In lieu of customers, cloud vendors form partnerships at Cloud Expo

Sys-Con, creator of the sixth international Cloud Computing Expo held last month in New York, blamed a real cloud for the absence of traffic on its show floor. It wasn’t enterprise concern over security, interoperability and portability of cloud services that kept attendees at bay, but airborne ash from the eruption of the Icelandic volcano.

Indeed, organizers said 15% of the anticipated 5,000 attendees were grounded in Europe, although there was no explanation for the visible lack of large corporate customers from the U.S. Virtually all the keynotes and informational sessions were led by one of the 100 cloud vendors (or industry consultants) whose booths occupied a basement corner of the Jacob K. Javits Convention Center.

During the keynotes and other premier sessions, the show floor was closed, presumably to fill the hall with bodies. Case studies of the cloud in action were presented as hearsay in cryptographic terms: “a large financial institution” or “a leading manufacturer in the energy field.” True, there were a couple of partial case studies among small or smallish mid-market firms, and to the show’s credit, most of the information presented was vendor-neutral. Sys-Con employed a cloud-based videoconferencing system to broadcast the main panels to Europe and around the world, including a lunchtime discussion at which a quartet from Iceland stood up to hawk the first “green cloud”—the volcanic ash having blown east to enable their departure.

When the floor reopened, traffic among the booths came primarily from staffers taking a break from other booths, and cloud partnerships were blooming faster than you can say latency. R1Soft, for example, a cloud vendor of backup software, told me about its partnerships with Hosting.com and The Planet. Likewise, LTech, a developer that helps companies “forklift their applications to the cloud,” emphasized its cloud partnerships with Google, RightScale and Soasta.

“Soasta is the coolest company here,” said LTech’s marketing guru of the firm, which measures performance of a cloud installation. “You should go over there; tell them the guys at LTech sent you — they love us.”

In a market that is sure to contract, the question is, who will buy whom? Driven by commodity pricing, no doubt many of the cloud vendors will die on the vine or be swallowed by larger competitors, according to Jeff Kaplan, managing director of ThinkStrategies, a consultancy in Cambridge, Mass.

Cloud vendor viability is a classic issue. Not many enterprises buy from startups, especially when cloud business models are unproven and unarticulated, confirmed Mike Grandinetti, managing director of Southboro Capital LLC, an entrepreneurial consulting company in Sudbury, Mass.

That would naturally drive the kind of cloud partnerships that formed at Cloud Expo in lieu of actual customers. “If you’re selling into CIOs with mission-critical data, it’s almost inevitable that a startup is going to have an uphill battle,” Grandinetti said. “Without a large big brother to put an arm around your shoulder and walk you in, there is not a prayer of being successful.”