Cloud computing has been the biggest buzzword in IT for the last few years. Today, cloud is evolving and diversifying to fit new models. Businesses are recognizing that not all cloud systems are the same.

One major distinction in cloud technology is between public cloud models and private clouds. These radically different vendor models offer very different things to businesses. This article will go over the basics of public vs private and explore options companies have when looking to go private.

The Emergence of Private Cloud

Lots of early cloud systems were built on a public cloud model, where cloud computing vendors offered services to multiple clients over one scalable system.

These are "multi-tenant" systems — clients get services delivered over the Internet, and the vendor delivers those services to more than one client over the same infrastructure. Servers and other hardware handle traffic for multiple clients at once. The same goes for data storage — that remote cloud handles the data for more than one company.

The major benefits of public cloud are that it's easier for vendors to offer options that allow companies to turn on a dime, dropping or adding services as necessary, and just paying for what they use.

But as the cloud matures, more and more companies are recognizing the downside to a public cloud solution, specifically in the areas of security and compliance.

Banks, for example, can't use public cloud solutions in most regions because shared services and control over data wouldn’t meet regulatory requirements. Another place that companies utilize private cloud for security concerns is in the healthcare market. Medical businesses need rigid privacy and control of sensitive patient health information, and now with recent modifications to HIPAA, even third-party businesses like insurance companies must provide the same high levels of control over data.

Choices for a Private Cloud

Private cloud shoppers are realizing that this is a market where competition and choices become a little complicated.

First, customers can choose whether to employ private cloud as Infrastructure-as-a-Service, where network virtualization meets vendor services that have developed architectures for clients to use. IaaS is a very popular type of private cloud model — companies can also use software as a service options involving web-delivered applications, or try a "self-regulation and return system" that allows for swapping software resources to one project or another, but IaaS is a fundamental way to get private cloud in-house, and that's its own market with some complexities.

Basically, Amazon Web Services, the platform that pioneered private cloud infrastructure, is by many measures dominating the market as of 2015.

However, the private cloud market also embraces open source, where inclusively licensed systems provide transparent source code and different developers work on common goals. A project called OpenStack is hoping to rival AWS, building private cloud architecture with a high degree of independence.

Essentially, those who want to develop private cloud IaaS can go with a company that uses the AWS platform, plugging in its own open-source software using application programming interfaces or ATIs. Or, they can choose OpenStack, a completely open-source project that's built from the ground up under the Apache open-source license.

In trying to discern what these companies are doing with private cloud, lots of people see the OpenStack vs. AWS model as splitting hairs. It basically comes down to how much a company is relying on AWS.

Private Cloud: The Netflix Case Study

To really get a better idea of what developers are dealing with in private cloud, check out a very concrete example provided by the major streaming video company Netflix.

A 2013 Fast Company feature shows how Netflix is choosing to work with AWS, instead of switching to the a more open-source approach.

Like some other notable companies, Netflix is choosing to use AWS tools, while simultaneously developing its own open-source products that are available to the public. The Netflix Open Source Software Project accomplishes this divergence from the traditional AWS model, while Netflix still uses Amazon’s service as its fundamental platform.

One thing that comes out of this article is the often-reiterated idea that Netflix and other companies don't have a choice of platform offerings, and are essentially forced to go with AWS. As for why Netflix isn't embracing OpenStack with the enthusiasm that some would expect, key engineers point out that the company has already invested in AWS-compatible technology, and that the OpenStack platform is still much more fragmented, partly because OpenStack hasn't gained the market share that would give it the critical mass to really become a contender.

"Amazon still has a long way to go, but there’s 'night and day’ between its feature breadth and feature set, and everyone else’s." says Netflix Director of Cloud Solutions Ariel Tseitlin. Tseitlin also mentions a prediction that others have made, which is that in the future, there will be more competition in the cloud.

"We’re far from being in a commoditized cloud market," Tseitlin said. "It really isn’t a utility like we feel someday it is going to become."

How Open is Open?

Those championing the OpenStack model are basically promoting the idea that crowdsourcing development is key, and that open source means being truly open source from the ground up, not building off of AWS.

In a series of videos from the annual Structure conferences of recent years, Chris Kemp of Nebula has been a major voice for the OpenStack model. Kemp has repeatedly invoked the idea of a "technical meritocracy" and a situation where collaborating parties gain influence in a project, not through investment share, but through code.

Kemp has held a series of talks with Marten Mickos of Eucalyptus Systems and Sameer Dholakia of Citrix in the 2012 and 2014 Structure conferences, where these three really parse the nature of open-source private cloud development. In the most recent of these summits, Dholakia gave a very clear and tangible insight on why companies are still using AWS.

Because AWS is compatible with the vast majority of public cloud structures, and because OpenStack lacks retail presence, companies are wary of departing from reliance on Amazon services.

Back in 2012, Dholakia also pointed out another reason that the big dogs tend to favor AWS-based models over OpenStack, which he called, "built by committee."

"There’s something to be said for a tight group of … developers." Dholakia said. "That core (AWS) is rock-solid and stable."

However, Dholakia, like members of the Netflix team, has also indicated that we’re just in the earliest beginnings of the private cloud market battle, and that it's too early for companies to really choose a long-term game plan. Dholakia called today’s private cloud battle, "the second inning of a nine-inning game," and suggested there is a lot more to come.

Compatibility, Extensibility, Interoperability

Overall, developers are using APIs and other tools to allow private cloud systems to piggyback off of one another in ways that are going to allow client companies to achieve scalable solutions.

Although some have spoken of "language wars" where, for example, OpenStack’s Python model rivals other systems written primarily in languages like Java, in the long run it's likely that compatibility is going to become the gold standard for development. Open-source philosophy is slowly eroding the idea that mega-tech companies can build walled gardens and sell new products with high license fees. And that's good news for businesses that are shopping for technology upgrades.

So as private cloud emerges, there will be lots more conversation — about competitors and market share, about the most affordable and freest ways to develop data centers, and about how executives can keep their fingers on the pulse of the tech markets to get cutting-edge tools for real competition in their fields.