|For Zynga, a Journey from the Cloud to Home — and Back Again |
By Robert McMillan
Wall Street Journal
9:17 am ET, May 8, 2015
In 2009, Zynga ZNGA +0.71% was a marquee customer for Amazon.com 's AMZN +1.41% cloud-computing services. Two years later, it spent $100 million to build its own data centers to handle the bulk of its computing. Now Zynga’s cloud cruise has come full circle.
The company Wednesday said it would shut its data centers and shift its computing workload back to Amazon, as part of $100 million in spending reductions.
“There’s a lot of places that are not strategic for us to have scale and we think not appropriate, like running our own data centers,” Zynga CEO Mark Pincus told investors on a conference call. “We’re going to let Amazon do that.”
Why the change? Well, Zynga’s business changed. The company grew fast as a maker of popular Web-based Facebook FB +0.22% apps, but stumbled as the world moved to mobile games.
“Their business didn’t grow the way they expected,” said Lydia Leong, an analyst with industry research firm Gartner. “Games were unpredictable,” she said, making it hard to plan computing needs.
Meanwhile, Amazon changed too. The company has famously slashed its cloud computing prices, and today offers companies like Zynga more flexibility to tap the right amount of computing power and storage, Leong said.
Even after Zynga built its data centers in 2011, it still relied on Amazon for some tasks. That required the company to create software for the data centers, called zCloud, which made it easier to switch between Amazon’s servers and its own. The zCloud was based on open-source software called CloudStack, Leong said.
Zynga declined to comment for this article.
Amazon rivals Microsoft MSFT +2.36% and IBM sa IBM +1.13%y they offer customers an easier way to create such “hybrid” clouds, mixing customer-owned computers and a cloud provider. But Gartner’s Leong says customers can accomplish the same tasks using Amazon’s cloud without much additional effort.
When Zynga built the data centers, it bet that it could operate them more cheaply than paying Amazon. But squeezing better price performance out of a city block of servers turned out to be a tricky proposition.
Zynga may have simply decided that it wanted to be a gaming company, not a technology company, said David Moser, the chief technology officer of Zenovia Digital Exchange, an advertising-technology vendor that recently shifted much of its computing power from Amazon to its own data centers.
“Running a data center is expensive,” he said. “There are lots of mouths to feed when you have your own data center.”