OutsourcingCloud managementInfrastructure

In the cloud computing market, the party that bears the most risks is the cloud service provider. That is not surprising after all since the pay-as-a-you-use opex model, a basic tenet of cloud computing, is supposed to free user organizations from traditional IT risks of high upfront IT costs; poor utilization of IT resources; and rigid systems that cannot scale to meet dynamic business needs.  

"Although cloud computing may be gradually catching on, service providers are already paying for the equipment today and they have to think of a model where they can earn [a profit on] what they have invested," said Hayato Koeda, the president and CEO of A10 KK as well as vice president of South Asia at A10 Networks. "From a business model perspective, cloud computing is not there yet. Probably, no one's making money in cloud services."

Koeda believes that the pricing model has to make sense for the service provider who faces the challenge of retaining customers and earning revenue from an opex model while having to bear upfront costs from their many suppliers in the supply chain. "We don't think this pricing model is established yet," he said.

"We're still monitoring where the market is growing," Koeda added. "For example, we may charge service providers on [a pay-as-you-grow] basis. We have a list price for our solutions but we just don't know whether that's going to work. We're considering a stepped fee [or] some kind of model where everyone can make money."

For now, the vendor will tout its virtualization, application networking and IPv6 migration solutions to help cloud service providers realize cloud economics and reduce costs per transaction.

It is trying to achieve this through dynamic resource provisioning based on load by the vendor's AX application delivery controllers (ADCs) or virtualized management software; reduced server requirements for multi-tenancy with virtualized management of multiple customers per appliance and acceleration/offload functionality; and reduced space and power requirements with its 1 rack unit (RU) and 2 RU ADCs.

"IT trends such as cloud computing, multi-layer security and high compute per rack unit are essential to ensure applications can keep pace with rapidly expanding user demand," said Joe Skorupa, research vice president for Data Center Convergence at Gartner. "Application networking vendors are enabling these trends with scalable, compact application delivery controllers that help customers create scalable, high-performance application deployments."

A10 Networks also offers the software-based SoftAX virtual appliance for application delivery and server load balancing. It runs on VMware and works with Microsoft Exchange 2010 and Lync 2010. While targeting data centers and cloud providers with high-bandwidth requirements or unexpected bandwidth spikes, an entry-level version of SoftAX can be upgraded on a pay-as-you-grow model.

"In the future, as application delivery becomes more intelligent, the system will be unified and you can access applications from anywhere," said Koeda. "Cloud computing provide the steps required to get there."

"As hypervisor companies continue to innovate and organizations mature their virtualization environments, the number of virtual machines per server will rapidly increase. This trend puts more pressure on administrators to ensure that their infrastructure runs smoothly," said Bob Laliberte, senior analyst for ESG.

These challenges have presented A10 Networks with opportunities for growth. "Worldwide, we grew 5 times in the last two years," said Koeda. "Japan grew 6 times. In South Asia, we grew 2.5 times in 10 months and we're expecting at least 3 times growth this year. In Asia, we see higher growth in the Philippines, India, Singapore and Thailand."

The company recently opened its South Asia regional office in Singapore, which also serves customers in Malaysia, Thailand, India, Philippines, Pakistan, Vietnam, Sri Lanka and Indonesia.