Entries in IaaS (6)


Growth Factors: IaaS Numbers and Expectations.

Lots of new IaaS reporting going on this week.  Gartner has a new Cloud Magic Quadrant, and Synergy Research Group has a new report on cloud market size and growth.  

The problem I have with the IaaS revenue numbers comes down to this: AWS hides them. IBM has been called on the carpet for being 'over-inclusive' in its reporting. The combination of IaaS/PaaS numbers into one figure for Microsoft and Google disguises the fact that MSFT and GOOG both started in Platform Services first, and have only recently offered up 'pure' infrastructure services. 

The important factors of IaaS/PaaS accelerated growth are these:

[1] Infrastructure Service adoption -- new customers and the expanded use by existing customers -- in all market segments and among all the enterpise size classes is explosive.  The opinion that "enterprise won't put their [data | processing] in the Cloud" is bogus.  We're all -- ALL -- using cloud infrastructures, and will continue to add new data and processing to the cloud as comfort levels increase.

[2] The growth in IaaS and PaaS will continue on this path, and probably see acceleration, as enterprise and government customers become 'comfortable' with the upcoming offerings for cloud data management (e.g., security, privacy, distribution, meta-data generation, …) and for 'cloud automation' that includes APPLICATIONs, not just infrastructure configuration management. (We really need the cloud punditry to get straight on what it refers to when using the term 'orchestration.')

[3] Finally, just as Infrastructure Services understand the value of giving development and operational IT communities self-service and the ability to 'have it their way', they will recognize the need for fine-grained, customized alternatives for consumption and economic terms.  That is, more choice in the packaging and economic terms on which Infrastructure Services are procured.

On this last point: I expect considerable push back from enterprise customers on the measly number of choices they have to procure on-demand IaaS at either (a) rack rates using a credit card or (b) 'reserved' use in one-year or three year packages.  That is  far too little operational and economic choice.  The same kind of late-binding, fine-grained control the characterizes cloud development, deployment and functionality needs to be available to the businsess functions of IaaS/PaaS procurement, metering and billing.

More proof that Amazon still leads the IaaS pack, but watch out for those other dogs — Tech News and Analysis:

Amazon leads Google, IBM, and Microsoft in cloud. So what else is new? The fact that the other guys are growing like weeds.



OpenStack: Enterprise Cloud or Service Cloud?

It's instructive to look at the various schools of thought within the OpenStack community on the role of OpenStack in both enterprise and service environments.  

Consider the Rackspace view of OpenStack as the 'alternative to cloud lock-in'.  

Then witness the industry's discussion of OpenStack and its embrace of Amazon APIs that erupted around an open letter from Randy Bias of Cloudscaling, who recognized the importance of hybrid cloud solutions.  

In fact, it is precisely this hybrid cloud solution that Randy calls out as vital to OpenStack's future which "… is predicated on driving hybrid cloud compatibility with the major public clouds, and those are AWS and perhaps GCE." In other words, OpenStack with active and full support of AWS APIs, is best suited as the infrastructure of choice for the enterprise. 

It's as interesting to note how OpenStack is 'acknowledged' by its competitors in both the services (IaaS) and the enterprise infrastructure realms.  Today, we have Pat Gelsinger, VMware's CEO, with a VERY different future in mind for OpenStack -- one so different from that espoused by Randy as to cause whiplash.  

VMware CEO: OpenStack is not for the enterprise - Network World:

VMware CEO Pat Gelsinger says he doesn’t expect open source cloud project OpenStack to catch on significantly in the enterprise market, instead he says it’s more of a platform for service providers to build public clouds.
It’s a notion that others in the market have expressed in the past, but also one that OpenStack backers have tried hard to shake. 
“Where is OpenStack, we believe, going to be adopted?” Gelsinger said in an interview with Network World. “We don’t see it having great success coming into the enterprise because it’s a framework for constructing clouds. People have largely adopted and have extremely large deployments of VMware and the switching costs and so on of that are not particularly effective. Where we see it being effective though are very much in cloud providers, service providers, an area where VMware hasn’t had a lot of business in the past and thus, our strategy, we believe opens a whole new market for us to go pursue.”

I'm now waiting to find someone 'official' from AWS to weigh in on an 'appropriate' future in which OpenStack plays a part.  That ought to be just as interesting -- in an academic sort of way.  Anyone have an enlightening quote from AWS about OpenStack?


Commodity Cloud Futures? Unquestioned. Performance Cloud? Still questioned.

Bernard Golden wrote a piece that appeared at the end of May, which I've (sadly) not seen until today.  He sets out the perspectives being promoted by various clouderati regarding the ultimate future of commodity cloud services like Amazon's AWS, and the role / scope of 'enterprise-quality' configuration and tuning offers of competitive service providers.  

What he comes to is less a pronouncement and more a rational observation: There will be demand … continued, serious demand… for the commodity styled class of services provided by AWS.  The growth for this form of IaaS+ will continue unabated.  

What is less clear is the degree to which (and the resulting market size for) performance-sensitive, highly tunable cloud services will be in demand. Will they represent a separate, significant class of services in their own right, a class of boutique services 'at the top of the pyramid' or a special form of 'spiffed-up' managed service hosting offers?

Thus, I believe that the article is not titled correctly.  Better put, it might be: Will commodity cloud services be supplanted by 'crown jewel' services? Answer: No.

And, while I don't share his doubts about performance-sensitive applications and their share of cloud services, I completely agree that it IS a question. whereas the future of commodity cloud services seems altogether clear as an extended, long-term juggernaut.

Can commodity cloud services handle 'crown jewel' enterprise apps? - Computerworld:

In other words, can this complex tuning capability required for a certain domain of applications truly be offered as a cloud service, or are we really talking about spiffed-up colocation or managed service hosting presented as a shiny cloud offering? The crucial question is what depth of tuning is required for the applications that reside at the top of the pyramid and what proportion of those applications' performance requirements can be served via an API.
Overall, I'm not convinced that performance-sensitive applications that require tuning represent the future of the cloud computing market.



IaaS Wars - Lessons from the Steel Industry

One can view the oncoming price wars led by AWS, GCE and Azure as an anything-but-level playing field.  It’s a different time scale certainly, but, by analogy, the history of the steel industry business strategy is not unlike the history of information & communication technology (ICT) strategies of the internet, Web 1.0, SOA, Web 2.0 and now cloud computing.  But relying on the idea that the forms of IaaS are all fungible, interchangeable commodities will lead one to some mistaken conclusions.


Any recounting of world economies in the past two centuries will chronicle the role of the steel industry as a fundament of the industrial age (roughly from 1850 to somewhere in the later half of the 20th century -- probably around 1970).  Such a history will also note how the means of production and the economies of Big Steel underwent huge technological change, from a labor intensive industry to one of the first automated industries, in a very short period.  From producing steel in enormous lots to the creation of vertically integrated fabricators of steel piece-parts, the nature of the industry was changed by a series of mechanized (world) wars, the arrival of personal automotive transportation, and the population's migration to urban centers. 



A sum of money granted by the government or a public body to assist an industry
or business so that the price of a commodity or service may remain low or competitive

The importance of steel to national interests and economic dominance led to the use of subsidy as a tactic employed by aspiring economic world powers -- Japan, then India and now China -- in their efforts to accelerate the demise of the second (and most economically powerful) generation of steel companies of the US.   Along with agile, modular and 'lean' production methods which served to deliver highest quality steel in appropriate lot sizes and at exceptionally good prices, these industrial enterprises sought to accelerate their rise to the top through the use of 'dumping'.  The upstart national industries -- subsidized and nationally protected -- started selling large amounts of product at prices below cost.  This contest would eventually destroy those companies that were less economically sound (because of their reliance on outdated production approaches or facilities) or those newly tooled companies already saddled with debt which had neither access to patient investment nor to national subsidy. 

From Big One to Big Three and arrival of Cloud Dumping

With AWS now clearly the undisputed leader in IaaS -- the Big One -- are we now about to see internal subsidization by Microsoft and Google in their respective infrastructure services?  The answer is clearly 'yes.'  After starting their approach to cloud computing through platform services, both Microsoft and Google have now truly launched infrastructure services … six years after AWS' introduction.

The Big Three IaaS offerings (AWS, GCE and Azure) have been established at major cost in capital equipment, the dedication of the best architecture and development talent on the planet, and incredible attention to the operation, administration and management (OA&M) of the services.  When a company with the stature and resources of Microsoft or Google decides to go for position in an industry segment, their investment strategy is to take the long view.  That includes setting aside serious amounts of money for the continued operating costs and expansion of their infrastructure services.  

Is this 'cloud dumping' or just the patient investment by digital powerhouses who can afford it?  I'll vote for the former, since along with their investment in a nascent set of services, the impact on the rest of the infrastructure competitors and the IaaS customers has some major implications.  This not only becomes a waiting game that will demonstrate the dedication, patience and depth of the Big Three's treasuries.  This is also a cleansing action for the industry.

In the battle for turf among what, arguably, will become the Big Three, what happens to the smaller IaaS providers -- the fast followers, the specialist infrastructure services?  It puts serious economic pressure on the second tier of less well-heeled competitors. They must consider their option to move out of the commodity IaaS markets and move into specialty areas, to find themselves bulldozed, or to end as the assets in industry roll-ups.   

If the IaaS segment takes its future history from the steel industry, there would be little to recommend getting into or remaining in the business for the likes of Rackspace, Joyent, GoGrid and those carriers like Verizon which have put Terremark in place.  But this is where I believe that IaaS does NOT have to repeat the industrial history of steel.  The IaaS industry is more  malleable and more capable of major differentiation.  Furthermore, IaaS is, ultimately, NOT about the delivery of commodity services.   

The error of IaaS fungibility and other ways oligopolies might be disrupted

- IaaS offerings are not fungible and interchangeable -- or at least, not as fungible as pundits would have you believe.  They are not as easily commoditized as electricity, water, petroleum or telephony.  In recognizing the variations in demand and use cases for IaaS, the industry should find interesting opportunities.  A recent article by Owen Rogers and Willam Fellows of the 451 Group uses the analogy of hotels and hotel rooms as a better analog, and I agree.  Just as there are significant variations in functionality, amenities, location and, of course, price involved in the use of a hotel room, so are there variations in the commercially viable infrastructure services.

- The lessons learned from the partially regulated airline industry may be more instructive in both the benefits and pitfalls of oligopoly and the advantages of smaller, regional / specialist services which apply different processes and metrics to establish a winning offer.  In fact, there are probably so many interesting lessons to take home from an look at the airline industry, that I propose we go there next.

- A final point worth noting before leaving the steel industry: The lessons of the steel industry have not yet played out because the steel industry itself is going through yet another transformation. New forms of technology and process, which utilize 'steel-the-commodity' in ways never before seen in mass produced manufacture, are about to confound and disrupt the steel industry.  By analogy, we can point to similar upsets coming to the realm of infrastructure services. There are lessons yet to be learned as to how the means of production and the organization of business can be as disruptive to the present kings of the hill in IaaS.