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Cloud Database Company Xeround, and a Tale of Evolving Business Models

Xeround’s timing for the shutdown bothers me

Last night, cloud database company Xeround announced that they’re shutting down the version of their service hosted in public clouds such as Amazon, Rackspace, GreenQloud, and others. Users of the free service have until 8 May to move elsewhere, whilst paying customers have until 15 May. The company describes this as an attempt to “re-focus,” with the implication that other parts of the business remain viable. It’s never easy to admit mistakes and kill products, but the ability to do so is an essential part of running a business that’s viable for the long haul. Xeround’s announcement needn’t be interpreted as the end of the company, or the end of databases running in the public cloud. The challenge now is one of persuading staff, investors and customers to move past the short-term pain and uncertainty, and to get behind the new direction with conviction.

Xeround was founded back in 2005, initially delivering scalable data management solutions into the data centres of telcos such as T-Mobile. The company’s work on scaling MySQL and offering it in the cloud brought it to wider attention, and they seemed to maintain momentum by adding additional cloud partners. Last year, the company rolled out a freemium offering to entice a far wider set of potential customers. It would appear, though, that any influx of paying customers was insufficient to meet the cost of this rapid expansion across disparate cloud providers.

In last night’s blog post, Xeround’s Avigail Ofer writes;

Xeround’s leadership forum has recently decided to re-focus the company’s effort. This means we will no longer be able to support our service over public clouds, across all of our currently active data centers.

This presumably means a return towards the company’s roots, offering scalable data management solutions inside enterprise data centres. As a strategic decision it may make sense, although that market is far more crowded than it was in 2005. For now, though, the company website continues to talk almost exclusively about their Database as a Service (DBaaS) offering, hosted in public clouds. Anyone looking to see what else Xeround does today, or where it will be active after 15 May, will get few clues from the site. Current and prospective customers must, inevitably, feel anxious. What else might be consigned to the pyre?

Strategic refocusing, cutting underperforming products, and even pivoting are facts of business life. Well-known consumer services like Flickr and Twitter were the result of pivots that must have seemed painful at the time. In those cases, and others, pundits and commentators bemoaned the death of whatever went before… but few would dispute the success of the new ventures. Customers worry about what they have. I still miss Tungle, and have no idea how I will cope when Google cruelly sacrifices the invaluable Reader. But boards and managers need to worry about where they’re going. Sometimes, maintaining the status quo simply does not make sense. You’re breaking even or — worse — burning cash. You can see a new competitor that’s faster, better, or cheaper than you. Your revenues or usage figures are headed the wrong way. All are signs that something needs to change. And if you’ve got a better idea about how to focus resources, why not go for it?

iStock_000008993887SmallSuccessful companies aren’t necessarily the ones with the most brilliant people, or the strongest teams, or the best idea, or the biggest pile of cash. Successful companies are those with people who are good enough, who can work together well enough, on an idea that’s intriguing enough, attracting sufficient cash to get noticed. If all of those pieces fall into place, successful companies then need a good dose of luck, and a great big dollop of smart timing. The market needs to be ready, customers need to be in the mood to buy, and the competitive landscape needs to be tilted in your favour. Sometimes, those pieces don’t all align, and the company needs to shift focus a little and try again.

Trying again is fine. There’s no shame in it. But when you try again people remember things about how you behaved the last time. They won’t hold failure or pivoting or downsizing or refocusing against you. But if they are considering becoming an investor, partner or customer, they’ll remember how you treated investors, partners, and customers last time around.

And that’s why Xeround’s timing for the shutdown bothers me. A week (or two, if you’ve given them cash) is not a lot of time to move off a database that might be baked deep into your business. Customers must be waking up this morning, and scrambling to adapt. Their roadmap is out the window. Their vacation is on hold. Their work to attract the next client abandoned, as they scrabble to keep the database running for the clients they already have. Xeround did that. And it didn’t need to.

Pivot if you want, Xeround, but you’ll have a much better hope of maintaining current and future custom if you treat your users with respect. And a week or two’s notice for the removal of something that may very well be mission critical is not respectful.

I did try to reach Xeround’s PR firm for comment, without success. I shall update this post if I receive anything relevant from them or the company.

Hat tip to Barb Darrow at GigaOM, who was quick to cover the story… and to update her post as more facts emerged.

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More Stories By Paul Miller

Paul Miller works at the interface between the worlds of Cloud Computing and the Semantic Web, providing the insights that enable you to exploit the next wave as we approach the World Wide Database.

He blogs at www.cloudofdata.com.

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