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Matchmaking for the Cloud

A marketplace sells unused computing capacity—but a lack of transparency may put off some customers.
February 16, 2011

For big computing jobs, such as data analysis or video processing, it’s often cheaper for businesses to use rented resources rather than hardware they own. They can lease access to hardware for a specific period of time, or they can use a cloud computing service, which charges for the amount of computer power used. Now a service launched this week by Toronto-based Enomaly will let companies buy and sell unused computing capacity.

Enomaly’s marketplace, called SpotCloud, is meant to help companies that aren’t in the cloud computing business make money off resources that might otherwise be lying idle, and to help smaller companies compete with larger, better-known providers. Meanwhile, buyers may get a cheaper deal—and the chance to select a provider according to criteria such as how much processing power it offers and where the computing systems are physically located.

Some cloud computing companies already sell excess capacity. Amazon, for example, offers the opportunity to bid on this resource through its Elastic Compute Cloud, providing customers with a discount on processing. But SpotCloud brings together excess capacity from many different companies, creating broader competition.

Reuven Cohen, founder and CTO of Enomaly, says if a business finds that it has many customers in Brazil, for example, it could rent computing power in a major Brazilian city to speed up access there. Before allowing providers into its market, SpotCloud vets them by running tests on their hardware to ensure a baseline quality of service. However, it doesn’t reveal who is providing specific services to buyers.

During SpotCloud’s testing phase, Cohen says, many of its customers were traditional Web hosting companies looking to use a space unexpectedly freed up—say, by a big customer who went out of business.

The SpotCloud marketplace itself is built on top of Google’s App Engine. Enomaly provides technology that helps a buyer transfer a computing job to the seller. Buyers use Enomaly’s SpotCloud Package Builder to create a virtual machine that can run the job. The system then uploads the job to the seller, who has to have software installed that’s compatible with SpotCloud.

Cohen notes that having a marketplace allows prices to fluctuate according to supply and demand. In the testing phase, Enomaly found that prices for services in Silicon Valley were lower because there are a lot of computing resources available there. On the other hand, in Brazil and Asia—expanding markets where resources are relatively scarce—prices were higher.

“Part of the flip side of computing becoming a true utility service is that the infrastructure providers will have massive amounts of hardware,” says Ben Kepes, an analyst and business advisor who runs Diversity Limited, a consultancy specializing in cloud computing and business strategy. That tends to mean they have excess capacity lying unused. “In order to drive the efficiency of the marketplace, a clearinghouse where vendors can unload excess capacity at discount rates is necessary,” Kepes says.

But SpotCloud will face challenges, says Krishnan Subramanian, an independent cloud computing analyst. For example, Subramanian notes that keeping sellers’ identities hidden may put off some enterprise customers. “Before I put my organization’s data into anyone’s facility, I really want to know who they are,” he says. SpotCloud also does not offer service-level agreements, which guarantee customers a certain standard of performance. To be successful in the long term, Subramanian says, SpotCloud will have to attract enterprise customers and set them at ease.

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