. But it would be wrong to attribute Netflix’s precipitous stock slide solely to Amazon’s machinations. The AP has a good roundup of all the other issues smacking Netflix’s stock, including subscription price hikes, debt offerings, missed quarters and Carl Icahn.
The fact that Netflix is funding its closest competitor with its infrastructure payments ought to raise eyebrows. And it isn’t alone. Dropbox, have you guys heard of Amazon’s Cloud Drive? Maybe you want to check it out before you cut your next check to Seattle for S3 storage services.
A company has choices when it comes to cloud computing in 2012, and it seems strange that Netflix hasn’t kicked its Amazon addiction. But will going to another cloud provider solve its problems?
Rackspace would certainly welcome the business and tout its OpenStack-enabled lack of lock-in. CEO Lanham Napier all but said as much on a conference call with analysts. And the company is already running loads for Walmart, which apparently is sane enough not to hand Amazon its infrastructure and data. It may not have all the bells and whistles that Amazon has built over the last six years, but the OpenStack community seems to be bringing it closer to feature parity.
Indeed OpenStack and other initiatives promise to make it easier to switch from one cloud to another, though it’s still at its beginnings.
Rackspace says that you can leave its cloud whenever you want. It won’t stop you. It’s putting all its chips down on making the customer experience its competitive advantage. That’s why it has supported the commoditization of certain cloud technologies. It’s pushing “Fanatical Support” and aiming to addict its customers on that experience.
Of course Netflix could stop blowing clouds altogether. Just pull the needle out and walk away, as Zynga did, and roll its own infrastructure. That would break it out of the cycle of addiction. Why it hasn’t done that, I don’t know. Maybe it’s just not ready to go through the requisite phase of delirium tremens. It could be that Amazon’s just too good to leave.
I can just see Reed Hastings saying to Jeff Bezos: “I wish I knew how to quit you.”
Netflix’s Year of Innovation: Filling Cloud Holes
Astyanax (launched Jan. 31, 2012): Tools for managing really big databases. Netflix says: “Astyanax is a Java Cassandra client. It borrows many concepts from Hector but diverges in the connection pool implementation as well as the client API.” Read more.
Priam (launched Feb. 21, 2012): Manages Cassandra databases. Netflix says: Provides for Cassandra: backup and recovery; bootstrapping and automated token assignment; centralized configuration management; and RESTful monitoring and metrics. Read more.
Aegisthus (launched Feb. 27, 2012): Cloud data processing done in the cloud. Netflix says: It’s “a constantly running Hadoop cluster capable of processing sstables as they are created by any Cassandra data source.”
Exhibitor (launched April 16, 2012): Manages the coordination system for a distributed application. Netflix says: “ZooKeeper is a high-performance coordination service for distributed applications. We found a need for a supervisor service that runs alongside ZooKeeper server instances.” Read more.
Archaius (launched June 18, 2012): Cloud configuration management. Netflix says: A “dynamic, multi-dimensional, properties framework.”
Eureka (launched Sept. 4, 2012): Load balances at the server level. Netflix says: “A REST based service that is primarily used in the AWS cloud for locating services for the purpose of load balancing and failover of middle-tier servers.” Read more.
Edda (launched Nov. 6, 2012): Search your cloud resources and view changes. Netflix says: In the cloud, “nothing is static. Virtual host instances are constantly coming and going, IP addresses can get reused by different applications, and firewalls suddenly appear as security configurations are updated. At Netflix we needed something to help us keep track of our ever-shifting environment.” Read more.
Blitz4j (launched Nov. 20, 2012): Scalable logging. Netflix says: “Blitz4j overrides key parts of the log4j architecture to remove the locks and replace them with concurrent data structures. Blitz4j puts the emphasis more on application performance and stability rather than accuracy in logging.”
Hystrix (launched Nov. 26, 2012): Manages cloud service and application interdependencies. Netflix says: “A library designed to control the interactions between these distributed services providing greater tolerance of latency and failure.” Read more.