The recent announcement between Terremark and Engine Yard got me to thinking this past week, just what this means for enterprises. Terremark has been quite aggressive in providing its Enterprise Cloud to the market. With VMware’s vCloud, they are delivering private cloud services to their enterprise customers. With roughly 50% of enterprises considering a move to a cloud computing model, the market opportunity abounds and competition will heat up. Terremark and VMware are both well known vendors who understand the needs of enterprises, and will leverage this to make its way into the private cloud market, as Terremark will not only provide the platform with VMware’s vCloud, but will also provide the necessary services needed to deliver superior performance.

What I did find more interesting was Engine Yard’s decision to move its customers to Terremark. After all, they were providing a custom infrastructure as a service (IaaS) solution for their enterprise customers, and eventually started using AWS for a significant number of its customers as well. It struck me as an odd move from EngineYard, who has operated with more of a start-up demeanor, and have developed a sort of cultish following with their Ruby-on-Rails platform. So why the switch?

The IaaS space has become flooded with vendors peddling their solutions. The fact of the matter is the business value of cloud for enterprises will come more from the platform-as-service they choose in order to be able to work and customize their applications, hence the move for vendors to move up the stack to become more PaaS vendors. Most recently, we saw VMware make this move with the acquisition of Zimbra. Engine Yard’s move to no longer host its own IaaS solution is smart, as it can provide better value to its enterprise customers by focusing more on its Ruby-on-Rails platform. Enterprises can benefit from Engine Yard’s RoR platform, with Terremark, who delivers enterprise-class services. For enterprises, this is a win-win.

The bigger question I think is, why not switch all their customers to Terremark? Why only their customers who

were being hosted on their custom solution? Clearly, Terremark has vCloud, which will enable Terremark’s customers to have high performance, custom configuration, a standard (for the most part) API, and enterprise- class services to boot, so why not?

I believe AWS provides a different need for a different customer. I have long advocated that there will be a need and use for both kinds of vendors, delivering very different services and functionality. Amazon’s AWS offers a cost structure that is very difficult for enterprises to ignore, regardless of whether it offers the capabilities that private cloud offers or not. While Terremark offers a more cost efficient solution through VCloud Express, designed for smaller scale needs and cost efficiencies, the fact is that customers still look to Amazon’s AWS to fill their needs and requirements. The fact is that enterprises will continue to use both, for different needs and functionality. Terremark/VMware offer the beginning of a migration path for customers like Engine Yard, but that path is still not quite there yet. I believe Engine Yard recognizes this and therefore, has chosen to keep their AWS customers where they are, and perhaps wait until Terremark and VMware can deliver what AWS provides for their customer today.

Your thoughts? Can service providers and vendors today deliver what Amazon’s secret sauce seems to be?