It’s hard to say whether the move will have a major impact on VMware’s market share. Yes, companies could in theory adopt Microsoft’s or Citrix’s solutions, but they could have done that from the first and elected not to. Will the price change be enough to change their minds? If so, then why not adopt “free” virtualization from Microsoft or from an open-source provider?
I think it’s possible that VMware is looking ahead to a shift in virtualization growth—from success in the enterprise to success in the cloud. Cloud adoption of virtualization is a service-industry application, and VMware may be rightfully unwilling to subsidize someone else’s business model by sustaining a pricing policy that encourages an explosion in the number of virtual machines per host. One could argue that the enterprises most likely to be hit by the changes are ones doing relatively simple server consolidation to address an explosion in independent server deployment that should never have happened in the first place.
Also to address cloud computing and data center evolution, Cisco, at its Cisco Live event, announced some interesting enhancements to its UCS portfolio. While what it did in terms of capacity changes was again valuable in an evolutionary sense, but its moves lacked the big strategic sweep that would have benefitted the company’s positioning.
There are two roles a company can play in the cloud: driver of the cloud or supplier to the cloud. Cisco offered some credentials in the latter role, but it’s the former role that needs to be filled. Remember, someone has to drive a strategic enterprise project. Whoever does that will likely deploy all their own gear where they have it and let the masses scramble for the scraps. IBM, HP and Microsoft are driving most of the cloud, and none of them is particularly friendly to Cisco’s interest. Two have their own data center lines, in fact.
I think vendors are missing something important in the enterprise space, just as they are in the service provider space. There was a time when network technology was almost a mandate; we knew we had insufficient connectivity to support optimum employee empowerment. Today the low productivity apples have been picked, and companies need to understand the business value behind proposed tech changes. Ten years ago, perhaps, the trade publications would have filled this need with long-ish insightful articles on adoption and benefits. Today, all anyone wants to publish is a snappy title on a vapid article that elicits a click-through and generates ad revenue. Nobody is offering the buyer the guidance they need, and so they move more slowly]]>
Google+ is definitely a revolution, a step toward social networking as many believe it should have been all along. Because it avoids most of the privacy problems that seem inherent to Facebook’s simple model of “friends,” it could potentially be used more effectively without putting its members at risk. Because it’s built around communication, it would establish Google not only as a social network leader but also as a player in the web-based communications space that will eventually displace the old PSTN we’ve come to know. And behind it all looms the old Google/Microsoft face-off, this time regarding the Microsoft acquisition of Skype.
Make no mistake, Google wanted to counter the Skype deal probably as much or more as it wanted to be a social networking player. Skype, in Microsoft’s hands, could become a powerful force to integrate Microsoft cloud software into people’s lives. Skype could also be the foundation for social communities, of course, and having Microsoft in a position to exploit Skype at its leisure wouldn’t serve Google’s interests.
The fact that Facebook went running to Skype for a deal is interesting too. They can’t now expect to buy the company after all, and they’ve admitted that they have either never thought of the communication-based social network (unlikely) or that they can’t toss money and time at creating one to counter Google’s move. Facebook’s weakness, as I’ve pointed out, is its off-market trading and correspondingly high valuation. They can’t afford to keep going to the well for more capital and they can’t be perceived as losing ground—though they are.
All of this comes at a time when the Street is newly aware of the eroding credibility of carrier capital budget planning. To quote Credit Suisse, “We expect the ongoing disconnect between revenue growth and bandwidth economics to drive an ongoing shift in carrier capex to specific projects focused on revenue generation or cost savings”.
Network spending focused on cost is an open invitation to Huawei, and spending on revenue generation is clearly not going to focus on creating more of the low-value bits that have put carriers in the disconnect to begin with. This is the issue that raised our concerns about Alcatel-Lucent’s FP3 chip announcement. The world doesn’t need a way to push more bits until we can figure out how to make bits pay, and right now everything happening in the industry is disintermediating the operator more. Alcatel-Lucent, we’d note, continues to champion IMS as the basis for mobile broadband “services” when the Google/Facebook brouhaha makes it clear that it’s going to be tough to make even IMS voice work effectively against OTT P2P competition.
With bit-pushing going out of fashion, Cisco seems unable to break out of the bit-and-box marketing mold and is instead looking to cut costs by cutting headcount. The company’s reported early-out package expired in late June and there’s no official word of how many people took advantage of it, but we did hear that there were still as many as three thousand more jobs on review for elimination. That could push the total cuts above the 4,000 that were rumored. Cisco’s intransigence with respect to the service layer is creating an opportunity for its competitors, who could not only gain market share on Cisco’s fall from grace but also gain an early lead in the service layer. So far, though, nobody is stepping up with a good story, and we’d not be surprised to see any improved positioning saved for early September, timed to the carrier strategic technology planning cycle that will end around November first.]]>
Some are touting this as a way of getting people to pay for pirated material, though 25 bucks a year per person won’t exactly stir the heart of the recording industry. Some think it rewards piracy by giving somebody a good set of songs instead of amateur-ripped copies for a low annual rate. And functionally, iCloud is still more of a locker. It’s not designed to stream stuff as much as to store it. And while it will make songs available to all a user’s devices, it downloads them on demand rather than streaming them.
The most interesting thing announced wasn’t really even iCloud, it was the addition of iMessage to the new version of iOS. This will let all Apple device users message each other in encrypted format, with receipts and so forth. There’s also improved technology to find others who are online, and if anything in the announcement could directly lead to a new service-layer threat, it would likely come from here.
Leaving the song-matching capability aside, iCloud isn’t much different from what Google or Microsoft might offer, and what a host of third-party products also have. Syncing devices with the cloud isn’t exactly big news. Anyone with multiple e-readers does it all the time for books, too. So we’re left wondering whether Apple trotted out the Big Gun for nothing, or whether the current iCloud is a kind of lightweight shape of heavyweight things to come.
Probably the most interesting stuff was what wasn’t in the announcement. For example, regular device syncing with iCloud will happen only when you’re WiFi-linked and off the mobile network. Obviously that relieves what might be considerable user angst over the charges, but it also alleviates operator concerns about the gratuitous traffic. Operators are also likely to be relieved that video won’t be streamed/synced with Apple TV. In fact, it appears that Apple may have made a deliberate effort not to push operators too hard. Might they be waiting until they have something to leverage in such an operator battle?
So adding up the points, you could speculate that the iPhone 5 might be that un-SIM-ed phone we and others have talked about. You could speculate that when Apple has the tools to cut the cord, it will then expand iCloud and take the gloves off. If so, it would seem likely that the new iPhone and the new independence aren’t too far away. Why spend Jobs’ collateral on something that’s not even close to being explosive? Why alert Microsoft (which sort-of-announced an Xbox TV premium subscription service on the same day) and Google?
The Apple announcement gave both operators and vendors some breathing room. Apple hasn’t made that killer move in the space…for now. The problem is that the ongoing battle between Apple and Google in the mobile space, and the attempts by Microsoft to elbow in for itself, will surely drive more radical changes and put more pressure on operators to make the moves their vendors are reluctant to support. For someone wanting to increase their market share in the router space, this is what to look at. New models are just new boxes, not new strategies.]]>
Cloud databases have been an issue of increasing importance because they’re essential for the cloudsourcing of any team or company application and because they represent a new dimension in security risk for enterprises. Amazon’s EBS was the proximate cause of that company’s recent cloud outage, so cloud databases also demonstrate the new dimension in vulnerability that this sort of distributed technology can bring. Enterprises need a way of harmonizing cloud use with data security or they’re not going to the cloud with anything that’s important, and that would relegate the cloud to hosting websites or testing/piloting applications.
Database.com is first an attempt to integrate strong security into a cloud DBMS (an RDBMS to be specific). It includes strong authentication at the API call level, meaning that every access attempt is verified, and by-row tabular security rights within the DBMS. All of this is good stuff, and for many enterprise applications, it will help relieve security fears. But it’s not enough by itself.
No matter what any vendor says, mission-critical enterprise data isn’t likely to go into the cloud. The career risks for anyone making that decision are profound, according to the results of our spring survey. None of the enterprises we asked said they believed they would cloudsource a mission-critical DBMS. So it would appear we’re at an impasse, right?
Not so fast. Database.com is also an example of a database model, DBMS-as-a-Service. It’s always been possible to visualize “data” in multiple ways — as disks, as file systems, as DBMSs. That multiplicity of vision translates into a multiplicity of models. You can send disk commands to a database, or file-system commands, or you can send DBMS queries—SQL, for example. When you send the low-level commands, you drag disk I/O over a connection to the cloud if you cloudsource the data. And when you send high-level commands, you receive the results of a query and not the 10 million records you might have spun through to get those results.
OK, fine, but this is still DBMS-in-the-cloud. It is, unless you turn the tables. Instead of looking at the DBMSaaS as something the cloud offers, how about if the enterprise offers it? Suppose that in a hybrid cloud, the DBMSaaS queries were made by the cloud applications back into your data center? That model is readily supported by modern back-end repository strategies and DBMS appliances. With tabular joining in an RDBMS, it would be possible to create a database that was partly stored in the cloud but whose sensitive elements were back in the enterprise.
Even this may be a model of an even deeper and more important issue. Enterprises say that basic platforms (IaaS) in the cloud are, at reasonable levels of utilization and with reasonable availability enhancements, about 75% more costly than internal servers. That says that the basic business model for IaaS can’t be successful in securing wide penetration of cloud computing into mission-critical apps even if you solve security and availability concerns. But services can be offered from cloud infrastructure, and efficiency in both the resources needed for the service and the way the service can be linked to enterprise computing/business activity can be more compelling.
Outsource firm Virtela, which has already created an interesting umbrella VPN service as a kind of VNO across multiple operators, is also launching a cloud service set based on the same framework. The idea is to take applications like security in the mobile space or application acceleration and make them into “services” of the cloud. These are more easily introduced than competing architectures for mission-critical apps, and enterprises in our survey seem to think that sort of thing is the right way to go.
So do carriers, of course. Verizon is clearly looking at this same model, as well as BT. KT, while making some waves by promising IaaS services that are more cost-effective than Amazon’s, is also planning higher-level cloud-based services. We’re told that they believe there’s more money in the services space than in basic IaaS.
All of this, of course, gets us back to the notion of “SOA clouds” and the need to think of applications as being cloud-optimized. The SOA architecture facilitates the consumption of application components in service form, delivered either through RESTful interfaces or more rigorous SOAP connections (which is how Database.com works, by the way). Microsoft and IBM have both been working with their customers to move thinking in this direction, and the results are becoming clear by the number of enterprises who now think more in SOA terms than in terms of virtualization for their clouds.]]>
While Intel has a license to produce ARM chips, it realizes that exercising it isn’t the answer to getting into the smartphone and tablet spaces. Not only would it suffer in terms of profits after the license fees, it would be perpetuating someone else’s processor architecture in the hottest space in the market. But wanting relevance doesn’t mean you’ll get it.
The big barrier for Intel to cross is getting big-name appliance OSs, which I’ve been calling “embedded control OSs” or ECOSs, ported to its architecture. One reason why Intel got so into the MeeGo Linux model was that it could easily support the porting of that OS to its architecture. Intel can do the same with Android, and in fact are doing just that, but it’s harder to get iOS moved over; Apple is in sole control there.
However, even getting the OS ported isn’t going to solve the problem, because there are hundreds of smartphone and tablet models out there already and more arriving every day. Given that Intel won’t be ready with even a minimal offering until 2012 and won’t be competitive in performance until likely 2013 or even 2014, things could get tough.
The reason Intel cares is shown by another thread of discussion in its recent conference. The company was very defensive about the future of the PC, saying it wasn’t going to become an irrelevant dinosaur in a world of tablet mammals. Intel made the PC market and still commands it (AMD’s efforts notwithstanding). If that market takes a hit because consumers start buying tablets (which HP’s results say is already happening, but clearly there haven’t been enough tablets shipped to have had the widespread effect), then the loss to Intel in PC chips has to be made up. That means not just matching the volume of CPUs lost, either, because appliance CPUs have much lower prices and profits. They have to command the appliance space.
The only thing Intel has going for it there is the fact that both the key appliances—smartphones and tablets—are going to enter a kind of “window of susceptibility” in late 2012. In the smartphone space, the combination of 4G rollout and normal product cycles will put a large number of users in the market for a new phone. In the tablet space, the Apple iPad onrush will have generated effective Android response, which means that mass-market rollout of tablets will be starting.
If Intel can be ready for that two-barreled market shift, it can be a player. The question is: How?
What Intel needs to avoid at all costs is linking up with Microsoft and Windows Phone 7 on this point, something that we hear is being promoted by Microsoft/Nokia to Intel even now. As tempting as re-launching the “Wintel” alliance might seem, Phone 7 isn’t the star Intel wants to hitch its wagon to. Similarly, Intel need to abandon MeeGo in favor of Android, simply because it can’t promote another OS at this stage. There are already too many out there; developers won’t latch on.]]>
Right now, both the big vendors we’ve named offer both, and the carriers are trusted in terms of financial stability, professionalism and quality of infrastructure. Where vendors have the edge is in the planning of a cloud-ready IT commitment. I think that the latter is more important than most people realize; simple IaaS cloudsourcing doesn’t address enterprise needs except in development and pilot testing. Anything other than IaaS requires significant SOA-like integration, something IBM and Microsoft realize and others either don’t realize or don’t address.
The assertion that the Sony PlayStation Network hack was hosted on Amazon’s EC2 isn’t raising all that many hackles among the cloud promoters, but it has demonstrated to enterprises yet again the concept of “collective risk.” A single company, particularly one with a low public profile and little customer credit data on file, has relatively little risk of being targeted by hackers. A cloud hosting a thousand or ten thousand or a million companies is a much more attractive target.
Sony gets attacked because it’s big, but would Mom’s Pizza be at risk? Not as a stand-alone, but it might well be part of a larger risk pool if their cloud host is attacked. Thus, moving to the cloud could raise risks of hacking. Not only that, if the cloud is hosting the hackers, might they not be able to hack others on the cloud more easily, exploiting interprocess issues or opportunities for denial of service? Hacking is an ROI- or publicity-driven process, after all.
Some of the earliest cloud successes (in total-revenue terms) are likely to be the kind of services that AT&T is offering for Windows support. These services don’t ask customers to outsource data or their critical applications, only to outsource support. Cloud resources are applied not to run customer apps but to improve support economies of scale and thus improve both pricing and profits.
This illustrates why I believe that service provider cloud computing and service provider service-layer intelligence are likely to converge on the same architecture. It’s only logical to assume that a provider that successfully sells a support service would be successful in selling cloud services, if the tie between the two was clear. It’s also better for economies of scale if IT functionality (whether the providers’ own apps are used in customer support and services, or the customers’ apps hosted in a provider cloud) use common servers/software and common support tools.
Speaking of Amazon, early responses from my spring enterprise survey suggest that the EC2 problem it had didn’t impact enterprise cloud planning much. That’s because enterprises were not, in the main, considering EC2 as the host for their critical applications. What the survey shows among SMBs is that those with clouds in their eyes, the early adopters, took the process in stride, while those that were on the fence were more likely to be hardened against cloud usage. In short, it increased the skepticism among those still considering the cloud, which may (if the feeling persists) impact the sales cycle for cloud services.
We tend to forget that a market is normally classified as being push or pull, meaning it is sales-driven or demand-driven. Some buyers will go out into the marketplace (meaning the Web, in most cases) to look for cloud providers. That’s not likely to be how mission-critical apps are handled, though. For that, you need a sales effort to create a sense of personal accountability. The larger players like AT&T, IBM, Microsoft and Verizon have sales forces that can hug and cuddle wary buyers, and that is more likely than anything to propel them to the top of the cloud heap.]]>
From what’s been said, the big reason appears to be the creation of a communications ecosystem built to envelope Microsoft’s gaming and mobile products, and I think it’s clear that it would be extended to Microsoft desktop products as well, and could even offer an attractive reason for hardware vendors to offer a Microsoft-based tablet.
Skype is two things: 1) A community that already includes tens of millions of active users worldwide, and 2) A technology that can create a “behavior-centric” communications framework around any activity that’s persistently interesting to users and that has a social dimension.
Gaming is surely such an activity, and so is unified communication and collaboration for the enterprise. I think it’s clear that Microsoft is aiming at this. But I also think it’s clear that Phone 7 and Microsoft’s smartphone fate is tied up with this deal as well…and that’s complicated.
Technologically, this might be an interesting time to make a Skype-based play. Mobile operators are transitioning rapidly to LTE, which is pure IP. While there are ways to tunnel TDM voice over LTE networks, a quick migration of mobile users to LTE would mean that an all-IP calling community would develop quickly. That would call into question the whole IMS voice evolution, because without much interconnect between TDM and IP voice, a lot of IMS is redundant. If you don’t believe that, reflect that Skype already inter-calls without IMS. So might Microsoft put Skype voice on its handsets instead of conventional voice? It would depend on the operators.
Voice services are clearly not going to be profitable in mobile any more than in wireline, but they do sustain some revenue from non-broadband customers and justify at least part of the investment in wireline copper loop. They’re also still a big source of mobile revenue, if one that’s clearly in decline.
P2P voice is the cheapest way to offer voice services, which is why you can offer free Skype. Given that universal broadband will create a universal framework for something Skype-like, it’s hard to justify spending bigger bucks to create another voice model. Yes, the carriers have low IRR and can win a race to the bottom, but their horse in a future-voice race is more likely to be P2P-based than central-mediated and server-based. Remember that signaling issues were what was supposed to have brought down Verizon’s LTE network. Why create more of it?]]>
Microsoft and IBM preach a more cloud-enabled app story than most vendors, and they also preach more PaaS, hybrid cloud and private cloud. This month in Netwatcher, we’ll take a more detailed look at the architecture issues here, and how enterprises are seeing their cloud plans developing.]]>
PCs are not seeing the growth they once did, and that of course reduces the new-system licenses for Windows. Some of the slowing is due to tablet encroachment, but most is likely due to people just not upgrading as often. Windows 7 drove a spate of refreshes, but that’s over. I don’t think there’s much of significance in this particular data point.
What’s more interesting is that the server and Office portfolios did very well. The media has Linux running rampant in the data center, and cloud productivity tools kicking Office’s butt.
The truth is apparently not quite that dramatic. In fact, both Microsoft’s server sales and its Office sales were well ahead of IT spending trends overall. I’ve noted for quite some time that Google Docs isn’t equivalent to Office, and that’s for now enough to keep the Faithful in line, Office-wise.
I do have to admit surprise at the server numbers; 11% growth is twice the industry rate. I think a decent chunk of this is SMB spending; SMBs adopt Linux at half the rate of enterprises.]]>
Microsoft’s big problem isn’t Google and the cloud, though, it’s Apple. We’re living in a world where wireless and appliances are redefining how people do just about everything, and Microsoft has let itself get trapped outside the candy store window. Phone 7 just isn’t going to catch up in the mobile handset space, Nokia deals notwithstanding. Microsoft has no effective tablet strategy because it’s afraid of undermining its Windows 7 space. The more iPads Apple sells, the more it turns the consumer away from Microsoft; away from anywhere that Microsoft appears even able to move.
Yes, Microsoft has to protect its current incumbencies, but without creating new ones that matter, it’s only delaying the inevitable. Microsoft won in PC operating systems over Digital Research because DRI missed the IBM PC opportunity. One slip and you’re done. Microsoft missed MP3 players, smartphones, and now tablets. It needs to get its act together–and fast.]]>