Whether you’re running a business or organizing a tech conference today, it’s all about the cloud. I talk to startups talking to venture capitalists, and there’s no way of pitching without having ones solution running in the cloud. As hard it’s been to agree on a proper definition for cloud computing, it’s been the thing for both service providers and businesses to move on to. Even the telecom companies are now getting into the game of cloud computing.

Not surprisingly cloud computing was also one of the buzz words at the recently held Mini Seedcamp Helsingborg, where Witsbits caught my attention when pitching their new business model. 

 Witsbits, a Swedish startup company, is the first and so far only actor in the Nordic and Scandinavian region providing cloud computing services. They started already in 2004, in the era when cloud computing still was called utility computing. The journey into cloud computing began in 2003 when running Render Planet, an automated render farm service offering free, remote, distributed rendering over the Internet. Rendering 3D images required a lot of hardware resources, which resulted in developing their own utility management software. The first cloud computing service saw its daylight, and Witsbits today is a profitable business with number of customers in their storage cloud. Now with cloud computing booming the company feels it’s time to refocus on their core competence, the software development.

CC: Foxtongue

CC: Foxtongue

Adding a fourth horse into the race

Witsbits is to take on a new path to become a cloud computing software provider targeting Internet Service Providers and server hosting companies to run cloud computing services of their own. Simply, to enable to “Go Cloud” very quickly. Or to put in other words, Witsbits is about to add a fourth horse into the race of cloud computing. Instead of taking up the fight in offering server and storage capacity with the big league players like Amazon & Co, who keep adding servers like there’s no tomorrow, they see a whole new market in helping others to get in the game.

The Business Model

I talked with Mikael Lirbank, the CEO of Witsbits, about the new business model, and was curious to find out why they would leave a profitable business model and why the new one would work.

Cloud computing is here to stay so the role and the offering of server hosting companies is inevitably to change. The dominance of Amazon, Google, Sun Microsystems etc. calls for new approaches for other smaller actors to stay in the game while businesses keep moving their services in the cloud. This is where Mikael sees Witsbits’ know-how in cloud computing and their software comes to play an important role for server hosting companies. 

The entrance barrier into cloud computing is low with the Witsbits’ software. It runs on any 64-bit processor and is easy to implement. It measures server and Internet utilization for the customers, periodically reporting back to Witsbits. This feature opens up for revenue sharing business model between the hosting providers and Witsbits. Witsbits is also to include all software updates in the license agreement.

So why would I as a customer choose a smaller cloud computing provider instead of the proven ones?

According to Mikael there are several reasons to do that, but particularly for following two:
– It’s usually easier to have a relationship and get help with a smaller, or even local, service provider.
– With local providers one seldom has to worry about breaking any legal restrictions regarding storing personal data outside the country borders.

I think both reasons are considered as relevant, although depending mostly on the type of the business and the company’s own comfort zone. I recently attented a cloud computing seminar held by Sun and SIME where both subjects actually came up and were discussed. The companies who were using cloud computing services today were mostly disappointed at the customer service feedback level, and complaints were also raised against the poor server calculation capacity of the services. The security issue was a common question among the guests not yet in the cloud.

Witsbits is planning to go worldwide with their software starting with Europe and US. I will not only be watching Witsbits, but all the new ways taking form on creating businesses and monetizing the ever growing cloud ecosystem.