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MGI 360 Ratings Oct 18 2013: Connectria - Public Cloud

We are initiating coverage of Connectria in the Public Cloud/Hosting & Colocation market with a 55 rating and a POSITIVE outlook. 

OpinionThe company is well established in its niche, conservatively run by a tenured management team, and enjoys high levels of customer satisfaction. The company offerings are distinguished in two ways: 1. focus on "exotic" platforms, e.g. non-X86 hardware, 2. on cloud services requiring HIPAA and PCI compliance. We view the company product/service offering as very solid, its management team as mature and complementary in terms of skills. The nature of company ownership structure limits its ability to invest into channel expansion and broader market reach. Bottom Line: For mid-size user organizations and divisions of larger companies or for application vendors seeking a hosting solution, Connectria represents a viable choice.

The attached MGI 360 Ratings note contains detail on company rating in five major categories:
  • Product
  • Management Team
  • Channels
  • Strategy and Marketing
  • Finance

This rating is a result of an extensive independent effort to evaluate the company on almost 150 different criteria in five major categories listed above. The process involves in-depth interviews with management, customers and business partners. Companies are asked to provide input into the rating process but are not required to do so. 

Company SummaryConnectria is a cloud and hosting provider focused on legacy, non-X86 server environments as well as the HIPAA compliant cloud services. While majority of company's customers are mid-sized organizations, Connectria has also been able to get traction with a number of multi-billion dollar household brand names. Company operates four data centers (all in the US), has 112 employees and over 1000 customers in 30 countries. Connectria has built partnerships with Amazon Web Services, Microsoft, Oracle and IBM among others. Company is privately held.

Market Outlook: The market for public cloud services is shaped by three key trends:

  • Dominance by Amazon Web Services - AWS is an extreme price competitor and has been able to continuously update its product lineup with offerings that disrupt computing status quo
  • Attempts by AWS competitors - Google, Microsoft, VMware, OpenStack group (IBM, RedHat, Rackspace) et al, to create viable alternatives to AWS
  • Evolution of select companies in the hosting (incl. managed hosting) and colocation markets into a public cloud solution with some differentiation (e.g. high security cloud)

Cloud infrastructure services like the Public Cloud continue to grow overall at over 25% per year with select companies growing by 8-10% per month. Our 2013 Public Cloud revenue estimate is about $6.5 Billion with Amazon Web Services likely to hit near $4Billion in 2013 revenues. See MGI Research 2013 Cloud Scenario for reference. Customer demand remains strong, fueled by continued price pressure put on all vendors by AWS and increased acceptance of cloud as a viable option for production-grade corproate IT workloads.


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