Loudcloud Inc. made official here in April its plans to evolve into the enterprise data center space, a move met with optimism from the new target market but with hesitancy from customers.
With Version 2i of its proprietary Opsware service, said CEO and President Ben Horowitz, the Sunnyvale, Calif., company will be able to plug in directly to enterprise data centers. The revenue potential for that market is about 10 times that of Loudclouds current market in commercial hosting management, Horowitz said. "More of our business, right now, is coming from the enterprise than from new companies," he said.
Industry observers said they think its the right move for Loudcloud, formed early last year by Netscape Communications Corp. co-founder Marc Andreessen.
"I think its very significant," said Len Eckhaus, founder of AFCOM, a trade association for enterprise data center professionals based in Orange, Calif. "With all the dot-coms that are going out of business, the data centers are still plugging along."
Of the countrys roughly 9,000 such centers, Eckhaus said, many "are getting very involved in things like wireless and e-commerce. ... I see this as a very logical move; it makes a lot of sense to me."
However, he said, Loudcloud will find that it has a lot to learn in this new realm. "Theyre going to run into a lot of things that for them are new problems but that weve been solving for a long time," he said. "The traditional data center is already doing a lot of the things that dot-coms are interested in."
Growth opportunities also abound by working with service providers. Loudcloud will be working with more partners such as New York-based Accenture and building "deeper relationships" with data centers and other service providers, Horowitz said.
While recognizing that Loudclouds plans may appeal to enterprises and stockholders, customers said Loudcloud needs to do a better job addressing its more immediate needs. Customers cited inflexible pricing plans and a lack of useful service measurement tools as areas that could stand improvement.
"Were at a point where its not making sense for us to be paying the $100,000 a month Loudcloud requires. We could be running our own data center a lot cheaper right now," said Jim Lucier, director of corporate alliances for Xign Corp., an 11-month-old online payment company in Pleasanton, Calif. But, Lucier said, "The amount of money charged, in our mind, is not as much of an issue as scalability and security."
On those fronts, he said, Loudcloud more than fits the bill. "We overall have a very high level of satisfaction," he said. "The Loudcloud software allows us to do that."
Loudcloud also used the event to announce an alliance with iFormation Group, a New York-based business incubator with international scope, to give both companies customers access to their services. So far, iFormation has spawned companies such as eOne Global LP, an online payment company, and Site59.com Inc., for last-minute travel planning.