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Bart Copeland, November 28, 2013
Here at ActiveState, we watched with bemusement over the past week or so as the viability of Platform as a Service (PaaS) was called into question by various writers and pundits.
First there was Ben Kepes who wrote about Apprenda's new round of financing in Fortune and made what some felt were several disparaging comments about PaaS, including Ben stating, "Seemingly there is one vendor for every one of the half dozen companies in the world that have actually made a decision to buy PaaS" and "Pivotal One's flavor of Cloud Foundry seems to be sucking up the vast majority of the mindshare leaving other Cloud Foundry vendors scratching their heads over how to differentiate".
Ben is an advisor to ActiveState. Many who don't know how advisory positions work might be surprised to know that he has almost no visibility over our internal workings. To maintain his independence, we keep him at arms length from the day to day workings of the business. He has limited knowledge of our revenue figures or who our customers and prospects are. I'll tackle his two comments in reverse order.
There definitely seem to be many other PaaS vendors who are trying to figure out how to compete with Pivotal. ActiveState is not one of them. We already do differentiate from generic Cloud Foundry and from Pivotal CF with our Stackato product. We have been driving differentiation from the moment Cloud Foundry was released in April of 2011 and never once were we left "scratching our heads"—our Team and enterprise customers have been a huge source of inspiration for us on differentiation and we'll continue to maintain that differentiation moving forward.
As to Ben's other comment, more importantly, many, many more than a "half dozen companies" have chosen Stackato because Stackato offers them a strategic and competitive advantage. I wrote in February this year about our momentum and we had a similar post a little earlier. In the first three quarters of 2013, our Stackato revenue grew 600% year over year. That's impressive when you consider that we landed some really big deals last year, including an OEM deal with HP. We also doubled our employee headcount since we started Stackato, while remaining profitable and continuing to be self-funded (not beholden to VCs).
The next item that caused us bemusement following Ben's article was by Barb Darrow of GigaOm asking Twitter users for a roll call of who is using PaaS. That prompted a stream of responses and even some blog posts debating whether or not PaaS has a future. We were brought into it and tried to offer some feedback but it's pretty hard to do when you're contractually unable to name most of your customers.
James Watters and Jack Clark's comments on the thread pinpointed exactly why our customers don't agree to be named publicly:
ActiveState is very fortunate to have a few customers who are happy to talk about their use of Stackato, but they are in the minority. The majority prefer to keep their cards closer to their chest. We do not incent customers to be private references and we certainly don't give Stackato away in exchange for case studies or public references; the case studies we have published were not in exchange for discounts.
The final piece of bemusement I want to comment on is Gartner published a report just a couple of weeks ago called "Risks and Opportunities of PaaS at the Peak of Inflated Expectations". While it states, "a steady stream of new IT organizations is adapting PaaS for application development and integration", it also warns of the coming "trough of disillusionment" in the next 2-3 years. I sincerely hope the trough is not brought upon us prematurely by those who don't understand the value of PaaS. In fact, the only reason I'm writing this is because I bristle at the thought of anyone thinking, incorrectly, that PaaS is not being used by real enterprises.
The main thing our customers and prospective customers care about is whether or not Stackato solves a problem they have. When it gets down to final decision time, many do their due diligence and inquire about our roadmap (to see if Stackato is aligned with their vision and priorities), company viability (no large enterprise wants to do business with someone who may not be around tomorrow), and our ability to support them moving forward. Some prospects also like to perform reference checks on us with current Stackato customers. We have dozens of paying customers that are willing to speak to prospects on our behalf.
Our customers speak to prospects because they believe in Stackato and ActiveState. As one of our customers has stated, "We have a vested interest in making sure Stackato gets as many customers like us as possible, so that it remains a viable product. But we will not share publicly that we're using Stackato to streamline our IT processes because we see it as a major competitive advantage."
Circling back to Ben's original post-we have a ton of respect for Ben as an industry commentator and thought leader, but in terms of the fundamental commercial success of Stackato as a product, Ben is in the dark and, in this instance at least, he was plain wrong.
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