Azure Stack, AWS Outposts Poised to Impact Colocation

Since the dawn of the cloud era in the mid-2000s, the colocation industry has generally thought of itself as an alternative to the public cloud. “Cloud vs. colo” is a dichotomy to which most have become accustomed.

Hybrid cloud and colocation don’t have to be an either/or proposition.

That thinking made sense for most of the past two decades, when public cloud providers and colocation data centers were indeed in stiff competition. Over the past several years, however, things have changed. The largest public cloud providers have rolled out a new generation of hybrid cloud solutions that make it easy for customers to access public cloud services while housing their workloads in their own or a colocation data center.

Here’s a look at what these hybrid cloud services entail and what they mean for the future of colocation.

Cloud vs. Colo: The Traditional Choice

It’s easy to understand why the public cloud and colocation were traditionally portrayed as an either/or proposition.

If you chose to run workloads in the public cloud, you got access to a range of different services. You could spin up those services almost instantaneously. What you lost, however, was the privacy and control that come with hosting workloads in a colocation data center. Customers there had greater ability to choose which hardware they use and how it is configured; also, how it is isolated from other organizations’ resources.

On the other hand, colocation providers couldn’t offer the flexibility or broad range of services of public cloud providers. They specialized only in infrastructure.

For much of the 2010s, it seemed that the public cloud proved to be the more appealing option for many companies, which increasingly migrated to the public cloud. Although they didn’t always stay there – some moved back to colocation – it would nonetheless be hard to argue that the colocation industry enjoyed as much momentum over the past decade as did public cloud computing. If nothing else, revenue data shows that the public cloud has grown more quickly than colocation.

Modern Hybrid Cloud Meets Colocation

Somewhat ironically, public cloud vendors’ efforts in recent years to grow their own market share even further changed the landscape. Today, thanks to new hybrid cloud frameworks that public cloud companies themselves have introduced, it has become quite feasible to take advantage of public cloud services while keeping workloads inside a colocation center.

Chief among those frameworks are:

Each of these hybrid cloud offerings has its limitations, especially when used to extend public cloud services into a colocation facility. Azure Stack only works with certified hardware, which colocation providers might not offer. (Azure Arc, which is not subject to this limitation, might prove more useful in colocation centers for this reason.) AWS Outposts is even more restrictive; it requires customers to use AWS’ own hardware, although Amazon says it is compatible with colocation scenarios. Google Anthos works with any hardware, but its major caveat is that …

… it may be difficult to deploy and manage, especially for organizations without extensive in-house Kubernetes expertise.

Bridging the Gap

Still, these hybrid solutions open vast new opportunities for bridging the gap that has traditionally separated public cloud from colocation data centers. As long as your colocation provider meets any applicable hardware requirements, and you are comfortable managing the software side of things on your own if necessary (or hire a channel partner for that), these frameworks make it very easy to deploy public cloud services, like AWS S3 storage or Azure Virtual Machines, on servers in a colocation center.

At the same time, these hybrid cloud solutions provide access to a broad range of public cloud services. They support not just the bread-and-butter IaaS compute and storage services, but also serverless functions, databases, and even PaaS-like software delivery platforms built into public clouds. They also typically cost the same or less than you would pay to access the same services directly within a public cloud. That means that total cost of ownership, even after you factor in colocation pricing, could be less for users of a hybrid cloud framework within a colocation center than it would be if you used only a public cloud, or just a colocation solution.

This is all a big deal, especially because earlier generations of hybrid cloud solutions from the public cloud vendors did not offer this kind of compatibility or broad functionality. Frameworks like Windows Azure Pack (which debuted in 2013), the main predecessor to Azure Stack, supported only a handful of public cloud services and never gained large followings.

Meanwhile, the solutions that colo providers themselves offered for interfacing with public cloud services within their data centers, like Equinix’s Starter Kit for Microsoft Azure (introduced in 2014), came with added costs, were cumbersome to deploy, and were designed for only a subset of hybrid cloud use cases.

Conclusion

What the introduction of hybrid cloud platforms like Azure Stack and AWS Outposts will ultimately mean for the colocation industry remains to be seen. They are only a few years old, so it’s not clear how quickly colocation customers are adopting them.

What is clear is that in 2020 it no longer makes a lot of sense to think about the public cloud and colocation data centers in oppositional terms. A new generation of hybrid cloud frameworks has introduced a level of integration between public cloud and colocation that was difficult to envision just a few years ago.