Thought Leaders in Cloud Computing: Austin McChord, CEO of Datto (Part 5)

Sramana Mitra: What are the gating items in providing that connectivity? Is it that the Internet service providers are not moving fast enough? Is there any kind of technology that is unresolved?

Austin McChord: I think there’s just not enough competitive pressure in the market for the quality of Internet service to rise. Lots of these small businesses in the 20 to 200 spot don’t have the availability to bring in direct fiber from a real Internet provider – like Level 3. So instead, when they’re putting together fiber links, they’re limited to what’s being offered by consumer and residential ISPs. There’s not a lot of competition or real pressure to have that quality improved. So that limits businesses’ adoption of the cloud at the lower end.

Sramana Mitra: If you extrapolate from what you said, that doesn’t seem to have any lever to change right now. I don’t see what the lever is that is going to change that dynamics.

Austin McChord: I think that there’s a lot of things that are changing. There are different changes in public policy around how towns and municipalities address it. Rolling out a Google fiber across a few locations in the country has really shown what change cloud connectivity can be bring. New technology in the areas around delivering Internet over wireless is a good step forward. If you take that up one more level, you start looking at providing ISP quality services over wireless links. This will reduce a lot of the infrastructure and provide competition against a lot of the incumbent ISPs that are currently servicing small business markets.

Sramana Mitra: However the drivers of this infrastructure is still the Internet service provider, right?

Austin McChord: Yes. We are not involved in it other than its effects on how we do business.

Sramana Mitra: You’re not involved in it. The small businesses are not involved in it because the small businesses have to acquire the Internet service from an ISP. The bottleneck in rolling out higher-end connectivity is the carriers.

Austin McChord: Yes, I would agree with that.

Sramana Mitra: I know you’re saying that there are all sort of technologies coming up. I think that will continue to move slowly. I agree that will be a bottleneck for a while.

Austin McChord: It has a real impact on services that we can deliver for our customers and what the next generation of the services that we currently provide will look like. There’s still much more innovation that would be available assuming that some of those major barriers go away. I think it has a huge effect in how customers adopt and think about cloud computing because without removing those barriers, it would be very hard to truly adopt in the way that they currently use their services locally.

This segment is part 5 in the series : Thought Leaders in Cloud Computing: Austin McChord, CEO of Datto
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