Virtustream targets midsized businesses with cloud package

It hopes its pricing model, management software and assessment services will appeal to medium-sized enterprises

Virtustream is unveiling a new cloud computing service aimed at midsize enterprises.

The xStream platform is a package that includes cloud computing services, a service that helps users determine the cloud compute resources they require and a custom software management tool. The management tool lets users manage both internal and external computing jobs from the same software console.

Virtustream joins a growing number of companies offering infrastructure as a service. Like the others, it is targeting a specific customer base in hopes of creating a niche for itself.

Virtustream is catering to businesses with revenues of between US$250 million and $5 billion. "They are largely underserved because they are not big enough to be worthy of the investment of the large, tier-one infrastructure-as-a-service companies, but also too large to be serviced effectively by the smaller [value added resellers]," said Kevin Reid, CEO of Virtustream.

Both the pricing model and the services are designed with these users in mind, said Dan Kusnetzky, an analyst with the 451 Group. "This service offering is designed to make it easier for these mid-tier companies to have access to this technology without necessarily having the muscle or the staff of the bigger companies."

For example, Virtustream's "on-boarding" process helps customers assess their IT needs and then determine the cost of using xStream computing services.

That's important because one of the biggest barriers to adoption of cloud services is uncertainty about cost, Kusnetzky said. "There are so many different approaches to how the services are priced," he said. "There are a number of vendors trying to simplify that, because it's very complicated."

Virtustream is one of those. It uses a concept that it calls "infrastructure unit" to determine the cost of use of its compute services. An infrastructure unit is a combination of CPU cycles, memory use and I/O, Reid said. Virtustream can guarantee its service level for each of those components. "As far as I can tell, that's unique," he said. Typically, other infrastructure-as-a-service companies may guarantee either CPU cycles or memory, but not both, he said.

The result is that Virtustream is offering a service that is potentially less expensive than its competitors, in the hopes that customers will return to buy additional services, Kusnetzky said.

Virtustream has pairs of data centers in the U.S. and the U.K. and a relationship with another vendor for data centers in the Channel Islands. It is targeting businesses in those three markets.

Virtustream believes that its experience offering professional services makes the new offering a natural extension and one that will be attractive to customers.

But it has plenty of competition. Kusnetzky is tracking more than 200 companies offering cloud computing services. That list is segmented into 14 different types of technologies that the service providers may offer. For each segment, between 10 and 20 companies offer services, he said. In order to stand out, the service providers are targeting different markets such as vertical industries, companies of a specific size or certain regions, he said.

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