Infrastructure is still Where It is at Today

Amazon's "Other" revenue

The official number is not available. But, as the biggest public Cloud infrastructure
provider, it is a topic of intense speculation. Here is a credible analysis: AWS is worth approximately $1 billion with a 100% compound annual growth rate (CAGR).

Step 1 in Rackspace's OpenStack masterplan: Private Edition

As described by Rackspace's CTO, OpenStack is a way for it to offer its Cloud management services. So, it is not a surprise to see Rackspace Cloud: Private Edition being offers through partners such as Equinix, OpsCode, RightScale, Cisco and Dell.

What would be equally interesting to find out is how would be the revenue and workload be shared.

SME is the game

I often have to remind myself that technology too is its own bubble. As compelling as Cloud Cloud could be, it is important to see if the rest of the world sees the same value.

So, it is a good thing to see that BestBuy is responding to competitive pressure by bulking up on the Cloud front. Its plan, according to the report, is to provide a richer offer to its SME customers because its showroom has become a retail extension for retail buyers looking to buy at Amazon. (Gulp! That really sucks for BestBuy.)

New biz-model through the Cloud

Instead of the time honored perpetual seat license of the package software, Cloud promises on-going recurring revenue through subscription to vendors. That is the good news, potentially larger total revenue over time. What is not obvious to me as claimed by the Wharton analysis is that Cloud would enable a more diverse ecosystem with many more smaller players.

It is true that, at its current stage of development, most of the Cloud players are small relative to its on-premise peer and most of them compete by collaborating with other smaller vendors. But, this feels like a transition than a new state of things. After all, there is nothing particularly anti-monopolistic about a subscription biz-model. If anything, it would probably enhances the winner takes all model.


Related entries:

* An estimates on how much revenue AWS is taking in this year http://cloudscaling.com/blog/cloud-computing/amzn-other-revenue-in-2011

* Rackspace Cloud: Private Edition: http://www.datacenterknowledge.com/archives/2011/11/10/rackspace-launches-openstack-private-cloud/

* BestBuy's $167 million Cloud strategy: http://www.fiercetelecom.com/story/cloud-service-acquisitions-gain-momentum-and-everyones-jumping-board/2011-11-09?utm_medium=nl&utm_source=internal

* Cloud's new pricing model: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2872

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