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Magic Quadrant for Cloud Infrastructure as a Service, Worldwide

18 May 2015 | ID:G00265139

Analyst(s): Lydia Leong, Douglas Toombs, Bob Gill

Summary
The market for cloud IaaS is in a state of upheaval, as many service providers are shifting
their strategies after failing to gain enough market traction. Customers must exercise caution
when choosing providers.

Market Definition/Description
Cloud computing is a style of computing in which scalable and elastic IT-enabled capabilities
are delivered as a service using Internet technologies. Cloud infrastructure as a service (IaaS)
is a type of cloud computing service; it parallels the infrastructure and data center initiatives
of IT. Cloud compute IaaS constitutes the largest segment of this market (the broader IaaS
market also includes cloud storage and cloud printing). Only cloud compute IaaS is evaluated
in this Magic Quadrant; it does not cover cloud storage providers, platform as a service (PaaS)
providers, software as a service (SaaS) providers, cloud service brokerages (CSBs) or any
other type of cloud service provider, nor does it cover the hardware and software vendors that
may be used to build cloud infrastructure. Furthermore, this Magic Quadrant is not an
evaluation of the broad, generalized cloud computing strategies of the companies profiled.

In the context of this Magic Quadrant, cloud compute IaaS (hereafter referred to simply as
"cloud IaaS" or "IaaS") is defined as a standardized, highly automated offering, where compute
resources, complemented by storage and networking capabilities, are owned by a service
provider and offered to the customer on demand. The resources are scalable and elastic in
near real time, and metered by use. Self-service interfaces are exposed directly to the
customer, including a Web-based UI and an API. The resources may be single-tenant or
multitenant, and hosted by the service provider or on-premises in the customer's data center.
(For more details, see "Technology Overview for Cloud Infrastructure as a Service" ).

Cloud IaaS includes not just the resources themselves, but also the automated management
of those resources, management tools delivered as services, and cloud software infrastructure
services. The last category includes middleware and databases as a service, up to and
including PaaS capabilities. However, it does not include full stand-alone PaaS capabilities,
such as application PaaS (aPaaS) and integration PaaS (iPaaS).
We draw a distinction between cloud infrastructure as a service , and cloud infrastructure as a
technology platform ; we call the latter cloud-enabled system infrastructure (CESI). In cloud
IaaS, the capabilities of a CESI are directly exposed to the customer through self-service.
However, other services, including noncloud services, may be delivered on top of a CESI; these
cloud-enabled services may include forms of managed hosting, data center outsourcing and
other IT outsourcing services. In this Magic Quadrant, we evaluate only cloud IaaS offerings;
we do not evaluate cloud-enabled services. (For more on this distinction, see "Technology
Overview for Cloud-Enabled System Infrastructure" [Note: This document has been archived;
some of its content may not reflect current conditions] , "Technology Overview for Cloud-
Enabled Managed Hosting" and "Don't Be Fooled by Offerings Falsely Masquerading as Cloud
Infrastructure as a Service" [Note: This document has been archived; some of its content may
not reflect current conditions] .)
This Magic Quadrant covers all the common use cases for cloud IaaS, including development
and testing, production environments (including those supporting mission-critical workloads)
for both internal and customer-facing applications, batch computing (including high-
performance computing [HPC]) and disaster recovery. It encompasses both single-application
workloads and "virtual data centers" (VDCs) hosting many diverse workloads. It includes
suitability for a wide range of application design patterns, including both "cloud-native"
application architectures and enterprise application architectures.
Customers typically exhibit a bimodal IT sourcing pattern for cloud IaaS (see "Bimodal IT:
How to Be Digitally Agile Without Making a Mess" and "Best Practices for Planning a Cloud
Infrastructure-as-a-Service Strategy — Bimodal IT, Not Hybrid Infrastructure" ). Most cloud IaaS
is bought for Mode 2 agile IT, emphasizing developer productivity and business agility, but an
increasing amount of cloud IaaS is being bought for Mode 1 traditional IT, with an emphasis
on cost reduction, safety and security. This Magic Quadrant considers both sourcing patterns
and their associated customer behaviors and requirements.
This Magic Quadrant primarily evaluates cloud IaaS providers in the context of the fastest-
growing need among Gartner clients: the desire to have a "data center in the cloud," where the
customer retains most of the IT operations responsibility (even if the customer subsequently
chooses to outsource that responsibility via third-party managed services). Gartner's clients
are mainly enterprises, midmarket businesses and technology companies of all sizes, and the
evaluation focuses on typical client requirements.
This Magic Quadrant strongly emphasizes self-service and automation in a standardized
environment. It focuses on the needs of customers whose primary need is self-service cloud
IaaS, although this may be supplemented by a small amount of colocation or dedicated
servers. Organizations that need significant customization or managed services for a single
application, or that are seeking cloud IaaS as a supplement to a traditional hosting solution
("hybrid hosting"), should consult the Magic Quadrants for Managed Hosting instead ( "Magic
Quadrant for Cloud-Enabled Managed Hosting, North America," "Magic Quadrant for Cloud-
Enabled Managed Hosting, Europe" and "Magic Quadrant for Cloud-Enabled Managed
Hosting, Asia/Pacific" ). Organizations that want a fully custom-built solution, or managed
services with an underlying CESI, should consult the Magic Quadrants for data center
outsourcing and infrastructure utility services ( "Magic Quadrant for Data Center Outsourcing
and Infrastructure Utility Services, North America," "Magic Quadrant for Data Center
Outsourcing and Infrastructure Utility Services, Europe" and "Magic Quadrant for Data Center
Outsourcing and Infrastructure Utility Services, Asia/Pacific" ).

This Magic Quadrant evaluates all industrialized cloud IaaS solutions, whether public cloud
(multitenant or mixed-tenancy), community cloud (multitenant but limited to a particular
customer community), or private cloud (fully single-tenant, hosted by the provider or on-
premises). It is not merely a Magic Quadrant for public cloud IaaS. To be considered
industrialized, a service must be standardized across the customer base. Although most of the
providers in this Magic Quadrant do offer custom private cloud IaaS, we have not considered
these nonindustrialized offerings in our evaluations. Organizations that are looking for
custom-built, custom-managed private clouds should use our Magic Quadrants for data center
outsourcing and infrastructure utility services instead (see above).

Understanding the Vendor Profiles, Strengths and Cautions

Cloud IaaS providers that target enterprise and midmarket customers generally offer a high-
quality service, with excellent availability, good performance, high security and good customer
support. Exceptions will be noted in this Magic Quadrant's evaluations of individual providers.
Note that when we say "all providers," we specifically mean "all the evaluated providers
included in this Magic Quadrant," not all cloud IaaS providers in general. Keep the following in
mind when reading the vendor profiles:

All the providers have a public cloud IaaS offering. Many also have an industrialized private
cloud offering, where every customer is on standardized infrastructure and cloud
management tools, although this may or may not resemble the provider's public cloud
service in either architecture or quality. A single architecture and feature set and cross-cloud
management, for both public and private cloud IaaS, make it easier for customers to
combine and migrate across service models as their needs dictate, and enable the provider
to use its engineering investments more effectively. Most of the providers also offer custom
private clouds.

Most of the providers have offerings that can serve the needs of midmarket businesses and
enterprises, as well as other companies that use technology at scale. A few of the providers
primarily target individual developers, small businesses and startups, and lack the features
needed by larger organizations, although that does not mean that their customer base is
exclusively small businesses.
Most of the providers are oriented toward the needs of Mode 1 traditional IT, especially IT
operations organizations, with an emphasis on control, governance and security; many such
providers have a "rented virtualization" orientation, and are capable of running both new and
legacy applications, but are unlikely to provide transformational benefits. A much smaller
number of providers are oriented toward the needs of Mode 2 agile IT; these providers
typically emphasize capabilities for new applications and a DevOps orientation, but are also
capable of running legacy applications and being managed in a traditional fashion.
All the providers offer basic cloud IaaS — compute, storage and networking resources as a
service. A few of the providers offer additional value-added capabilities as well, notably
cloud software infrastructure services — typically middleware and databases as a service —
up to and including PaaS capabilities. These services, along with IT operations
management capabilities as a service (especially DevOps-related services) are a vital
differentiator in the market, especially for Mode 2 agile IT buyers.
We consider an offering to be public cloud IaaS if the storage and network elements are
shared; the compute can be multitenant, single-tenant or both. Private cloud IaaS uses
single-tenant compute and storage, but unless the solution is on the customer's premises,
the network is usually still shared.
In general, monthly compute availability SLAs of 99.95% and higher are the norm, and they
are typically higher than availability SLAs for managed hosting. Service credits for outages
in a given month are typically capped at 100% of the monthly bill. This availability
percentage is typically non-negotiable, as it is based on an engineering estimate of the
underlying infrastructure reliability. Maintenance windows are normally excluded from the
SLA.
Some providers have a compute availability SLA that requires the customer to use compute
capabilities in at least two fault domains (sometimes known as availability zones or
availability sets); an SLA violation requires both fault domains to fail. Providers with an SLA
of this type are explicitly noted as having a multi-fault-domain SLA.
Very few of the providers have an SLA for compute or storage performance. However, most
of the providers do not oversubscribe compute or RAM resources; providers that do not
guarantee resource allocations are noted explicitly.
Many providers have additional SLAs, covering network availability and performance,
customer service responsiveness and other service aspects.
Infrastructure resources are not normally automatically replicated into multiple data centers,
unless otherwise noted; customers are responsible for their own business continuity. Some
providers offer optional disaster recovery solutions.
All providers offer, at minimum, per-hour metering of virtual machines (VMs), and some can
offer shorter metering increments, which can be more cost-effective for short-term batch
jobs. Providers charge on a per-VM basis, unless otherwise noted. Some providers offer
either a shared resource pool (SRP) pricing model or are flexible about how they price the
service. In the SRP model, customers contract for a certain amount of capacity (in terms of
CPU and RAM), but can allocate that capacity to VMs in an arbitrary way, including being
able to oversubscribe that capacity voluntarily; additional capacity can usually be
purchased on demand by the hour.
Some of the providers are able to offer "bare metal" physical servers on a dynamic basis.
Due to the longer provisioning times involved for physical equipment (two hours is
common), the minimum billing increment for such servers is usually daily, rather than
hourly. Providers with a bare-metal option are noted as such.
All the providers offer an option for colocation, unless otherwise noted. Many customers
have needs that require a small amount of supplemental colocation in conjunction with
their cloud — most frequently for a large-scale database, but sometimes for specialized
network equipment, software that cannot be licensed on virtualized servers, or legacy
equipment. Colocation is specifically mentioned only when a service provider actively sells
colocation as a stand-alone service; a significant number of midmarket customers plan to
move into colocation and then gradually migrate into that provider's IaaS offering. If a
provider does not offer colocation itself but can meet such needs via a partner exchange,
this is explicitly noted.
All the providers claim to have high security standards. The extent of the security controls
provided to customers varies significantly, though. All the providers evaluated can offer
solutions that will meet common regulatory compliance needs, unless otherwise noted. All
the providers have SSAE 16 audits for their data centers (see Note 1). Some may have
security-specific third-party assessments such as ISO 27001 or SOC2 for their cloud IaaS
offerings (see Note 2), both of which provide a relatively high level of assurance that the
providers are adhering to generally accepted practice for the security of their systems, but do
not address the extent of controls offered to customers. Security is a shared responsibility;
customers need to correctly configure controls and may need to supply additional controls
beyond what their provider offers.
Some providers offer a software marketplace where software vendors specially license and
package their software to run on that provider's cloud IaaS offering. Marketplace software
can be automatically installed with a click, and can be billed through the provider. Some
marketplaces also contain other third-party solutions and services.
All providers offer enterprise-class support with 24/7 customer service, via phone, email and
chat, along with an account manager. Most providers include this with their offering. Some
offer a lower level of support by default, but allow customers to pay extra for enterprise-
class support.
 All the providers will sign contracts with customers, can invoice, and can consolidate bills
from multiple accounts. While some may also offer online sign-up and credit card billing,
they recognize that enterprise buyers prefer contracts and invoices. Some will sign "zero
dollar" contracts that do not commit a customer to a certain volume.

All the providers evaluated are believed to be financially stable, with business plans that are
adequately funded. However, many of the providers are undergoing significant re-evaluation
of their cloud IaaS businesses. Existing and prospective customers should be aware that
such providers may make significant changes to the strategy and direction of their cloud
IaaS business, including replacing their current offering with a new platform, or exiting this
business entirely in favor of partnering with a more successful provider.
Many of the providers have white-label or reseller programs, and some may be willing to
license their software. We mention software licensing only when it is a significant portion of
the provider's business; other service providers, not enterprises, are usually the licensees. We
do not mention channel programs; potential partners should simply assume that all these
companies are open to discussing a relationship.
Most of the providers offer optional managed services on IaaS. However, not all offer the
same type of managed services on IaaS as they do in their broader managed hosting or
data center outsourcing services. Some may have managed services provider (MSP) or
system integrator (SI) partners that provide managed and professional services.
All the evaluated providers offer a portal, documentation, technical support, customer
support and contracts in English. Some can provide one or more of these in languages other
than English. Most providers can conduct business in local languages, even if all aspects of
service are English-only. Customers who need multilingual support will find it very
challenging to source an offering.

In previous years, this Magic Quadrant has provided significant technical detail on the
offerings. These detailed evaluations are now published in "Critical Capabilities for Public
Cloud Infrastructure as a Service, Worldwide" instead.

Format of the Vendor Descriptions

When describing each provider, we first summarize the nature of the company and then
provide information about its industrialized cloud IaaS offerings in the following format:

Offerings: A list of the industrialized cloud IaaS offerings (both public and private) that are
directly offered by the provider. Also included is commentary on the ways in which these
offerings deviate from the standard capabilities detailed in "Understanding the Vendor Profiles,
Strengths and Cautions," above. We also list related capabilities of interest, such as object
storage, content delivery network (CDN) and managed services, but this is not a
comprehensive listing of the provider's offerings.
Locations: Cloud IaaS data center locations by country, languages that the company does
business in, and languages that technical support can be conducted in.

Recommended mode: We note whether the vendor's offerings are likely to appeal to Mode 1
traditional IT, Mode 2 agile IT, or both, and whether the offerings are likely to be useful for
organizations seeking IT transformation. This recommendation reflects the way that a
provider goes to market, provides service and support, and designs its offerings. All such
statements are specific to the provider's cloud IaaS offering, not the provider as a whole.

Recommended uses: These are the circumstances under which we recommend the provider.
These are not the only circumstances in which it may be a useful provider, but these are the
use cases it is best used for. For a more detailed explanation of the use cases, see
"Recommended Uses" below.

In the list of offerings, we state the basis of each provider's virtualization technology and, if
relevant, its cloud management platform (CMP). We also state what APIs it supports — the
Amazon Web Services (AWS), OpenStack and vCloud APIs are the three that have broad
adoption, but many providers also have their own unique API. Note that supporting one of the
three common APIs does not provide assurance that a provider's service is compatible with a
specific tool that purports to support that API; the completeness and accuracy of API
implementations vary considerably. Furthermore, the use of the same underlying CMP or API
compatibility does not indicate that two services are interoperable. Specifically, OpenStack-
based clouds differ significantly from one another, limiting portability; the marketing hype of
"no vendor lock-in" is, practically speaking, untrue.

For many customers, the underlying hypervisor will matter, particularly for those that intend to
run commercial software on IaaS. Many independent software vendors support only VMware
virtualization, and those vendors that support Xen may support only Citrix XenServer, not
open-source Xen (which is often customized by IaaS providers and is likely to be different
from the current open-source version).
For a detailed technical description of public cloud IaaS offerings, along with a use-case-
focused technical evaluation, see "Critical Capabilities for Public Cloud Infrastructure as a
Service, Worldwide."

We also provide a detailed list of evaluation criteria in "Evaluation Criteria for Cloud
Infrastructure as a Service." We have used those criteria to perform in-depth assessments of
several providers: see "Amazon Web Services: In-Depth Assessment," "In-Depth Assessment of
Google Cloud Platform," "In-Depth Assessment of SoftLayer, an IBM Company" and "Microsoft
Azure: In-Depth Assessment."

We summarize all the provider descriptions, and compare their capabilities against our
baseline expectation of capabilities, in tabular format in "Toolkit: Comparison Matrix for Cloud
Infrastructure-as-a-Service Providers, 2015."

Recommended Uses
For each vendor, we provide recommendations for use. The most typical recommended uses
are:

Cloud-native applications. These are applications specifically architected to run in a cloud

IaaS environment, using cloud transaction processing (TP) principles.
E-business hosting. These are e-marketing sites, e-commerce sites, SaaS applications, and
similar modern websites and Web-based applications. They are usually Internet-facing.
They are designed to scale out and are resilient to infrastructure failure, but they might not
use cloud TP principles.
General business applications. These are the kinds of general-purpose workloads typically
found in the internal data centers of most traditional businesses; the application users are
usually located within the business. Many such workloads are small, and they are often not
designed to scale out. They are usually architected with the assumption that the underlying
infrastructure is reliable, but they are not necessarily mission-critical. Examples include
intranet sites, collaboration applications such as Microsoft SharePoint, and many business
process applications.
Enterprise applications. These are general-purpose workloads that are mission-critical, and
they may be complex, performance-sensitive or contain highly sensitive data; they are
typical of a modest percentage of the workloads found in the internal data centers of most
traditional businesses. They are usually not designed to scale out, and the workloads may
demand large VM sizes. They are architected with the assumption that the underlying
infrastructure is reliable and capable of high performance.

Development environments. These workloads are related to the development and testing of
applications. They are assumed not to require high availability or high performance.
However, they are likely to require governance for teams of users.
Batch computing. These workloads include high-performance computing (HPC), "big data"
analytics and other workloads that require large amounts of capacity on demand. They do
not require high availability, but may require high performance.
For all the vendors, the recommended uses are specific to self-managed cloud IaaS. However,
many of the providers also have managed services, as well as other cloud and noncloud
services that may be used in conjunction with cloud IaaS. These include hybrid hosting
(customers sometimes blend solutions, such as an entirely self-managed front-end Web tier
on public cloud IaaS, with managed hosting for the application servers and database), as well
as hybrid IaaS-PaaS solutions. Even though we do not evaluate managed services, PaaS and
the like in this Magic Quadrant, they are part of a vendor's overall value proposition and we
mention them in the context of providing more comprehensive solution recommendations.

Magic Quadrant
Figure 1. Magic Quadrant for Cloud Infrastructure as a Service, Worldwide
Source: Gartner (May 2015)

Vendor Strengths and Cautions

Amazon Web Services
Amazon Web Services (AWS), a subsidiary of Amazon.com, is a cloud-focused service
provider with a very pure vision of highly automated, cost-effective IT capabilities, delivered in
a flexible, on-demand manner.

Offerings: AWS offers Xen-virtualized multitenant and single-tenant compute, with

multitenant storage, along with extensive additional IaaS and PaaS capabilities, including
object storage with an integrated CDN (Amazon S3 and CloudFront) and a Docker container
service (EC2 Container Service). It is willing to negotiate large-scale single-tenant and on-
premises deals (such as the U.S. intelligence community cloud deal). The AWS Marketplace
has an extensive selection of third-party software and services. Enterprise-grade support is
extra. It has a multi-fault-domain SLA. Colocation needs are met via AWS Direct Connect. See
the In-Depth Assessment for a detailed technical evaluation.

Locations: AWS groups its data centers into "regions," each of which contains at least two
availability zones. It has regions on the East and West Coasts of the U.S., and in Germany,
Ireland, Japan, Singapore, Australia, Brazil, and (in preview) China. It also has one region
dedicated to the U.S. federal government. It has a global sales presence. The portal,
documentation and support are provided in English, Dutch, French, German, Japanese, Korean,
Mandarin, Portuguese, and Spanish, although documentation is comprehensively localized
only in English, Japanese and Mandarin.
Recommended mode: AWS primarily appeals to Mode 2 buyers, but is now commonly chosen
for Mode 1 needs as well. Transformation efforts are best undertaken in conjunction with an
SI.
Recommended uses: All use cases that run well in a virtualized environment, although highly
secure applications, strictly compliant or complex enterprise applications (such as SAP
business applications) require special attention to architecture.
STRENGTHS
AWS has a diverse customer base and the broadest range of use cases, including enterprise
and mission-critical applications. It is the overwhelming market share leader, with over 10
times more cloud IaaS compute capacity in use than the aggregate total of the other 14
providers in this Magic Quadrant. This has enabled it to attract a very large technology
partner ecosystem that includes software vendors that have licensed and packaged their
software to run on AWS, as well as many vendors that have integrated their software with
AWS capabilities. It also has an extensive network of partners that provide application
development expertise, managed services, and professional services such as data center
migration.

AWS is a thought leader; it is extraordinarily innovative, exceptionally agile, and very

responsive to the market. It has the richest array of IaaS features and PaaS-like capabilities.
It continues to rapidly expand its service offerings and offer higher-level solutions. Although
it is beginning to face more competition from Microsoft and Google, it retains a multiyear
competitive advantage. Although it will not be the ideal fit for every need, it has become the
"safe choice" in this market, appealing to customers who desire the broadest range of
capabilities and long-term market leadership. It is the provider most commonly chosen for
strategic adoption.
CAUTIONS
 AWS can be a complex vendor to manage. Customers must ensure that they receive the
level of sales and solution architecture engagement they need to be successful. AWS is a
price leader, but it charges separately for optional items that are sometimes bundled with
competing offerings; use of third-party cost management tools, such as RightScale Cloud
Analytics and Cloudability, is highly recommended. AWS's support offerings are tiered based
on the level of support that a customer purchases, rather than on a "relationship" or size-of-
spend basis; customers need Business-tier support in order to ensure excellent support.
AWS is spreading its efforts very broadly. Although many new services are highly
successful, services that turn out to be of less interest to customers will not get the same
depth of continued investment as more popular services. As AWS expands, it increasingly
encroaches on the territory of traditional IT vendors, heightening competitive pressure and
the need to invest deeply in engineering efforts. Furthermore, new capabilities often
compete with products and services from AWS partners; though this is normally positive for
customers, it creates ecosystem conflicts that AWS must continue to manage carefully.
CenturyLink
CenturyLink, a U.S.-based global communications service provider, acquired Savvis, a Web
hoster with a long track record of leadership in the hosting market, in 2011. It acquired Tier 3,
a pure-play cloud IaaS provider, in November 2013, and merged it into Savvis to create the
CenturyLink Technology Solutions business unit.

Offerings: CenturyLink Cloud (CLC) is VMware-virtualized; it can be either multitenant or fully

single-tenant. CenturyLink continues to sell legacy Savvis offerings, such as Cloud Data
Center 2 and Cloud Servers, when those solutions are appropriate. The Marketplace Program
provides third-party software. Enterprise-grade support is extra. Managed services are
optional. CenturyLink offers an aPaaS (AppFog), but it is not an integrated solution.
Locations: CLC is available in multiple data centers across the U.S., along with Canada, the
U.K., Germany and Singapore. The legacy Savvis cloud offerings are available in a broad
range of data centers globally. CenturyLink has global sales, and business is conducted in
local languages, but the service is offered only in English.

Recommended mode: CenturyLink primarily appeals to Mode 1 buyers, but may meet Mode 2
requirements that are limited to basic cloud IaaS.

Recommended uses: Self-service cloud IaaS in conjunction with managed services, for all
applications that run well in a virtualized environment, excluding batch computing.
STRENGTHS
CenturyLink has a compelling and distinctive vision of application-fluent infrastructure that
spans network, compute and storage capabilities. Its "Platform CenturyLink" vision is rooted
in the ability to deliver the breadth of CenturyLink's capabilities in an API-accessible and
 composable fashion. It is building a broad range of cloud-enabled services, including
automation-augmented managed services.

While CenturyLink is increasingly focused on using the cloud as a means to enter the data
center outsourcing market, it nevertheless has a competitive feature set for self-service, and
successfully blends the self-service and managed services models across a hybrid solution
portfolio. CenturyLink has a track record of successfully delivering enterprise-class
solutions, including managed security services. The existing CenturyLink base of managed
hosting, colocation and network customers provides it with cross-selling opportunities.
CAUTIONS
While CenturyLink has an ambitious vision and is investing significantly in this market, it is
competing against many other providers who are also investing deeply, including market
leaders with much more extensive engineering resources. CenturyLink has a solidly capable
and well-implemented basic offering, and it is executing successfully on its roadmap, but
that roadmap may not be sufficiently aggressive for the pace of the market.
CenturyLink has had a difficult time learning to deliver solutions on the CLC offering, which
created challenges for sales, solution engineering, installation and delivery. Customers who
are not simply using self-service on the CLC offering should take extra care to understand
how CenturyLink intends to architect and deliver their solution. Furthermore, the quality of
customer service has been uneven over the past year, although this represents an
improvement over the prior two years.

CSC
CSC is a large, traditional IT outsourcer with a broad range of data center outsourcing
capabilities.

Offerings: CSC's offering is VMware-virtualized and supports the vCloud API. It is offered in
several tenancy models — CSC-hosted and fully-multitenant (CloudCompute), CSC-hosted
single-tenant compute with a multitenant back-end (BizCloud VPE), and fully single-tenant on
the customer's premises (BizCloud). While customers can access vCloud Director if they prefer,
CSC has built its own, more user-friendly portal. Customers can also choose to use the Agility
Platform CMP (formerly ServiceMesh). Managed services are optional. Via its acquisition of
Infochimps, CSC also has big-data-related services.

Locations: CSC has multiple cloud data centers in the U.S., as well as in Canada, Brazil,
Germany, Luxembourg, the Netherlands, the U.K., Australia, Malaysia and Singapore. It has a
global sales presence. Customer support is provided in English, French, German, Italian,
Spanish, and Mandarin; technical support is provided in the local language of each data
center region. The portal and documentation are available only in English.
Recommended mode: CSC primarily appeals to Mode 1 buyers, but may meet Mode 2
requirements via a hybrid solution that combines the Agility Platform and its own cloud with
third-party cloud IaaS offerings.

Recommended uses: Cloud-enabled data center transformation for customers that want a
VMware-based service or a private cloud.
STRENGTHS
CSC has pivoted toward being a CSB capable of managing multiple clouds, including third-
party clouds such as AWS and Microsoft Azure. It is using the Agility Platform that it
acquired from the purchase of ServiceMesh in order to facilitate the management of
multiple platforms in a consistent way.

CSC has fully embraced the highly standardized, highly automated cloud model,
successfully blending the benefits of a true cloud service into an enterprise-ready offering. It
has a solid platform that is attractive to Mode 1 IT operations organizations that still want
to retain control, but need to offer greater agility to the business and are willing to embrace
data center transformation.
CAUTIONS
CSC now leads sales with a transformation discussion and emphasizes the Agility
Platform's capabilities, and then helps the customer choose the appropriate cloud IaaS
offering, which, increasingly, is not CSC's own. In the past year, CSC's investments in its own
platform have focused on integrating it with the Agility Platform, rather than advancing the
core capabilities of the offerings.

CSC is not building the rich portfolio of value-added cloud software infrastructure services
that leading competitors are offering. Instead, it is encouraging customers who need these
capabilities to use third-party clouds, and providing a hybrid offering that is managed via
the Agility Platform.

Dimension Data
Dimension Data, an NTT Group company, is a large SI and value-added reseller. It entered the
cloud IaaS market by acquiring OpSource in 2011.

Offerings: Dimension Data's Compute-as-a-Service (CaaS) offering is available in Public

(multitenant VMware-virtualized) and Private (single-tenant VMware or Hyper-V-virtualized)
flavors. Managed services are optional.

Locations: Dimension Data has data centers on the East and West Coasts of the U.S., plus
Canada, the U.K., Netherlands, Australia, Hong Kong, Japan, Brazil and South Africa. Local-
language sales and support is provided in 51 countries, with cloud-specialized support
provided from its regional service centers. The portal is available only in English.
Documentation is available in English and Japanese.
Recommended mode: Dimension Data appeals primarily to Mode 1 buyers, including
conservative SaaS vendors. It may meet Mode 2 requirements that are limited to basic cloud
IaaS.
Recommended uses: E-business hosting, cloud-native applications and general business
applications for customers that have very diverse geographic needs, or need a private cloud.
STRENGTHS
Dimension Data's Managed Cloud Platform (MCP) is a single unified architecture that is
used for both its own offerings and those of partners. It is pursuing a federated model,
whereby service provider partners offer MCP-based services via resale or white label, but
Dimension Data provides one consistent, unified service globally. It also provides sales and
marketing enablement to its OneCloud Alliance members. It has one of the broadest
geographic footprints, including presence in locations where there are few other cloud
providers.

OpSource had a long history as a SaaS hoster, and Dimension Data has retained these
capabilities. Its rich suite of offerings for that market includes not only infrastructure, but
also an on-demand billing platform, custom application management and help desk
support. It has notably excellent SLAs.
CAUTIONS
MCP uses Dimension Data's own technology and has been actively developed and
maintained. However, compared with competitors, Dimension Data has significantly
underinvested in cloud IaaS engineering since the OpSource acquisition. Although MCP is a
capable basic cloud IaaS platform, it lacks value-added capabilities. Dimension Data began
the rollout of MCP 2.0 in March 2015. This version of its platform uses a new API, and there
are changes in the portal UI, as well as different functionality and data center locations.
Although MCP 1.0 will continue to be supported, this change is potentially disruptive for
customers.

Dimension Data intends to become a CSB that will manage its own infrastructure as well as
third-party cloud offerings; to do this, it is splitting out its Cloud Control CMP from the MCP
offering. Other NTT Group companies own and operate several other cloud IaaS platforms.
We believe NTT Group's split of investment across multiple offerings is probably detrimental
to Dimension Data's ability to achieve maximum success in this market.
Fujitsu
Fujitsu is a large diversified technology company.

Offerings: Fujitsu Cloud IaaS Trusted Public S5 is Xen-virtualized and comes in two flavors —
a fully multitenant service, and a Dedicated service with single-tenant compute and a
multitenant back-end. Fujitsu also has regional offerings that use different technology
platforms, and carry the Fujitsu Cloud IaaS Private Hosted brand in conjunction with a region
name or the "Global" designation. Managed services are optional.

Locations: S5 is available in data centers in the U.S. (West Coast), Germany, the U.K.,
Australia, Japan and Singapore. Fujitsu has global sales, and provides support in 34
languages; the S5 portal and documentation are available in English, German and Japanese.
The regional offerings have their own capabilities and locations, which are different from
those of S5.

Recommended mode: Fujitsu appeals primarily to Mode 1 customers.

Recommended uses: General business applications for customers who need managed
services in conjunction with cloud IaaS. Development environments for customers who only
need basic cloud IaaS.
STRENGTHS
Fujitsu has a long history in IT services and data center outsourcing. It has a large global
sales force, is the leader in IT outsourcing in Asia/Pacific and has a strong European
presence. This gives it a large existing base of captive customers into which it can sell cloud
services, and it has been successful at extending existing Fujitsu relationships into cloud
deals. It has very responsive support and good account management.
Fujitsu is developing a portfolio of cloud IaaS, PaaS and SaaS services. It has launched the
Fujitsu Cloud Integration Platform, a CMP that unifies management across its infrastructure
portfolio, including its own cloud IaaS offerings, third-party cloud IaaS offerings and
noncloud infrastructure.
CAUTIONS
Fujitsu is developing its "Next Gen Cloud," a common platform onto which it intends to
consolidate all its internal systems, including its system integration business. This offering
is projected to enter beta in 2015. Over time, this OpenStack-based platform will be used for
both IaaS and PaaS solutions. Fujitsu has ambitious plans for this new set of offerings, and
customers considering the existing offerings should factor the new roadmap into their
decisions.

Fujitsu's cloud IaaS capabilities lag significantly behind those of the market leaders, and the
gap is increasing, not narrowing. Although it is possible that the "Next Gen Cloud" will help
close the gap, Fujitsu will need to commit extraordinary resources to deliver a truly
competitive offering. Although Fujitsu can sell its IaaS platform on a stand-alone basis, and
it can be purchased without the need for a long-term contract, it is most often combined
with managed services or a broader outsourcing relationship.
Google
Google is an Internet-centric provider of technology and services.
Offerings: Google Cloud Platform combines an IaaS offering (Compute Engine), an aPaaS
offering (App Engine) and a range of complementary services, including object storage and a
Docker container service (Container Engine). Compute Engine VMs are KVM-virtualized and
metered by the minute. Enterprise-grade support is extra. It has a multi-fault-domain SLA.
Colocation needs are met via Google Cloud Interconnect. See the In-Depth Assessment for a
detailed technical evaluation.

Locations: Google groups its IaaS data centers into "regions," each of which contains at least
two availability zones. There is a central U.S. region, a European region (located in Belgium),
and an Asian region (located in Taiwan). Google has a global sales presence. Support is
available in English and Japanese. The portal is available in English, French, German,
Spanish, Portuguese, Korean, Japanese and Mandarin. Documentation is available only in
English.

Recommended mode: Google appeals to Mode 2 buyers.

Recommended uses: Cloud-native applications and batch computing, as well as projects
leveraging Google Cloud Platform as a whole.
STRENGTHS
Google's strategy for Google Cloud Platform centers on the concept of allowing other
organizations to "run like Google" by taking Google's highly innovative internal technology
capabilities and exposing them as services that other companies can purchase.
Consequently, although Google is a late entrant to the IaaS market, it is primarily
productizing existing capabilities, rather than having to engineer those capabilities from
scratch.

Google has a comprehensive vision for, and extensive experience with, how cloud-native
applications are developed and managed through the life cycle. It has a fluid notion of the
boundaries between IaaS and PaaS, along with the spectrum of deployment options from
VMs to containers, that will, over time, enable customers to choose their trade-offs between
control and automated management. Although many customers currently choose Google
for its excellent price/performance value and exceptionally fast VM provisioning, over time,
Google will differentiate itself with platform and manageability features, not prices.
CAUTIONS
Although Google has significant appeal to technology-centric businesses, it is still in the
rudimentary stages of learning to engage with enterprise and midmarket customers, and
needs to expand its sales, solutions engineering and support capabilities. Prospective
customers report difficulties in gaining the attention of Google's sales staff and being
directed toward appropriate solutions. Furthermore, Google needs to earn the trust of
businesses. Google also lacks many capabilities important to businesses that want to
migrate legacy workloads to the cloud. Its hybrid cloud strategy is open-source and partner-
 centric, focused on the ecosystem surrounding Kubernetes, its container cluster
management software Google needs to build an ecosystem around Google Cloud Platform;
its partner program is nascent.

Google's cloud IaaS adoption has been driven primarily by cloud-native use cases, including
batch computing. Google's short-term focus is on better enabling new cloud-native
applications, with less attention being paid to capabilities needed for other workloads. While
the offering has been improving steadily, Google's feature release velocity has not been as
fast as expected. Google's deep engineering investment could potentially advance its
offering much more rapidly in the future. Google is not yet taking full advantage of its
potential opportunity with Google Cloud Platform.

IBM (SoftLayer)
IBM is a large diversified technology company with a range of cloud-related products and
services. In July 2013, it acquired SoftLayer, an independent Web hoster with a focus on small
and midsize businesses (SMBs), and in January 2014, it shut down its own SmartCloud
Enterprise cloud IaaS offering, after migrating its existing customers to SoftLayer.

Offerings: SoftLayer, an IBM company, offers both multitenant and single-tenant Citrix-Xen-
virtualized compute (Virtual Servers). It also offers, as part of its cloud, paid-by-the-hour
nonvirtualized dedicated servers (Bare Metal Servers). It has OpenStack-based object storage
with an integrated CDN (via a partnership with EdgeCast). SoftLayer's primary business is
noncloud offerings, such as paid-by-the-month dedicated servers (a broader range of
configurations than is available per hour) and hosted appliances, but it does not make a clear
distinction between these offerings and its cloud IaaS capabilities. Managed services are
available through IBM. There is no support for colocation. IBM's aPaaS (BlueMix) is hosted in
SoftLayer data centers but the offerings are not integrated. See the In-Depth Assessment for a
detailed technical evaluation.

Locations: SoftLayer has multiple data centers in the U.S., along with data centers in Canada,
Mexico, France, Germany, the U.K., Netherlands, Australia, Hong Kong, Japan and Singapore. It
has a global sales presence. It offers support in English, Dutch, French, German, Italian,
Spanish and Japanese. The portal and documentation are available in English only.

Recommended mode: Before the IBM acquisition, SoftLayer typically sold to Mode 2
customers (specifically startups and gaming companies with a strong interest in bare-metal
dedicated hosting). Since the acquisition, IBM has increasingly focused on acquiring Mode 1
customers, but SoftLayer better meets the needs of Mode 2 customers (as long as they only
require basic cloud IaaS and specifically want bare metal).

Recommended uses: E-business hosting, general business applications and batch

computing, in circumstances that require both API control over scalable infrastructure and
bare-metal servers in order to meet requirements for performance, regulatory compliance or
software licensing. Alternatively, IBM outsourcing deals that use SoftLayer bare-metal servers
as the hosting platform, where the customer has a need for supplemental basic cloud IaaS.
STRENGTHS
IBM's cloud vision encompasses public and private clouds at both the system and
application infrastructure levels. IBM's portfolio of products and services has IaaS, PaaS
and SaaS elements, along with IT operations management (ITOM) software, middleware
and database software, and comprehensive consulting and outsourcing capabilities. IBM
believes the shift to cloud will radically transform its business over time, including altering
its go-to-market strategy, with an increasing focus on online sign-up and self-service.
SoftLayer is one of its first forays into self-service and serving SMB customers. SoftLayer
will be the common hosting platform for IBM's services in the future.

IBM has a strong brand and existing customer relationships across the globe, and its base
of strategic outsourcing customers will help drive a cloud-enabled data center outsourcing
business on top of SoftLayer. IBM intends to make local presence one of its competitive
differentiators; since the acquisition, it has taken advantage of SoftLayer's relatively small-
scale "pod" architecture to expand the service from three countries to 11. However, in the
near future, IBM will continue to be a hosting-scale provider, which may make it difficult for
it to match the cost economics of the hyperscale market leaders.
CAUTIONS
SoftLayer has limited differentiation beyond the hybrid blending of virtualized and bare-
metal capabilities, and a broader geographic presence. SoftLayer's feature set did not
improve significantly in 2014, and IBM's efforts to enrich the capabilities of its BlueMix
aPaaS have limited benefits for SoftLayer customers because the offerings are not
integrated into SoftLayer. Furthermore, SoftLayer uses its own technology and API, which
has limited third-party tool support. IBM has a beta of OpenStack-based VMs in BlueMix,
but a transition toward OpenStack could be disruptive for existing SoftLayer customers. We
believe that SoftLayer is primarily becoming an enabling data center platform for the rest of
IBM's business, and customers who pursue strategic adoption of IBM cloud services will do
so via IBM's enterprise sales force for the managed services and other higher-level IBM
capabilities, not the core SoftLayer capabilities. However, existing and prospective
customers report that integration with IBM managed services is still nascent.

SoftLayer has historically been strongly focused on self-service dedicated hosting for SMB
customers, and it is missing many cloud IaaS capabilities desired by midmarket and
enterprise customers. Customers report that SoftLayer services still feel like a small-
business experience, particularly with regard to the portal, sales and support. SoftLayer's
portal does not distinguish between cloud services and the noncloud, by-the-month hosted
hardware and appliances. Provisioning for all services can be initiated via API, but
customers need to understand the technical and business implications of choosing the
noncloud services, such as less financial flexibility, longer provisioning times and greater
 operational burdens placed on the customer. SoftLayer is not a market share leader in cloud
IaaS (based on Gartner estimates) and does not have the scale of the market leaders;
customers anticipating large-scale deployments must ensure that IBM has the necessary
capacity in those specific data centers, and that they can obtain that capacity in a cloud
model.

Interoute
Interoute is a U.K.-based Pan-European communications service provider.

Offerings: Interoute Virtual Data Centre (VDC) is a CloudStack-based offering that can be
delivered in the customer's choice of tenancy models and of VMware, Citrix Xen or KVM
virtualization. A wide variety of payment models are supported. Interoute's CloudStore
provides a marketplace for third-party software and solutions. Managed services are optional.

Locations: Interoute VDC is located in data centers on the East and West Coasts of the U.S.,
plus the U.K., France, Germany, Italy, Netherlands, Spain, Switzerland, and Hong Kong. It has
global sales. Centralized support is available in English, Dutch, French, German, Italian, and
Spanish, and Interoute's local technical support can cover most languages spoken in Western
and Central Europe. The portal is available in English and Spanish. Documentation is
available only in English.
Recommended mode: Interoute is likely to appeal primarily to Mode 1 customers, but may be
a good fit for the needs of Mode 2 customers who value Interoute's unique intersection of
networking and cloud IaaS capabilities.

Recommended uses: E-business hosting, general business applications, and development

environments for customers who need a broad Pan-European geographic footprint or for
whom tight integration with the WAN is important.
STRENGTHS
Interoute has tightly integrated its cloud services with its global network, which has broad
coverage of the major European markets, including especially strong coverage of Central
and Eastern Europe. Its "network-attached cloud computing" concept allows customers to
easily integrate VDC LAN topologies with Interoute's WAN services, including the ability to
use the API to configure networks that span multiple sites. This is useful for customers that
have complex distributed applications.

Interoute's flexible range of choices for tenancy models, hypervisors, pricing models, and
support and service models, provides customers with a variety of interoperable options.
Interoute's VDC is a capable enterprise-class basic cloud IaaS offering, and it is one of the
few such offerings available from a Europe-based, Pan-European provider; customers with
European data sovereignty requirements may find Interoute to be more attractive than a
U.S.-based provider.
CAUTIONS
 Interoute's VDC service is a capable basic cloud IaaS offering; Interoute has not ventured
into higher-level cloud services, other than communications applications. Instead, Interoute
is depending on partners to build and offer higher-level services on the VDC platform.
Interoute has begun to build an ecosystem of software partners in its CloudStore, but also
needs solution partners. Awareness of its brand is limited outside Europe.
Interoute is feeling the impact of the industrywide decline in fixed data revenue on its
wholesale business, for which its significantly growing IT service revenue may not be able to
compensate. Cloud IaaS is a very expensive market in which to compete, and Interoute will
find it challenging to muster the resources necessary to accelerate its success in the market.

Joyent
Joyent is a small, independent service provider that focuses solely on cloud services and
software.

Offerings: Joyent Compute Service is a fully multitenant cloud IaaS offering, although Joyent
can also offer it as a hosted private cloud. Joyent's architecture is container-native; compute
resources run in Triton Zones (Joyent's SmartOS virtualization technology, similar to Solaris
Zones). Customers can run Linux guests in Triton Zones (on bare metal), or Windows guests
on KVM-based VMs. There is a Docker container service (Triton). Joyent offers a free open-
source version of its software as SmartDataCenter, and sells a commercial version as Triton
Elastic Container Infrastructure; Joyent can also offer this as a Joyent-operated service on the
customer's premises. Joyent's object storage service (Manta) has a unique architecture
designed for batch jobs that require high-performance access to large amounts of storage,
with an in-place batch compute service separate from Joyent's main compute service.
Enterprise-grade support is extra.

Locations: Joyent has data centers in the eastern and western U.S., along with a data center in
the Netherlands. It has local sales presence in the U.S. and U.K. Support, the portal and
documentation are in English only.

Recommended mode: Joyent will appeal primarily to Mode 2 organizations, but may appeal
to Mode 1 organizations that are seeking a secure hybrid solution for Docker containers.

Recommended uses: Cloud-native or microservice architecture applications deployed into OS

containers; cloud-native applications and e-commerce sites where visibility into application
performance is crucial; batch computing on large datasets.
STRENGTHS
Joyent has long been an advocate of OS containers, and the growing popularity of
container technologies, especially Docker, has been beneficial both for its service and
software businesses. Joyent's architecture is well-suited to running containers securely
within a multitenant environment, and it is one of the first providers to launch a Docker-
 based container service. Because Joyent maintains a single codebase across its own
service offerings and the cloud infrastructure framework software that it sells, customers
can more easily consume Joyent technology in a hybrid fashion.

Joyent has a pure focus on new, cloud-native applications, including mobile applications, as
well as, in the context of its Manta service, big data applications and massively parallel data
analytics. Joyent is the sponsor of Node.js. It offers commercial support for Node.js, as well
as proprietary tools focused on Node.js operations within its platform. Joyent places strong
emphasis on application performance and takes a holistic approach to its delivery, including
particularly deep portal-based performance analytics.
CAUTIONS
Joyent focuses on developing its own technology, and has a track record of releasing
innovative capabilities. However, it faces a long-term challenge to compete against
providers with greater development resources. Joyent has a capable basic cloud IaaS
offering, but its feature set is strongly oriented toward cloud-native use cases, and it is
highly developer-centric.

Joyent needs an ecosystem of third-party tools that support its platform, along with a
software marketplace, and managed and professional service partners. Although Joyent
can take advantage of the growing Docker ecosystem, it must find ways to bring that
ecosystem to its platform, and that ecosystem will not by itself be sufficient to support
customer needs.
Microsoft
Microsoft is a large and diversified technology vendor that is increasingly focused on
delivering its software capabilities via cloud services. Its Azure business was previously
strictly PaaS, but Microsoft launched Azure Infrastructure Services (which include Azure
Virtual Machines and Azure Virtual Network) into general availability in April 2013, thus
entering the cloud IaaS market.
Offerings: Microsoft Azure offers Hyper-V-virtualized multitenant compute (Virtual Machines),
with multitenant storage, along with many additional IaaS and PaaS capabilities, including
object storage (Blob Storage) and a CDN. The Azure Marketplace offers third-party software
and services. Enterprise-grade support is extra. It has a multi-fault-domain SLA. Colocation
needs are met via Azure ExpressRoute. See the In-Depth Assessment for a detailed technical
evaluation.

Locations: Microsoft calls Azure data center locations "regions." There are multiple Azure
regions in the U.S., as well as regions in Ireland, the Netherlands, Australia, Hong Kong, Japan,
Singapore and Brazil. There are also two regions for the U.S. federal government. (Azure China
is a separate service operated by 21Vianet.) Microsoft has global sales. Azure support is
provided in English, French, German, Italian, Spanish, Japanese, Korean, Mandarin and
Portuguese. The portal and documentation are available in those languages, as well as
Russian.

Recommended mode: Microsoft Azure appeals to both Mode 1 and Mode 2 customers, but
for different reasons; Mode 1 customers tend to value the ability to use Azure to extend their
infrastructure-oriented Microsoft relationship and investment in Microsoft technologies, while
Mode 2 customers tend to value Azure's ability to integrate with Microsoft's application
development tools and technologies.

Recommended uses: General business applications and development environments for

Microsoft-centric organizations; cloud-native applications; batch computing.
STRENGTHS
Microsoft Azure encompasses integrated IaaS and PaaS components that operate and feel
like a unified whole. Microsoft has been rapidly rolling out new features and services,
including differentiated capabilities. It has a vision of infrastructure and platform services
that are not only leading stand-alone offerings, but also seamlessly extend and interoperate
with on-premises Microsoft infrastructure (rooted in Hyper-V, Windows Server, Active
Directory and System Center), development tools (including Visual Studio and Team
Foundation Server), and applications, as well as Microsoft's SaaS offerings.
Microsoft's brand, existing customer relationships, history of running global-class consumer
Internet properties, deep investments in engineering, and aggressive roadmap have enabled
it rapidly to attain the status of strategic cloud IaaS provider. Microsoft Azure is growing
rapidly, and is in second place for market share, with more than twice as much cloud IaaS
compute capacity in use as the aggregate total of the remaining providers in this Magic
Quadrant (excluding market share leader AWS). Microsoft has pledged to maintain AWS-
comparable pricing for the general public, and, on a practical level, customers with Microsoft
Enterprise License Agreement discounts obtain a price/performance ratio that is
comparable to AWS.
CAUTIONS
Microsoft has previously reliably met its promised time frames for introducing critical
features that help Azure fulfill enterprise needs for security, availability, performance,
networking flexibility and user management, but it has not finished introducing all such
functionality. Customers who intend to adopt Azure strategically and migrate applications
over a period of one year or more (finishing in 2016 or later) can begin to deploy some
workloads now, but those with a broad range of immediate enterprise needs may encounter
challenges. Furthermore, customers express concern about the global impact of many past
Azure outages, which may necessitate ensuring that critical applications on Azure have a
non-Azure disaster recovery solution.
 Microsoft's partner ecosystem is still relatively nascent. It recently launched a software
marketplace and has begun aggressively recruiting managed service and professional
services partners. However, many of these partners lack extensive experience with the Azure
platform, which could compromise the quality of the solutions they deliver to customers.
Furthermore, the Azure ecosystem is very dependent on existing Microsoft relationships.
Although customers do run heterogeneous environments in Azure, this lessens the appeal of
Azure to non-Microsoft-centric organizations.

NTT Communications
NTT Communications (hereafter "NTT Com"), an NTT Group company, is a Japan-based
global communications service provider.
Offerings: NTT Com has two cloud IaaS offerings. Cloud n is a fully multitenant, CloudStack-
based, KVM-virtualized offering. Cloud n has an associated object storage offering, CDN,
MySQL-based database as a service, and Cloud Foundry-based aPaaS. Enterprise Cloud is a
VMware-virtualized, vCloud API-enabled offering with an SRP pricing model, and it can be
either fully multitenant or single-tenant; almost all customers use managed services, but they
are optional.

Locations: Cloud n is available in multiple data centers in Japan, as well as a U.S. East Coast
data center. NTT Enterprise Cloud is available in data centers on the East and West Coasts of
the U.S., plus the U.K., Germany, Australia, Hong Kong, Japan, Malaysia, Singapore and
Thailand. NTT Com has a global sales presence. Cloud n support is available in English and
Japanese. NTT Enterprise Cloud support is available in English, French, German, Spanish,
Cantonese, Hindi, Japanese, Mandarin, Malay and Thai. The portal and documentation for
both offerings are available in English and Japanese.
Recommended mode: Cloud n will appeal primarily to Mode 2 customers. NTT Enterprise
Cloud will appeal primarily to Mode 1 customers.

Recommended uses for Cloud n : Development environments and cloud-native applications

where Japan-based hosting is desirable.

Recommended uses for NTT Enterprise Cloud: Development environments and general
business applications for customers who need a Pan-Asian footprint and want a VMware-
virtualized environment in conjunction with managed services.
STRENGTHS
NTT Com has a significant base of existing customers, especially in the Asia/Pacific region,
to whom it can potentially sell cloud services. Other NTT Group companies, such as NTT
Data, may also bring NTT Com cloud opportunities, as could NTT Com's partner network.
NTT Com also has a long track record in managed hosting and managed security services,
and can deliver these solutions in conjunction with Enterprise Cloud.
 NTT Com is using its global network to reduce both the total cost of its cloud solutions and
friction in its customer implementations. There are no data transfer charges with Cloud n .
NTT Com cloud customers receive a free connection between the offering and NTT's Arcstar
Universal One network. For NTT Enterprise Cloud, NTT Com has implemented software-
defined networking in its data centers and in the interfaces between the offering and the
WAN.
CAUTIONS
NTT Enterprise Cloud is a basic cloud IaaS offering with little differentiation. While Cloud n
has more features that may be of interest to developers, Cloud n is missing capabilities that
would make it attractive to enterprise IT operations organizations. There is no integration
between the offerings. This makes it difficult for NTT Com to serve customers who need a
unified offering, or who have cloud-native use cases that require enterprise-class
capabilities.

In mid-2015, NTT Com will begin rolling out its "Next Generation Cloud Platform," an
OpenStack-based offering that is intended to serve as the unified cloud IaaS platform for its
cloud efforts. It will replace the bifurcated approach currently represented by Cloud n and
Enterprise Cloud. It will also allow NTT Com to introduce new hosted private cloud services
and bare-metal cloud options. NTT Com intends to provide a CSB portal that includes not
only its own offerings but third-party clouds as well. While this represents a positive
direction for NTT Com, it is a change that existing customers will have to navigate.

Rackspace
Rackspace is an independent Web hoster with a long track record of leadership in the
managed hosting market. It has numerous related businesses; some, such as SaaS email, are
part of Rackspace itself, while others, such as Jungle Disk, are subsidiaries.
Offerings: Rackspace Public Cloud is a fully multitenant, OpenStack-based, Citrix Xen-
virtualized offering; the offering also has OpenStack Ironic-based bare-metal servers
(OnMetal) that are provisioned in approximately 5 minutes, and paid for per minute.
Rackspace also offers three flavors of hosted private cloud: vCloud Director-based and
VMware-virtualized, Microsoft Cloud OS-based and Hyper-V virtualized, and OpenStack-based
and KVM-virtualized. It also offers a Rackspace-operated OpenStack private cloud on the
customer's premises. Private clouds are priced on the basis of dedicated capacity. Rackspace
has object storage with an integrated CDN (Cloud Files). Customers must choose either a paid
support plan or managed services.

Locations: Rackspace Public Cloud and the hosted private cloud services are offered in data
centers in the central and eastern U.S., the U.K., Australia and Hong Kong. However, accounts
are region-specific; Europe is a separate region from the rest of the world. Rackspace has sales
presence in the countries where it has data centers, along with the Netherlands, Switzerland
and Mexico. Support is provided in English only. The portal and documentation are available
only in English.
Recommended mode: Rackspace appeals to both Mode 1 and Mode 2 customers who value
highly responsive customer service.
Recommended uses for Rackspace Public Cloud: Cloud-native applications requiring a basic
cloud IaaS offering that includes bare-metal servers; cloud IaaS as part of a hybrid hosting
solution with DevOps-oriented managed services; hybrid hosting where cloud IaaS is
supplementary to a primarily dedicated infrastructure; development environments where
simplicity and ease of use are crucial.
Recommended uses for Rackspace Private Cloud: Private OpenStack environments for
development or cloud-native applications; VMware or Hyper-V-based "rented virtualization" for
general business applications or development environments; private "Azure-like" (Windows
Azure Pack) environments for development; hybrid environments with Microsoft Azure.
STRENGTHS
Over the course of 2014, Rackspace successfully pivoted from its "Open Cloud Company,"
OpenStack-oriented strategy, and returned to its roots as "a company of experts,"
emphasizing its managed service expertise and superior support experience. Rackspace has
a coherent vision of cloud-enabled managed services that utilize automation and a DevOps
philosophy. Rackspace is no longer targeting customers that want to self-manage
exclusively, except in the context of its private cloud services.

Rackspace's industrialized private cloud offerings are thoughtfully constructed, more

automated than most competing offerings, and operated in a fashion that allows
Rackspace to deliver reliable, well-supported services at economical prices. During 2014,
Rackspace embraced technology partnerships with VMware and Microsoft in order to
expand its range of private cloud offerings, and began to provide managed services for
third-party offerings, starting with VMware's vCloud Air. While Rackspace continues to
participate in the OpenStack community, and has invested significantly in its OpenStack-
based private cloud services, it is increasingly technology-neutral. It is now focused on the
ways in which it can add value beyond providing basic infrastructure, such as offering
solution templates within its OpenStack-based private cloud.
CAUTIONS
Rackspace Public Cloud is a developer-centric offering, and has appealed primarily to small
businesses seeking a replacement for low-cost mass-market hosting. Although Rackspace
now delivers a solid set of basic features, it has not been able to keep up with the pace of
innovation of the market leaders. Rackspace has refocused its business upon customers
that need expert managed services for mission-critical needs, rather than try to compete
directly for self-managed cloud IaaS against hyperscale providers that can rapidly deliver
 innovative capabilities at very low cost, or against established IT vendors that have much
greater resources and global sales reach. It is a stronger competitor in private cloud IaaS,
which does not require the same breadth of capabilities.
Rackspace has made many cloud-related acquisitions to enhance its cloud capabilities and
rapidly expand the number of developers it employs. However, it has not integrated these
acquisitions into a cohesive whole. Many of the acquisitions actually can manage or
operate with multiple cloud IaaS providers. While this potentially positions Rackspace for
future multicloud management, and enables it to take advantage of the growth of
competitors, Rackspace will need to create a compelling value proposition for using its own
cloud IaaS offerings.
Verizon
Verizon is a U.S.-based global communications service provider. Verizon acquired Terremark, a
managed hosting and cloud IaaS provider, in 2011. During 2014, Verizon phased out the
Terremark brand.

Offerings: During 2014, Verizon consolidated most of its cloud IaaS offerings under the
"Verizon Cloud" umbrella brand and portal. The "Verizon Cloud" brand was previously used for
a new cloud IaaS offering that Verizon introduced into beta in October 2013. This offering is
now in general availability, with three deployment models: Virtual Private Cloud (VPC)
Reserved Performance (fully multitenant), Public Cloud (fully multitenant, with a simplified
subset of features) and Private Cloud (single-tenant). It is based on AMD SeaMicro servers, is
fully multitenant and can be either Xen-virtualized or VMware-virtualized; it also encompasses
Verizon's object storage offering. Verizon's other offerings are fully multitenant and VMware-
virtualized. The former Terremark Enterprise Cloud (eCloud) is now offered as Verizon Cloud's
VPC Elastic Resource, although it remains a distinct deployment model with its own distinctive
environment, capabilities, UI and API; it uses an SRP pricing model. The Federal Edition of
eCloud remains a separate offering outside Verizon Cloud. The vCloud Express offering and
Verizon's Enterprise Cloud Managed Edition (ECME) are being retired. Optional managed
services are available for all offerings other than Public Cloud and eCloud Federal Edition.
Enterprise-grade support is extra.

Locations: Verizon Cloud is available in multiple U.S. data centers, plus the U.K., Netherlands,
Hong Kong and Brazil, but not all offerings are available in all locations. Verizon has a global
sales presence. Support for all of Verizon Cloud is provided in English, Spanish and
Portuguese; other offerings are supported only in English. The portal and documentation for
all offerings are only in English.
Recommended mode: Verizon primarily appeals to Mode 1 customers.

Recommended uses: Development environments and general business applications.

STRENGTHS
 Verizon, via the offering formerly known as Terremark Enterprise Cloud, has the longest
track record in the market for VMware-virtualized enterprise-class public cloud IaaS.
However, its competitive differentiators have eroded over time as competitors have caught
up and, in some cases, surpassed it in feature development. The new Verizon Cloud offering
was an effort to build a consolidated, hypervisor-neutral, next-generation platform; although
it has not fulfilled Verizon's hopes, it remains the market's most ambitious and innovative
attempt at a truly software-defined, mixed-tenancy cloud IaaS offering delivered on
commodity infrastructure.
Verizon has a solid, workload-centric vision of what it would like its future service portfolio
to be. Currently, Verizon can serve a relatively broad range of use cases for basic cloud IaaS
via its range of different offerings. It is gradually consolidating all its cloud IaaS offerings
under the Verizon Cloud portal, which will eventually result in a more consistent user
experience across the portfolio. It has begun to build an ecosystem around Verizon Cloud
and started a marketplace program.
CAUTIONS
Verizon has capable basic cloud IaaS offerings, but lacks value-added capabilities. It will
need to invest very deeply in engineering, product development and its partner ecosystem,
which means competing for scarce talent and the attention of partners (which normally
prefer to work with the providers that have the most market share). Verizon's maintenance of
multiple distinct cloud IaaS platforms has forced it to split its engineering efforts, at a time
when all competitors in this market face a challenge to advance a single platform.
Verizon's sales organization does not often have a relationship with the decision makers
and influencers who select cloud IaaS providers, since they are different from the people
who control network procurement. For Verizon's cloud business to achieve its potential,
Verizon needs to become relevant to business managers and application development
leaders.
Virtustream
Virtustream is a small, independent service provider focused solely on cloud services and
software.
Offerings: Virtustream's service, xStream, is hypervisor-neutral but typically supports VMware
and KVM. It is offered in both single-tenant and multitenant variants; furthermore, it can
support single-tenant compute with a multitenant back-end, as well as bare metal. VMs are
available by the hour, bare metal is available by the month, and both paid-by-the-VM and SRP
models are available. The offering embeds a tool for governance, risk management and
compliance (GRC), including capabilities from Virtustream's 2014 acquisition of ViewTrust
Technology. There are variants of xStream targeted specifically at customers who need PCI
compliance, and U.S. federal government customers. Managed services are optional.
Virtustream also offers xStream as software, and has licensed some of its technology to other
service providers, such as IBM.

Locations: Virtustream has multiple data centers in the eastern and western U.S., and in the
U.K. and Netherlands. It has sales presence in the U.S., along with London, Walldorf (the
German home of SAP), and Dubai sales offices. The service is provided in English only.
Recommended mode: Virtustream's focus on complex traditional enterprise applications
means that it appeals primarily to Mode 1 customers, especially those seeking improved
agility.
Recommended uses: Complex workloads, particularly those related to ERP or other enterprise
software suites, including applications that may not have been designed to run in virtualized
environments.
STRENGTHS
Virtustream's founders have backgrounds in VMware and SAP consultancies, as well as
system integration, and the company has a strongly consultative approach, as well as
particular expertise in SAP; in 2013, Virtustream received a direct investment from SAP
America. Its cloud is targeted primarily at production applications, especially mission-critical
complex enterprise applications, such as ERP suites from SAP, Oracle and Microsoft. Its
ability to template and automate the deployment and management of highly complex
legacy applications enables customers to achieve agile application development life cycles
and reduce the risk of application changes for complex workloads such as those associated
with SAP. Virtustream has been successful at winning large-scale enterprise deals,
particularly those focused on SAP and that require managed service capabilities.
Virtustream has developed its own cloud platform technology, and can offer fully consistent
hybrid cloud solutions. Its micro-VM technology enables it to charge for resources
consumed, rather than resources allocated, and to offer policy-based service-level
management and application performance SLAs. It has focused on meeting enterprise
security and compliance needs, and has some unique capabilities, such as support for
Intel's Trusted Execution Technology (TXT) and trust framework. Virtustream typically works
closely with customers to determine how best to migrate on-premises applications to its
cloud, and it has its own data collection tools that customers run on their on-premises
servers to determine what resources they will need on xStream.
CAUTIONS
Although Virtustream supports a solid set of self-service features, it primarily targets
complex, mission-critical applications where it is likely that the customer will purchase
professional service assistance for implementation, and managed services on an ongoing
basis. It does not have the resources to compete for all workloads against providers whose
 greater resources allow development of much broader product portfolios. Rather, it provides
deep and differentiated capabilities in its focus areas. As a relatively small but innovative
provider with unique intellectual property, it may be a target for acquisition.
Virtustream is a compelling and unique provider for particular enterprise application use
cases, but it is better suited to implementations where an environment will be carefully and
consultatively tuned for the needs of particular applications, rather than general-purpose
environments where workloads are deployed without oversight.
VMware
VMware has historically been a software vendor focused on virtualization technologies. It
entered the cloud IaaS market when it launched the VMware vCloud Hybrid Service (vCHS),
now renamed vCloud Air, into general availability in September 2013. It is a subsidiary of EMC.

Offerings: vCloud Air is a VMware-virtualized, vCloud-API-enabled offering that comes in three

variants: On-Demand (fully multitenant), Virtual Private Cloud (fully multitenant and SRP-
priced) and Dedicated Cloud (single-tenant compute with multitenant back-end, and SRP-
priced with customer-controlled oversubscription). There is also a disaster recovery service. All
vCloud Air services share a common portal and are delivered as resource pools out of the
same shared hardware.

Locations: vCloud Air is available in multiple data centers in the U.S., as well as in the U.K.,
Germany, Australia and Japan. VMware has a global sales presence. Support is available in
English, French, German, Portuguese, Spanish, Hindi, Japanese and Mandarin. The portal is
available in English only; documentation is available in English and Japanese.

Recommended mode: vCloud Air primarily appeals to Mode 1 customers with existing
investments in VMware technology.
Recommended uses: Development environments, general business applications,
supplementing existing VMware-virtualized environments, Pivotal Cloud Foundry hosting, and
disaster recovery for customers seeking a VMware-based solution.
STRENGTHS
VMware is the market share leader and thought leader in virtualization. It has a strong
brand, global sales reach, and a broad base of existing customers that are deeply
committed to its technologies. Its strategy for vCloud Air is to offer hybrid cloud options to
existing VMware customers, reinforcing its position in internal data centers, and expanding
its total addressable market. It wants to offer customers a consistent experience across
VMware-based infrastructure, whether delivered as an on-premises virtualized environment
or delivered as a cloud service.

vCloud Air is a vCloud Director-based service (although VMware offers an easier-to-use

portal as the primary UI), and takes advantage of VMware's NSX software-defined
networking technology; the result is a capable basic cloud IaaS offering. The notion of
 "single pane of glass" manageability appeals to many IT administrators, although vCloud
Air does not yet deliver on this promise. However, the vCloud Air Disaster Recovery service
may be attractive to customers with on-premises VMware. VMware also possesses a suite
of ITOM tools that could, in the future, be used to enhance vCloud Air manageability.
CAUTIONS
vCloud Air has limited appeal to the business managers and application development
leaders who are typically the key decision makers for cloud IaaS sourcing. VMware
administrators in IT operations are the most likely champions of vCloud Air within a
business, but they often prefer to build internal solutions, and they are also often the people
that the business is trying to bypass by going to cloud IaaS. VMware must continue to
create hybrid solutions that can pull customers toward the cloud. It is trying to develop
compelling value propositions for developers by partnering with PaaS providers, with a
particular emphasis on mobile solutions. Although EMC also owns Pivotal, the Pivotal Web
Services PaaS runs on AWS, and VMware is in the process of independently building
developer-oriented capabilities.
VMware needs to build an ecosystem around vCloud Air. It has introduced a vCloud Air
Marketplace within its VMware Solution Exchange, but the catalog currently only includes
operating systems and Microsoft SQL Server. VMware does have a strong channel in its
broader business, but SIs, MSPs and value-added resellers need to learn to sell vCloud Air
effectively and deliver value on top. VMware has previously used service providers as its
channel to market, but none of those providers attained true scale and they were not able to
maintain the level of innovation necessary in this market. Some of these partners are now
reselling vCloud Air, which reduces channel conflict, but VMware faces the same technical
challenges, and many of the same business challenges, as other VMware-based service
providers.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as
markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant
or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or
MarketScope one year and not the next does not necessarily indicate that we have changed
our opinion of that vendor. It may be a reflection of a change in the market and, therefore,
changed evaluation criteria, or of a change of focus by that vendor.
Added
Interoute
NTT Communications

Dropped
 GoGrid. GoGrid was acquired by Datapipe in January 2015. Due to the timing of the
acquisition, and integration-related uncertainty, we could not assess either vendor for this
Magic Quadrant.

HP. While HP continues to operate its cloud IaaS offering (HP Public Cloud), it now only
actively seeks to market and sell this offering as part of a hybrid solution. It no longer has
sufficient market share to qualify for inclusion in this Magic Quadrant.

Inclusion and Exclusion Criteria

To be included in this 2015 Magic Quadrant, vendors had to demonstrate the following, as of
January 2015:

Market participation. They must sell public cloud IaaS as a stand-alone service, without the
requirement to use any managed services (including guest OS management), or to bundle it
with managed hosting, application development, application maintenance, or other forms of
outsourcing. They may, optionally, also sell a private version of this offering that uses the
same architecture but is single-tenant.
Market traction and momentum. They must be among the top 15 providers for the relevant
segments (public and industrialized private cloud IaaS, excluding small deployments of one
or two VMs), based on Gartner-estimated market share and mind share.

Business capabilities relevant to Gartner clients. They must offer the public cloud IaaS
service globally, be able to invoice, offer consolidated billing, and be willing to negotiate
customized contracts. They must have 24/7 customer support (including phone support).

Technical capabilities relevant to Gartner clients. The public cloud IaaS service must be
suitable for supporting production workloads, whether enterprise or cloud-native. Specific
service features must include:
Data centers in at least two metropolitan areas, separated by a minimum of 250 miles, on
separate power grids, with SSAE 16, ISO 27001 or equivalent audits
Real-time provisioning (small Linux VM in 10 minutes)

The ability to scale an application beyond the capacity of a single physical server
An allowable VM size of at least eight vCPUs and 32GB of RAM
An SLA for compute, with a minimum of 99.5% availability

The ability to securely extend the customer's data center network into the cloud
environment
The ability to support multiple users or API keys, with role-based access control
Access to a Web services API

Vendors Considered but Not Included

Vendors Considered but Not Included
This Magic Quadrant is global in scope, but most of the providers are based in the U.S. This is
a reflection of the way the market is evolving. The market has matured more quickly in the U.S.
and the bulk of revenue comes from U.S.-based customers and flows to U.S.-based companies
— U.S.-based IaaS providers typically derive 20% or more of their revenue from customers
outside the U.S. However, all the providers in this Magic Quadrant offer their services on a
global basis, and most have at least one data center in North America, Western Europe and
Asia/Pacific.

Significant Europe-based providers not in this Magic Quadrant include arsys, CloudSigma,
Colt, Gigas, Orange Business Services, OVH and Skyscape. Providers with significant presence
in the Asia/Pacific region that are not in this Magic Quadrant include Datapipe and Tata
Communications.

In the evaluations for this Magic Quadrant, we considered a variety of interesting cloud IaaS
providers that did not meet the criteria for inclusion. The more distinctive ones, by use case,
include:
Development: Skytap, which has deep self-service "lab management" capabilities and
features that support collaboration between developers, using either its own infrastructure
or AWS.
Disaster Recovery: Hosting and iland, which offer disaster recovery as a service on their
cloud IaaS platforms.
Enterprise applications: NaviSite, a Time Warner Cable Company, whose cloud IaaS
platform is suitable for hosting Oracle E-Business Suite and other complex applications.

HPC: CloudSigma, Internap, Peer 1 Hosting and ProfitBricks, which offer configurations and
pricing models that are attractive for HPC.
Private clouds: Blue Box and Metacloud (now Cisco OpenStack Private Cloud), which offer
remotely managed OpenStack-based private clouds as a service.
There are also many cloud IaaS providers that specialize in serving small businesses that
typically use just one or two VMs; examples are DigitalOcean, ElasticHosts and Linode. These
low-cost providers are often used as an alternative to mass-market virtual private server (VPS)
hosting. Gartner clients typically have needs beyond what such "cloud VPS" providers can
fulfill.
Even though some businesses may use PaaS in a very IaaS-like manner, we have excluded
PaaS providers from this Magic Quadrant, with the exception of those PaaS providers that
also have a qualifying IaaS offering. PaaS offerings do not allow customers to obtain raw
VMs that can be loaded with arbitrary operating systems, middleware and applications, which
is a requirement for being considered as IaaS. For PaaS providers, see "Magic Quadrant for
Enterprise Application Platform as a Service" and "Magic Quadrant for Enterprise Integration
Platform as a Service, Worldwide."

Evaluation Criteria
Ability to Execute
Gartner analysts evaluate technology vendors on the quality and efficacy of the processes,
systems, methods or procedures that enable IT providers' performance to be competitive,
efficient and effective, and to positively affect revenue, retention and reputation. Ultimately,
technology providers are judged on their ability to capitalize on their vision, and on their
success in doing so.
We evaluated vendors' Ability to Execute in this market by using the following criteria:

Product/Service: Service providers were evaluated on the capabilities of their cloud IaaS
offering to support all use cases being evaluated. We evaluated the breadth and depth of
the feature set, self-service capabilities, automated system management and suitability to
run a broad range of workload types. This criterion is important to buyers who want to
purchase the most capable, feature-rich service.

Overall Viability (Business Unit, Financial, Strategy, Organization): Providers were evaluated
on the success of their cloud IaaS business, as demonstrated by current revenue and
revenue growth since the launch of their service; their financial wherewithal to continue
investing in the business and to execute successfully on their roadmaps; commitment to
their current offerings, with no plans to execute disruptive platform transitions or migrations
in the next two years; and their organizational commitment to this business, and its
importance to the company's overall strategy. This criterion is important to buyers who
prefer to purchase services from large vendors with ample financial resources, or from
vendors that have a position of market leadership and are continuing to invest aggressively
in the business. It is also important to buyers who are concerned about their long-term
strategic investment in a particular vendor, or who want to avoid potentially disruptive
service changes.

Sales Execution/Pricing: Providers were evaluated on their ability to address the range of
buyers for IaaS, including the different audiences in each mode of bimodal IT; adapt to
"frictionless selling" with online sales, immediate trials and proofs of concept; provide
consultative sales and solutions engineering; be highly responsive to prospective customers;
and offer value for money. This criterion is important to buyers who value a smooth sales
experience, the right solution proposals and competitive prices.

Market Responsiveness and Track Record: This market is evolving extremely quickly and the
rate of technological innovation is very high. Providers were evaluated on how well they
have historically been able to respond to changing buyer needs and technology
 developments, rapidly iterate their service offerings, and deliver promised enhancements
and services by the expected time. This criterion is important to buyers who value rapid
delivery of cutting-edge capabilities.

Marketing Execution: Providers were evaluated on their mind share and brand awareness in
the market; their ability to convey marketing messages based on their ability to deliver real
business value, not empty hype or misleading "cloudwashing" (the practice of rebranding or
remarketing an existing offering under a cloud label without offering all the attributes of a
cloud service); and the clarity and accuracy of their marketing messages, compared with
their actual service offering. This criterion is important to buyers who prefer to buy from
well-known vendors.
Customer Experience: Providers were evaluated on the quality and responsiveness of their
account management and technical support; the ease of use of their self-service
functionality; the capabilities of their customer portal (additional functionality such as
monitoring, reporting and trouble ticketing); the usefulness of their documentation and
customer communications; the quality of their SLAs; the ease of doing business with them;
and overall customer satisfaction. This criterion is important to buyers who value the
aspects of the vendor relationship and capabilities beyond the IaaS platform itself.
Operations: Providers were evaluated on their ability to meet their goals and commitments,
including their track record of service delivery; the quality of their response to outages; their
approach to emergency and scheduled maintenance; and their ability to meet timelines that
are communicated to customers and to the market. This criterion is important to buyers who
want a reliable, predictable service experience.
Our evaluation of a service provider's Ability to Execute remains similar to that of the 2014
Magic Quadrant. We have continued to raise our expectations of a provider's feature set, and
we have further increased the weighting of Overall Viability, reflecting our belief that even
though some providers can accomplish great things with relatively few resources, long-term
success in this market will require substantial investment, as well as the ability to attract an
ecosystem.
Table 1.   Ability to Execute Evaluation Criteria
Evaluation Criteria Weighting

Product or Service High

Overall Viability High

Sales Execution/Pricing Medium

Market Responsiveness/Record High

 Marketing Execution Medium

Customer Experience Medium

Operations Medium

Source: Gartner (May 2015)

Completeness of Vision
Gartner analysts evaluate technology vendors on their ability to articulate logical statements
convincingly about current and future market direction, innovation, customer needs and
competitive forces, as well as how they map to Gartner's position. Ultimately, technology
providers are assessed on their understanding of the ways in which market forces can be
exploited to create opportunities.

We assessed vendors' Completeness of Vision in this market by using the following criteria:
Market Understanding: Providers were evaluated on their understanding of the wants and
needs of three different buying constituencies in this market — enterprises, midmarket
businesses and digital businesses (whether technology companies or digital business units
embedded in nontechnology businesses) — both currently and in the longer term as the use
of IaaS matures. This criterion is important to buyers who value a provider's understanding
of the market's evolution and broader business trends, which impact a provider's ability to
plan a successful long-term strategy.

Marketing Strategy: Providers were evaluated on their ability to articulate their position in the
market and their competitive differentiation, and to communicate these messages clearly
and consistently, both internally and externally. This criterion is important to buyers who
believe that providers should have a clear focus and direction.

Sales Strategy: Providers were evaluated on their understanding of the buying centers for the
market, and the way that these different buying centers want to engage with sales, as well
as their strategy for adapting their sales force, online channel and partner channels to the
IaaS market. This criterion is important to buyers who value a provider's ability to grow its
business over the long term.

Offering (Product) Strategy: Providers were evaluated on the breadth, depth, quality and
differentiation of their service roadmaps, as relevant to the use cases under evaluation, with
an emphasis on self-service, automated ITOM and overall feature set. This criterion is
important to buyers who want a provider who will lead the market in service capabilities.
 Business Model: Providers were evaluated on their overall value proposition and their
strategy for providing solutions for the use cases under consideration, not just raw
infrastructure elements. This included evaluating how IaaS fits into their broader product
portfolio and product strategy. This criterion is important to buyers who view IaaS as part of
an integrated set of solutions from a particular provider.
Vertical/Industry Strategy: Providers were evaluated on their ability to offer targeted services
for particular vertical markets, such as government, biotechnology, media and
entertainment, and retail. This includes sales and marketing to such verticals, their ability to
meet specialized compliance needs, and vertical-specific solutions. This criterion is not
directly important to most buyers, except to the extent that a provider has a vertical-specific
offering that is relevant to them.

Innovation: Providers were evaluated on the level of investment in the future of their
business, and the quality of those investments, whether financial or human capital; this
includes aspects such as the deployment of engineering resources, investments in new
technology, mergers and acquisitions, and partnerships and alliances. This criterion is
important to buyers who care about leading-edge capabilities, and the strength of a
provider's ecosystem.

Geographic Strategy: Providers were evaluated on their ability to expand their offering
beyond their home region, serving the needs of multinational businesses, as well as
adapting their offerings to other geographies. In particular, this included their strategy for
international sales and support, as well as their data center footprints and
internationalization efforts. This criterion is important to buyers who want to use a global
vendor.

Our evaluation of Completeness of Vision remains similar to that of the 2014 Magic Quadrant.
However, we have continued to increase our expectations for the breadth and depth of a
provider's vision. We believe that a comprehensive vision must encompass the ambition to run
any workload, at anytime, anywhere in the world, with the appropriate availability,
performance, security and isolation — including the ability to self-service all the necessary
compute, storage, network and management capabilities — in cooperation with an ecosystem
of supporting partners.
Table 2.   Completeness of Vision Evaluation Criteria
Evaluation Criteria Weighting

Market Understanding High

Marketing Strategy Medium

Sales Strategy Medium

 Offering (Product) Strategy High

Business Model Medium

Vertical/Industry Strategy Low

Innovation High

Geographic Strategy Low

Source: Gartner (May 2015)

Quadrant Descriptions
Leaders
Leaders distinguish themselves by offering a service suitable for strategic adoption and
having an ambitious roadmap. They can serve a broad range of use cases, although they do
not excel in all areas, may not necessarily be the best providers for a specific need, and may
not serve some use cases at all. They have a track record of successful delivery, significant
market share and many referenceable customers.

Challengers
Challengers are well-positioned to serve some current market needs. They deliver a good
service that is targeted at a particular set of use cases, and they have a track record of
successful delivery. However, they are not adapting to market challenges sufficiently quickly,
or do not have a broad scope of ambition.
Visionaries
Visionaries have an ambitious vision of the future, and are making significant investments in
the development of unique technologies. Visionaries may be new market entrants, or they may
be existing providers who are reinventing their business. Their services are still emerging, and
they have many capabilities in development that are not yet generally available. While they
may have many customers, they might not yet serve a broad range of use cases well.

Niche Players
Niche Players may be excellent providers for the use cases in which they specialize, but may
not serve a broad range of use cases well, or have a broadly ambitious roadmap. They may be
relatively new entrants to this market, or may not yet have gained significant market share.
Some may have solid leadership positions in markets adjacent to this market, but are still in
the relatively early stages of developing capabilities in cloud IaaS. Providers that specialize in
managed services on top of a "good enough" IaaS platform may be in this category. The more
highly targeted your needs, the more likely it is that there will be a Niche Player ideal for your
needs.

Context
When people think about "cloud computing," cloud IaaS is often one of the first things that
comes to mind. It's the "computing" in cloud computing — on-demand compute, storage and
network resources, delivered on-demand, in near real time, as a service. There has been
tremendous hype about these services, but there are also a number of use cases for which
cloud IaaS delivers excellent business value. Although the market is immature, it is evolving
rapidly; it has begun its journey up the Slope of Enlightenment on Gartner's "Hype Cycle for
Cloud Computing, 2014." Unfortunately, many customers do not clearly understand their
requirements, and many providers are in a state of turmoil and articulate their offerings poorly.
Therefore, care should be taken when sourcing these services.

In 2014, the absolute growth of public cloud IaaS workloads surpassed the growth of on-
premises workloads (of any type) for the first time. Market share has continued to grow more
heavily concentrated, even while the market has dramatically expanded. 2014 has been a year
of reckoning for many cloud IaaS providers, and many cloud IaaS providers believe that their
current strategy is failing them. Some of these providers intend to launch an entirely new
cloud IaaS platform, or are in the process of making substantial changes to their current
platform. Others are considering or in the process of executing a pivot to providing managed
services on leading cloud IaaS providers. Many providers have indicated that they intend to
discontinue or significantly reduce their investment in their cloud IaaS offerings, and others
intend to eliminate or replace their current offerings. We urge buyers to be extremely cautious
when selecting providers; ask specific and detailed questions about the provider's roadmap for
the service, and seek contractual commitments that do not permit the provider to modify
substantially or to discontinue the offering without at least 12 months' notice.

Cloud IaaS is now used for virtually all use cases that can be reasonably hosted on virtualized
x86-based servers. The most common use cases for cloud IaaS are development and testing
environments; HPC and batch processing; Internet-facing websites and Web-based
applications (which may or may not have architectures specifically designed for the cloud);
and non-mission-critical internal business applications. An increasing number of
organizations now run mission-critical business applications on cloud IaaS (Gartner's cloud
computing survey indicates 28% in 2014), and a significant number of organizations are in the
midst of migrating most or all of their infrastructure to cloud IaaS. Migrations are most
frequently done to avoid major capital expenditure, such as a hardware refresh or the
construction of a data center.
Initially, most businesses adopt cloud IaaS for Mode 2, agile IT projects; such projects may be
peripheral to the organization's IT needs, but may have a high business impact. Over time, as a
business becomes more comfortable with the use of cloud IaaS, it will be used in Mode 1,
traditional IT projects as well, usually mirroring the past decade's adoption pattern of
virtualization in the data center. Many businesses, especially in the midmarket, will eventually
migrate away from running their own data centers in favor of relying primarily on
infrastructure in the cloud. Gartner's 2015 CIO survey indicates that 83% of CIOs consider
cloud IaaS as an infrastructure option, and 10% are already cloud-first with cloud IaaS as their
default infrastructure choice. (See "Flipping to Digital Leadership: The 2015 CIO Agenda." )
Although some organizations still source cloud IaaS in a tactical, per-project fashion, most
organizations are now looking for long-term strategic partners. This 2015 Magic Quadrant
focuses on evaluating providers through the lens of their suitability for strategic adoption. We
believe that while the market is still relatively immature, customers may reasonably begin
making strategic choices, based on their own speed of adoption. Customers who will not have
the majority of their workloads on cloud IaaS until 2017 or later may choose strategic
providers whose offerings are still substantively incomplete, if they are confident that those
providers will have the necessary capabilities by the time they need them. We recommend that
prospective customers with immediate needs focus on finding the cloud provider that
matches their anticipated use cases for the next year. In some cases, businesses may have to
use multiple cloud IaaS providers to meet the needs of diverse use cases.

Market Overview
Cloud IaaS provides on-demand, near-real-time, self-service access to abstracted,
programmatically accessible and highly automated infrastructure resources (at minimum,
compute resources, along with associated storage and network resources), on-demand and in
near real time. In IaaS, the provider manages the data center facilities, hardware and
virtualization, but everything above the hypervisor layer — the operating system, middleware
and application — is managed by the customer, or is an add-on managed service from the
provider or another third party. This market is wholly separate and distinct from cloud PaaS
and SaaS.

Cloud IaaS is owned, built and operated by a service provider, but it may be delivered on-
premises within a customer's data center or hosted in the provider's data center. It may be
"public" (multitenant) or "private" (single-tenant), although, in practice, there is no consistency
in the application of these labels to varying degrees of resource isolation, and most hosted
offerings use some degree of shared resources in services labeled "private."

Cloud IaaS is not a commoditized service, and even providers with very similar offerings and
underlying technologies often have sufficiently different implementations that there is a
material difference in availability, performance, security and service features.

What Types of Workload Are Being Placed on Cloud IaaS?

There are four broad categories of customer need in cloud IaaS:

Digital business enablement

Mode 2, agile IT projects
Mode 1, traditional IT data center substitution

Batch computing
Digital business needs account for the majority of workloads in cloud IaaS. Digital business,
however, is not limited to technology companies. Almost every business is being impacted by
digital disruption and an increasing number of businesses have "internal startups" or digital
business units. (See "CEOs and CIOs Must Assume That Every Industry Will Be Digitally
Remastered." ) Digital business use cases are very broad, and include digital marketing, e-
commerce, e-CRM, SaaS and data services. These are generally production applications,
although cloud IaaS is typically used for the whole application life cycle. Many of these
customers have mission-critical needs.

In addition to digital business projects, many organizations have a wide variety of IT projects
that they are executing in an agile fashion. Rapid application development, prototyping,
experiments and other IT projects that require agility, flexibility and the ability to meet urgent
infrastructure needs are frequently executed on cloud IaaS. Although most such Mode 2, agile
IT projects are not core to the organization's overall IT portfolio, they may have high visibility
and high business impact.

In many organizations, cloud IaaS is gradually replacing or supplementing traditional data

center infrastructure. It is typically used very similarly to the organization's internal
virtualization environment. Organizations typically begin with development environments or
less-mission-critical production applications, but gradually expand to also host mission-
critical applications on cloud IaaS. Mode 1, traditional IT organizations typically look to cloud
IaaS to deliver cost reductions, but may also be interested in long-term IT transformation.
The least common need, but one that nevertheless generates significant revenue for the small
number of providers that serve this portion of the market, is batch computing. For these
customers, IaaS serves as a substitute for traditional HPC or grid computing. Customer needs
include rendering, video encoding, genetic sequencing, modeling and simulation, numerical
analysis and data analytics. These customers need to access large amounts of commodity
compute at the lowest possible price, with little concern for infrastructure reliability. Some HPC
use cases benefit from specialized hardware such as graphics processing units (GPUs) and
high-speed interconnects.
Cloud IaaS can now be used to run most workloads, although not every provider can run every
type of workload well. Service providers are moving toward infrastructure platforms that can
offer physical (nonvirtualized) and virtual resources, priced according to the level of
availability, performance, security and isolation that the customer selects. This allows
customers to run "cloud native" applications that have been architected with cloud transaction
processing principles in mind (see "From OLTP to Cloud TP: The Third Era of Transaction
Processing Aims to the Cloud" ; Note: This document has been archived; some of its content
may not reflect current conditions ), as well as to migrate existing business applications from
their own virtualized servers in internal data centers into the cloud, without changes. Cloud
IaaS is best used to enable new IT capabilities, but it has become a reasonable alternative to
an internal data center.

What Key Market Aspects Should Buyers Be Aware Of?

Cloud IaaS is not a commodity. Providers vary significantly in their features, performance, cost
and business terms. Although in theory, cloud IaaS has very little lock-in — a VM is just a VM,
in the end — in truth, cloud IaaS is not merely a matter of hardware rental, but an entire data
center ecosystem as a service. This encompasses the entirety of the ITOM stack, including
traditional IT service management capabilities, DevOps-oriented capabilities, and new forms
of automation, analytics and insight, including "smart" infrastructure capabilities that take
advantage of the unique perspective offered by the delivery of integrated compute, storage
and networking resources. The more you use those capabilities, the more value you will
receive from the offering, but the more you will be tied to that particular service offering. The
dynamics of this market resemble a software market, not a traditional IT services market.
Providers are in a race to deliver features, and the "winners" are likely to be those that are
highly innovative and that have the most resources to invest in the breadth and depth of
capabilities development.
IaaS and PaaS capabilities are overlapping. Cloud IaaS providers are increasingly offering
middleware capabilities as a service, and are likely to add capabilities such as the
provisioning and orchestration of application containers (particularly Docker containers).
Many leading providers will offer both IaaS and PaaS, and in many cases will blend IaaS and
PaaS capabilities into cloud integrated infrastructure services (CIIS). The spectrum of services
allows customers to decide on a trade-off between control and convenience. Customers want
to develop, deploy and manage applications efficiently, and will choose the combination of
capabilities that best suits their needs. To make it easy for applications to span the spectrum
of capabilities, a provider's CIIS needs a single self-service portal and catalog, common
identity and access management, an integrated low-latency network context, and an
integrated security context.
Providers' size and scale matter. While scale does impact operational efficiency to some
degree, more importantly, it impacts engineering efficiency — the ability to leverage an
investment in developers as well as partner capabilities across as large a customer base as
possible. Software requires a large upfront investment, but each incremental customer adds
comparatively little cost, and software markets tend to become "winner takes all" arenas,
where a small number of vendors command dominant market shares. Scale also matters
because the ability to deliver a broad range of integrated capabilities will become increasingly
crucial. A provider's size, its existing customer relationships, and the strength of its brand have
an enormous impact on its ability to gain market share and traction, especially on a global
basis. Furthermore, the solution ecosystem is rapidly consolidating around a small number of
market leaders.
The market is in a state of upheaval. The sky is not falling — customers are getting great value
out of cloud IaaS — but the earth is moving as the competitive landscape shifts. Few providers
have the financial resources to invest in being broadly competitive in the cloud IaaS market.
While there is room in the market for highly specialized providers, most providers are trying to
compete for a broad range of use cases. Many providers are struggling to grow their
businesses, despite rapid overall market growth. Some less successful providers may try to
build new platforms, become specialists in particular niches, acquire another provider in order
to use their platform instead, pivot to become third-party managed service providers on other
clouds, or exit the market entirely. This may be very disruptive for customers who choose such
providers. However, customers who have chosen market leaders should be well-insulated from
these troubling market conditions.
Bimodal IT impacts cloud IaaS sourcing decisions. Mode 2, agile IT organizations typically
value cloud IaaS providers that invest deeply in engineering in order to provide a rich suite of
features and extensive automation for self-service enablement. Mode 2 adoption is often
business-led — driven by business managers who hold the budget, need greater agility and
have shorter time frames than IT operations are able to accommodate, and who therefore turn
to application developers and enterprise architects for a solution. IT operations organizations
typically have a Mode 1 mindset and may initially look for providers that provide a basic set of
IaaS features within a familiar environment that is similar to their existing virtualized
infrastructure, but they are likely to rethink this approach if their ultimate goal is IT
transformation. Cloud IaaS providers vary in their ability to target these different buying
centers. Furthermore, most providers focus on either a Mode 1 or Mode 2 audience, and their
feature set and style of service are oriented accordingly, although leading providers offer
capabilities attractive to both audiences.
Automation will increasingly transform operations in the cloud. To deliver greater value to
customers, cloud IaaS providers must improve the quality and efficiency with which
customers can manage their infrastructure. They must find ways to reduce the burden of
operational chores such as patch management and backups. While manual managed
services are frequently used to substitute for automated offerings, efficiency demands
automation instead of operators, and successful IaaS providers will push "up the stack" to
deliver highly automated solutions.
Customers are separating cloud IaaS platform decisions from managed services decisions.
Some customers want to use an industrialized cloud IaaS offering, but would like to outsource
the management of that infrastructure. These customers increasingly choose to adopt a best-
in-class IaaS offering, and then seek a MSP to manage it, rather than adopt a "managed
cloud" offering from a MSP that can offer only basic IaaS capabilities on its own platform.
Customers may also extend existing outsourcing relationships to include management of a
third-party cloud IaaS offering. While some Mode 1, traditional IT customers consider it
acceptable for an MSP's platform to offer only a basic set of IaaS features, it is generally
unacceptable to Mode 2, agile IT customers. Furthermore, such deficiencies have a long-term
impact on the quality and cost of the customer's IT operations, which may be strategically
unacceptable to Mode 1 customers. Some MSPs specialize in cloud-native operations, usually
with significant use of DevOps, and can help customers through the transformation process,
which may be attractive to both Mode 1 and 2 customers, as well as digital businesses.

Public and private cloud IaaS are converging. Service providers are increasingly using
dynamic physical and logical isolation mechanisms to create "private" infrastructure within a
shared, multitenant capacity pool. This allows for economies of scale, while enabling
customers to meet a broader range of security and compliance requirements. For details of
this convergence and how to choose the level of isolation you need, see "Best Practice:
Evaluate Isolation Mechanisms in Public and Private Cloud IaaS" (Note: This document has
been archived; some of its content may not reflect current conditions) . We believe that, over
time, the leading providers will offer a single, highly flexible platform across both their own
data centers and customers' data centers. As a result, this Magic Quadrant covers not only
public cloud IaaS, but industrialized private cloud IaaS as well.
Most organizations are multicloud at the point of provisioning. While many customers use
multiple cloud IaaS providers, each individual project (or component of a composite
application) is typically hosted on a single provider. While it is relatively straightforward to
move VM images from one cloud to another, truly hybrid multicloud scenarios are rare. The
tools to enable true "single pane of glass" management and seamless movement across
infrastructure platforms are not mature, and there are significant differences in cloud IaaS
implementations, even between providers using the same underlying CMP. Note that the claim
that an ecosystem is "open" has nothing to do with actual portability. Due to the high degree of
differentiation between providers, the organizations that use cloud IaaS most effectively will
embrace cloud-native management, rather than allow the legacy enterprise environment to
dictate their choices.
The software-defined data center is the center of a partner ecosystem. Programmatic (API)
access to infrastructure is crucial, as it enables customers, as well as third parties, to build
management tools for their platforms, and to enable applications to take maximum
advantage of the infrastructure environment. Providers need to foster rich ecosystems of
capabilities. While the leading providers are likely to build a substantial number of capabilities
themselves, partners will extend the range of their capabilities, provide overlays for complex
heterogeneous multivendor environments, and add "stickiness" to these platforms by offering
tight integrations between applications, middleware and infrastructure.
Local sourcing matters to some customers. Customers normally prefer to keep data in-region
for reasons of network latency. However, regulatory concerns that require keeping data in-
country, as well as revelations about foreign intelligence agencies obtaining access to private
data, have heightened the desire of non-U.S.-based customers to purchase cloud IaaS from
local providers. (See "The Snowden Effect: Data Location Matters." ) Unfortunately, local
providers typically lack the scale and capabilities of the global providers, and may focus
primarily on small businesses, not enterprises. Furthermore, keeping data local is no
guarantee of freedom from either domestic or foreign surveillance. It is nevertheless possible
that the cloud IaaS markets in Europe and Asia will become highly fragmented, which may
result in only basic, commodity capabilities being available to customers that cannot use a
foreign provider (even when that provider has local presence).

Public cloud IaaS provides adequate security for most workloads. Although many security
controls are the responsibility of the customer, not the provider, most major cloud IaaS
providers offer a high degree of security on the underlying platform. Transparent encryption of
LAN, WAN and storage will become increasingly commonplace as a bundled element of cloud
IaaS offerings, as providers react to defend themselves against intrusion from government
entities.

Customers do not always save money by using cloud IaaS. Although many customers first
investigate using IaaS to achieve cost savings, most customers buy IaaS to achieve greater
business agility or to access infrastructure capabilities that they do not have within their own
data center. IaaS can drive significant cost savings when customers have short-term,
seasonal, disaster recovery or batch-computing needs. It can also be a boon to companies
with limited access to capital and to small companies, especially startups, that cannot afford
to invest in infrastructure (see "Cloud Computing Can Be the Singular Solution for at Least
Five Use Cases" ; Note: This document has been archived; some of its content may not reflect
current conditions) . For larger businesses with existing internal data centers, well-managed
virtualized infrastructure, efficient IT operations teams and a high degree of automation, IaaS
for steady-state workloads is often no less expensive, and may be more expensive, than an
internal private cloud. The less efficient your organization, the more likely you are to save
money by using a cloud provider, especially if you take advantage of this opportunity to
streamline and automate your operations. The largest-scale providers are continually lowering
their prices, and automated managed services will substantially drive down the cost of
infrastructure management over time, so cost advantages will continue to accrue to the
providers.
?

Government (Federal) Context

Market Differentiators
A cloud infrastructure as a service (IaaS) solution designed for U.S. federal government
customers ("federal IaaS") is expected to be Federal Risk and Authorization Management
Program (FedRAMP)-compliant. U.S. federal government entities are supposed to use
FedRAMP-compliant solutions, but in practice, they do not always do so.

Because the FedRAMP certification process is lengthy, providers may be in the process of
certification. Cloud IaaS providers exist in all three forms of FedRAMP compliance — Joint
Accreditation Board Provisional Authority to Operate (JAB P-ATO), agency ATO, and security
assessment package ("CSP Supplied Package") assessed by a FedRAMP-accredited Third
Party Assessment Organization (3PAO) — and all forms of compliance are considered valid
for federal IaaS. Some other providers may not want to undertake the effort and expense of an
ATO, but may have solutions that meet the FedRAMP requirements; note, however, that these
solutions are not considered FedRAMP-compliant. Because FedRAMP is the expected
standard in this market, but acquiring an ATO is a difficult, expensive and lengthy process, the
number of federal IaaS providers is limited.
Note that some cloud IaaS providers have a very broad solution, which may include platform
as a service (PaaS) capabilities. A 3PAO may not have assessed everything in their portfolios,
but providers will normally be specific about which parts of their solution have been reviewed
by a 3PAO.
Federal IaaS solutions normally adhere to International Traffic in Arms Regulations (ITAR)
restrictions. Some providers are also Federal Information Security Management Act (FISMA)
Moderate accredited. Some have also received authorization under the Department of Defense
(DoD) Cloud Security Model (CSM). Federal IaaS is often, but not always, delivered from data
centers that are specifically for government customers. When such solutions are hosted in the
same data centers as are used for commercial customers, the federal IaaS solutions are
usually physically and logically segregated from the commercial solutions. These federal
solutions are normally operated by U.S.-based personnel.
Use of federal IaaS solutions is normally restricted to U.S. federal government customers, but
in most cases, contractors and other third parties performing work on behalf of government
agencies can also use them. Notably, SaaS providers with government customers are often
allowed to use these solutions.
State and local government entities are usually not permitted to use federal IaaS solutions,
although this varies by provider — it is the provider that decides which customers are permitted
in the community cloud. Such entities may need to find commercial cloud IaaS solutions
instead. In most cases, customers use Criminal Justice Information Services Division (CJIS)
compliance as a proxy for determining whether a cloud IaaS offering can adequately meet
government security requirements.

Considerations for Technology and Service Selection

Government organizations contemplating the use of cloud IaaS should pay careful attention
to bimodal IT requirements. Government IT personnel frequently have a cautious mindset and
a tendency to operate only Mode 1 reliable IT, but they increasingly face agile demands that
are better served with Mode 2 IT. Government IT organizations often attempt to source cloud
IaaS in a Mode 1 fashion, even if the primary need is agility; such an approach is unlikely to
fully satisfy users. Conversely, government IT organizations that are trying to drive Mode 1-
oriented cost reductions need to source differently than those whose primary need is agility
and transformation. When selecting an offering, it is vital to keep bimodal requirements in
mind.
Government customers should be careful to distinguish between cloud IaaS and more
traditional forms of outsourcing. Many so-called "cloud" solutions that are marketed to
government entities are simply "cloudwashed" outsourcing; they often come with long-term
contracts, with relatively inflexible capacity constraints, and lack the automation and
industrialization of true cloud IaaS offerings (for more details, see "Don't Be Fooled By
Offerings Falsely Masquerading as Cloud Infrastructure as a Service" ).
Some government customers find it difficult to contract directly with cloud IaaS providers, due
to government acquisition rules. There are third-party cloud service brokerages — usually
managed service providers (MSPs) and system integrators (SIs), such as Accenture, Datapipe,
Smartronix and Unisys — that resell major cloud IaaS providers' solutions, and that typically
add significant value as well; these are probably the best choice for government entities that
need a brokered solution. There are other brokers that may add little or no value, but are willing
to resell a major cloud IaaS provider's solution while offering much more attractive contract
terms, usually with far higher liability caps. Government customers should beware of such
resellers as they frequently lack the financial solvency to fulfill their obligations. Government
customers may also want to buy through an 8(a) company in order to fulfill procurement
obligations; again, they should be careful, as such resellers often mark up the price without
adding value.

Notable Vendors
Vendors included in this Magic Quadrant Perspective have customers that are successfully
using their products and services. Selections are based on analyst opinion and references that
validate IT provider claims; however, this is not an exhaustive list or analysis of vendors in this
market. Use this perspective as a resource for evaluations, but explore the market further to
gauge the ability of each vendor to address your unique business problems and technical
concerns. Consider this research as part of your due diligence and in conjunction with
discussions with Gartner analysts and other resources.
Amazon Web Services
AWS's GovCloud is an AWS region located in Oregon. It is a community cloud dedicated to the
U.S. federal government, including contractors, third parties and SaaS providers providing
services to federal customers. It has a FedRAMP agency ATO from the Department of Health
and Human Services, as well as a DoD CSM Level 3-5 Provisional Authorization. It adheres to
ITAR regulations. It can be used for workloads that must adhere to CJIS requirements. Most
AWS services are available in GovCloud, though only the core services have been assessed by
a 3PAO.
AWS has the largest market share in cloud IaaS for government customers. It serves federal
customers both in GovCloud and its commercial regions. It also serves a significant customer
base of state and local customers from its commercial regions. AWS has a rich ecosystem of
partners, and many government customers adopt AWS through an MSP or SI.
Carpathia
VMware vCloud Government Service (vCGS) provided by Carpathia is a partnership between
VMware and Carpathia to provide a government community cloud. There are two vCGS data
centers, one in Northern Virginia and one in Arizona. vCGS has a FedRAMP JAB P-ATO, and
can be used for workloads that must adhere to CJIS requirements. Note that this service uses
the same architecture as VMware's own vCloud Air and must meet the same quality metrics,
but it is still a distinct service operated by a VMware partner, not VMware itself. Carpathia has
a long history as a managed hosting provider for government customers.

Microsoft
Microsoft Azure Government Cloud is a community cloud for U.S. federal, state and local
government customers, as well as qualified partners serving those entities. There are two
regions, one in Northern Virginia and one in Iowa. Completion of a FedRAMP JAB P-ATO is
expected in May 2015. It can be used for workloads that must adhere to CJIS requirements.
Many Azure services are available in the Azure Government Cloud, although the newer, higher-
performing compute instance types are not yet available in these regions. The main Microsoft
Azure service also has a FedRAMP JAB P-ATO, although only a subset of Azure services has
been assessed by a 3PAO.
Microsoft has been aggressively pursuing government customers, especially state customers.
There are many ways in which government customers can purchase Azure services, which
eases what is sometimes a complex procurement process.
Verizon
Verizon's Enterprise Cloud: Federal Edition is a community cloud for U.S. federal government
customers. It is based on the Terremark Enterprise Cloud; it is not part of Verizon Cloud. It is
deployed in Northern Virginia, and has an agency ATO from the Department of Health and
Human Services.
Virtustream
Virtustream's Federal Managed Cloud Services (FMCS) is a community cloud for U.S. federal
government customers. It is similar to Virtustream's Enterprise Cloud, with Northern Virginia
and San Francisco-based isolated deployments of Virtustream's xStream platform.
Virtustream expects to receive a FedRAMP JAB P-ATO in May 2015. FMCS can be used for
workloads that must adhere to CJIS requirements. In addition, Virtustream's ViewTrust
solution can be used for continuous monitoring and on-demand compliance reporting.

Evidence
Gartner client inquiries in 2014 and 2015 (currently more than 1,000 cloud IaaS-related
inquiries per quarter)
Service provider interviews and product demonstrations in 2014 and 2015
Surveys of more than 75 cloud IaaS providers in 2014 and 2015
Customer references from the service providers in 2014 and 2015

Hands-on trials of service offerings in 2014 and 2015

Public information from sources such as U.S. Securities and Exchange Commission filings,
press releases, vendor websites and community support forums

Note 1
SSAE 16
Statement on Standards for Attestation Engagements (SSAE) 16 — that is, Service
Organization Control (SOC) 1. See "SOC Attestation Might Be Assurance of Security … or It
Might Not."

Note 2
ISO 27001
International Organization for Standardization (ISO)/International Electrotechnical
Commission (IEC) 27001. See "Security Research Roundup for ISO 27001 Compliance."

Evaluation Criteria Definitions

Ability to Execute
Product/Service: Core goods and services offered by the vendor for the defined market. This
includes current product/service capabilities, quality, feature sets, skills and so on, whether
offered natively or through OEM agreements/partnerships as defined in the market definition
and detailed in the subcriteria.
Overall Viability: Viability includes an assessment of the overall organization's financial
health, the financial and practical success of the business unit, and the likelihood that the
individual business unit will continue investing in the product, will continue offering the
product and will advance the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure
that supports them. This includes deal management, pricing and negotiation, presales
support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve

competitive success as opportunities develop, competitors act, customer needs evolve and
market dynamics change. This criterion also considers the vendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to
deliver the organization's message to influence the market, promote the brand and business,
increase awareness of the products, and establish a positive identification with the
product/brand and organization in the minds of buyers. This "mind share" can be driven by a
combination of publicity, promotional initiatives, thought leadership, word of mouth and sales
activities.

Customer Experience: Relationships, products and services/programs that enable clients to

be successful with the products evaluated. Specifically, this includes the ways customers
receive technical support or account support. This can also include ancillary tools, customer
support programs (and the quality thereof), availability of user groups, service-level
agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors
include the quality of the organizational structure, including skills, experiences, programs,
systems and other vehicles that enable the organization to operate effectively and efficiently
on an ongoing basis.

Completeness of Vision
Market Understanding: Ability of the vendor to understand buyers' wants and needs and to
translate those into products and services. Vendors that show the highest degree of vision
listen to and understand buyers' wants and needs, and can shape or enhance those with their
added vision.
Marketing Strategy: A clear, differentiated set of messages consistently communicated
throughout the organization and externalized through the website, advertising, customer
programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of direct
and indirect sales, marketing, service, and communication affiliates that extend the scope and
depth of market reach, skills, expertise, technologies, services and the customer base.
Offering (Product) Strategy: The vendor's approach to product development and delivery that
emphasizes differentiation, functionality, methodology and feature sets as they map to current
and future requirements.
Business Model: The soundness and logic of the vendor's underlying business proposition.
Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to
meet the specific needs of individual market segments, including vertical markets.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or

capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet
the specific needs of geographies outside the "home" or native geography, either directly or
through partners, channels and subsidiaries as appropriate for that geography and market.

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