Cloud Computing circa 2012

Fast forward five (5) years

At the beginning of 2012, things have changed in the Cloud land. Amazon's strategy of offering Cloud Computing for a rental fee turns into a viable business. More importantly, being offered as an utility, it has become the dominant and de facto public Cloud of today.

MSP Players (Newbies)

Of the Cloud MSP companies, Google and Salesforce.com are worth noting.

For Google, it is interesting to note that while it attempted to offer an alternate solution to Amazon through Google Engine, it never quite caught on. Some have cited Google's insistence on using Python and other tools that are already supported by its infrastructure whereas Amazon let's install whatever you want for a fee. I do think there is also the fear that Google being seen as an engineering house as oppose to Amazon as a retail outfit is likely to be "inspired" and offer a similar product when a Cloud solution has turned out to be successful on the Google platform.

Salesforce.com, on the other hand, stayed focused on what they do. And, in the spirit of MSP, open up a set of API and created platforms for other vendors to participate in their eco-system.

Incumbents

I can only assume that Rackspace was shocked to find one of the biggest online retailer has decided to invade its business. On the other hand, one also has to give Rackspace credit for coming up with its OpenStack solution that has garnered quite a bit of marketing momentum.

For VMware, Cisco, and EMC, the answer is VCE where an integrated solution with VM, servers, switches, and storage from these companies are ready for the users.

Cloud Computing circa 2006

The newbies

In the beginning, there are data centers run by Amazon who need the capacity to handle the rush of Cyber Monday. Google, Salesforce.com, Netflix, and Facebook too are busy tuning their data centers to their own needs.

Dropbox, who will build on Amazon's Cloud infrastructure, is but a glimmer in the founder's eye and won't get started until 2007

The incumbents

VMWare, Cisco, and EMC are busy minding their enterprise business. Rackspace too focuses on providing fanatical support to enterprise users.

Blame it on EC2

Then, somebody at Amazon come to the idea that maybe it would be nice to monetize the "excess" data center capacity for most of the year outside of the Cyber Monday rush. So, the experiment, aka beta, of renting out computing resources from existing data center through services like EC2 and S3 were born.

The mad scramble for Cloud Computing thus have begun.

Giving a Talk at a Cloud Seminar

Cloud Seminar

I will give a talk on Cloud Computing at a Cloud Seminar. I aim to provide perspectives on both technical and business needs in an Asian context. The idea is to talk about Cloud Computing beyond what is being discussed in North America and the potential paths and shapes that it could take in Asia.

Details

Taipei Regent Hotel (台北晶華酒店三樓宴會廳)
Nov. 22, 2011 (Tue.)

This is an invitation-only forum. Please let me know if you are interested in attending.

SAP vs NetSuite - Enterprise SaaS Players Face Off

SAP

This is what SAP is making the argument for these days. Although these relate more to buseinss needs, Cloud Computing plays an important role as a technology platform.

HANA, the high performance application appliance, aggregates all the information in main memory and creates a platform where SAP users can apply BI (business intelligence) techniques to come up with answer that goes across different functions. For example, what impact does higher petro price has on my earning as my large vs small car mix shifts.

SAP Cloud include Business ByDesign which has 1,000 installs this year. Business ByDesign aims to provide the on-promise SAP capabilities for small- and mid-sized companies through the cloud. SAP is also launching Sales OnDemand which is similar to Facebook which helps the Sales process.

NetSuite

NetSuite is a pure-play Cloud player who competes against the likes of SAP. The basic argument that NetSuite makes is that its customers have gotten bigger and bigger because they want to run their expensive enterprise resource planning (ERP) software cheaper in the cloud than in their own data centers and do it better.

SuiteCloud is NetSuite's platform that allows other vendors to participate in its ecosystem. For example, Box.net provides file storage and collaboration and SuccessFactors provides human capital management solutions for NetSuite customers.

The trouble is that on-premise software costs about 2 percent of revenue getting it running and keeping it running in the filed. At a business model level, it becomes a competitive disadvantage. While improving the cost model gets you that 2 percent back, but the real payoff comes from the productivity gains because you can do things differently.

My take

SAP's Business byDesign was launched a while back and withdrawn. It is not clear from the reporting that if there is any meaningful change to its new Cloud incarnation. More importantly, the potential for cannibalization was not addressed in light of the fact that the enterprise world is getting more comfortable with Cloud Computing.

It is interesting to contemplate NetSuite's platform. It clearly needs to build a robust ecosystem so that it provides a full suite of solutions to its install base without overstretch its resources in different directions. On the other hand, it is also not obvious to me that the role of integrating these services cannot be better fulfilled by SI (system integrator) who has more vertical/customer insight.

The overall new is good. Enterprises are, if implicitly, endorsing the push toward Cloud solutions despite the initial misgivings on issues such as security. It would be most interesting to monitor what Cloud "synergy" is possible as claimed by NetSuite.

Related entries:

* Bill McDermott, SAP Co-CEO, on Cloud http://allthingsd.com/20111031/seven-questions-for-sap-co-ceo-bill-mcdermott/?mod=mailchimp

* Zach Nelson, NetSuite CEO, on Cloud and SAP's Cloud http://allthingsd.com/20111103/netsuite-sales-surge-making-for-a-good-day-in-the-cloud/?mod=mailchimp

Distruptions through Cloud

From $0 to $4 billion

It is the story that makes the Silicon Valley lore. Drew Houston not only founded the ubiquitous Dropbox that every other person is using, not only just got a B Round valuation of $4bn, not only turned down a cool $800 million buy-out offer two years prior, he turned down Steve Jobs.

Makes your knees feel just a tad weak, don't it!

And, for the record, DropBox could not have happened so rapidly without a solid Cloud backbone.

The Calculation

On the heel of my recent musing on the status of OpenStack, it is interesting to see how RackSpace CTO sees RackSpace's relationship to OpenStack as its unofficial guardian.

Apparently, the master plan to dominate the world involves widely deploying OpenStack whereby RackSpace can offer its consulting/management services. Seem reasonable enough, but it also seem to require quite a number of pieces to fall into the right place. More importantly, does this mean that RackSpace will take a more assertive role with OpenStack Foundation in the style of MySQL instead of Mozilla?

And I thought Cloud Computing is all about software

A final bit of noteworthy development. Given the relatively simple computational needs of Cloud Computing and its voracity for electric power, there is an arms race to create alternative chips and architecture away from the mainstream Intel x86 design. ARM chips are a favorite right now, but there are definitely chip shops working on other solutions to be followed by the infrastructure/support for the new chips and/or architecture.

Microsoft was disrupted by the internet as embodied by Google. Now, the other half of Wintel needs to watch out for the next disruption.

Related Entries

* Dropbox gets a $4bn valuation in B Round: https://plus.google.com/u/0/104462346399481715282/posts/P4bKc7cUX6y

* RackSpace's master plan for OpenStack: https://plus.google.com/u/0/104462346399481715282/posts/ZeRHQVheEQ8

* Simpler chips for Cloud computing: https://plus.google.com/u/0/104462346399481715282/posts/DFNx4V35xdm

OpenStack and Enterprise Applications

OpenStack

There are any number of Cloud related initiatives: Eucalyptus, Scalr, you name it. But, the "it" initiative these days is OpenStack.

Backed by RackSpace and a team from NASA, it is an open source effort that aims to create a complete Cloud Computing solution that is not encumbered by the VCE cartel (VMWare, Cisco, and EMC - in case you are wondering.)

With its hybrid commercial and tech origin, it also has a duel personality. On the technical side, there are groups of dedicated architects and developers driving the core products and related extensions. On the commercial side, a lot of companies, 100+ as of my last count, have signed up with OpenStack as corporate members.

It is worth watching who will drive the development of OpenStack as a project. On one hand, it could become Mozilla/Linux like with a clear technology focus. On the other, this could become mostly a standard setting body driven by corporate sponsors.

The easy answer is that this all depends on whether OpenStack gains traction in deployment. And, preferably, large scale ones. The real question is how would RackSpace manage the process?

With the announcement of the OpenStack foundation with donated IP at its recent Boston semi-annaul meeting, the foundation's development would offer the first clue on which path OpenStack will go down.

What does Cloud mean if you are not Google, Amazon, or Facebook

On the question of traction, I cannot help but look at the enterprise side of things. Cloud Computing as a utility is likely to end up in the hand of two providers in the US (look up your economics textbook for why so few and think of the US anti-trust history for why more than one.)

On the other hand, there are plenty of enterprises who need Cloud Computing in a meaningful scale. The most interesting one that I have heard so far is how DreamWorks, the animation film producer, is using Cloud for 50% of its rendering work. Here is an example of mission critical work where Cloud makes a lot of sense for.

Similarly, it is gratifying to note that corporate IT chiefs are thinking about what strategic advantages Cloud could offer beyond cost reduction through consolidation. We are likely to see a new batch of Cloud ideas in the next two years.


Related entries

* What's in it for corporate memebers, modular Cloud through OpenStack: https://plus.google.com/u/0/104462346399481715282/posts/GXPX1m5KDHD

* OpenStack Foundation annoucned: https://plus.google.com/u/0/104462346399481715282/posts/Tfig9mTkr59

* DreamWorks offload 50% of its computer processing to Cloud in 2011: https://plus.google.com/u/0/104462346399481715282/posts/9SnKr2q5DLy

* Shifting corporate view on what Cloud is for: https://plus.google.com/u/0/104462346399481715282/posts/8CgTJNQ8zme

Reality Check - Cloud is but a Tool

Can you touch Cloud Computing?

No. (This is not a trick question.)

Just like rail tracks, Cloud computing is more of a resource/tool that lets you do stuff. And, just like the rail tracks, back when it was invented, there was a bonanza to build tracks.

Without boring you with a history lesson, suffices to say that while rail tracks perform a vital function in any economy today, the real money for the long haul is to be made somewhere else.

What can you do with the Cloud?

It is therefore interesting to see the most dominant Cloud Computing provider, Amazon, coming out with its own tablet, Kindle Fire. Admittedly, tablet is hot these days with the success of Apple iPad. But, a reasonable question is what does Amazon have to offer that would beat iPad?

Turns out that Amazon probably is not looking to beat Apple in the game of desirous tablets. For Amazon, it is about content and Fire is really more of a delivery channel. Through the Cloud, no less.

This plays to Amazon's strength. It already runs a world class physical content delivery operations with all the rights and access to these content. It already operates one of the most respected Cloud computing platform with a proven record in doing and sending "stuff" on a massive global scale. And, guess what, given what Amazon can do, instead of charging a premium for its design, it could go to the other extreme and sell Fire as a loss-leader.

Now the tablet game begins!


Related entries

* Amazon's tablet biz-model: https://plus.google.com/u/0/104462346399481715282/posts/5QFL4aEtV9n

* Amazon's CDN play: https://plus.google.com/u/0/104462346399481715282/posts/Vo2vLVQyDjW

* Amazon Silk could be the face of Cloud Computing to users: https://plus.google.com/u/0/104462346399481715282/posts/aVmBsW1BoPB

Cloud Power - Operator, Vendor, and Buyer

Operator Power

It is well know that Data Centers can suck up a lot of electric energy. Being one of the largest operators, the revelation of Google's power consumption is closely scrutinized. Google uses 260 million watts continuously across the globe.

To give it more context, this is approximately the equivalent of powering 200,000 homes in the US. Alternatively, this is about a quarter of the output of a standard nuclear power plant.

Keep your hand off my Cloud

German telco, Deutsche Telekom, has recently requested a waiver for their data centers so that the US government cannot access DT (and European Cloud operators in general) client's information through the US Patriot (anti-terrorism) Act.

This will be a development worth monitoring as the Public Cloud as originally imagined may splinter into different flavors. On one hand, this is bad for growth, think what internet would have been like if it cannot operate across the globe. On the other hand, it could be an interesting commercial opportunities as markets outside of the US try to leapfrog both the technological and business innovation through separate clouds.

Where is the beef

Adrian Cockcroft's entry on "I come to use clouds, not to build them" is worth a quick read for two reasons.

One is his lucid example of what the SaaS providers really care about. Don't tell me how the component works, tell me what are the things I can do with your Cloud. This is a topic well worth remmeber for those us involved with Cloud, or any emerging technology in general. In otehr words, don't get side tracked by the "sexy" technical stuff.

Second is his observation on OpenStack. His view is exactly what it is, his view. And, I consider the negative tone on OpenStack is really a "roadmap" on what would make OpenStack a viable solution for SaaS vendors like Netflix. And, that, to echo observation #1 above, is precisely the point.

Links

What It Takes to Power Google: http://www.technologyreview.com/computing/38556/?nlid=nldly&nld=2011-09-12

Deutsche Telekom Wants `German Cloud’ to Shield Data From U.S.: http://www.bloomberg.com/news/2011-09-13/deutsche-telekom-wants-german-cloud-to-shield-data-from-u-s-.html

I come to use clouds, not to build them...: http://perfcap.blogspot.com/2011/08/i-come-to-use-clouds-not-to-build-them.html