SAN JOSE: Dell claims the public cloud is a “race to the bottom” and told V3 that it pulled the plug on its public cloud offering because it did not want to take on the “800lb gorillas” currently in the market.

Dell’s decision to exit the public cloud market came as a shock as rival vendors are pushing hard to get a piece of the market that is currently dominated by Amazon Web Services. However, Sam Greenblatt, chief architect of Dell’s Enterprise Solutions Group told V3 that the firm was not willing to put up the resources to fight the current industry incumbents.

Greenblatt said: “There are several 800lb gorillas in the public cloud market and we are not one of them. Building that market, you really have to understand in detail how you are going to be the low-cost provider and at the same time deliver the best value. Some people call it a race to the bottom in the public cloud.”

According to Greenblatt, Dell’s internal research said more than 90 percent of its customers were interested in private clouds. “Of the 90 percent, 75 percent is actually doing virtualisation, not cloud. People say cloud, but they are usually managed hosting providers, they are not really doing the cloud market. So we decided we were not going to invest heavily in public and we were going let the 800lb gorillas slug it out in that market, but we are not giving the private cloud business, or Openstack.”

Greenblatt was keen to state that the firm was fully behind the Openstack project but did have some sobering words about the hype surrounding the cloud. “It’s a transport mechanism and a computing architecture, it’s not something magical that you sprinkle fairy dust on and all your problems go away,” he said.

Greenblatt also said Dell’s decision to get out of the public cloud market had meant the firm let a number of contractors go, though he didn’t have exact numbers. Instead Greenblatt said Dell had a lot of contractors, which suggests it was at least partly a cost-cutting measure.

Given Dell’s internal research, perhaps it is not surprising that the firm didn’t want to take on the likes of Amazon, Google and Microsoft in the public cloud market. Although Greenblatt didn’t refer to the two companies by name and said margins were not the primary reason behind its decision to abandon the public cloud, it is becoming clear that new vendors will find it increasingly hard to mount a challenge to public cloud incumbents.