Peter Christy

Cloud Wisdom

The Structure 09 panel of successful Cloud practitioners (all the right places and people) had some real insight. Last year the key takeaway was scalability — if you didn't know how you were going to scale it would certainly kill you if you started to succeed. The wisdom this year was at a higher level, and the first part might be summarized by (a) think at the system level, (b) think probabilistically (bad things happen rarely but frequency with large numbers) and (c) it's really useful to own your own stack and be able to make everything work well together (this all speaks well to the Cisco UCS value proposition but that's a longer story). The second part was that humans are still the key to effective solutions and the ultimate cause of most problems (that was the Google perspective after 10 years and maniacal focus on tools and automation!). The broader wisdom at the meeting was that it really is mostly about virtualization (as a key enabler of pre-existing concepts) and utility computing, and it all makes sense if we stop elevating "Cloud" to something new and magical (as we here at IRG have concluded as well).

The Cloud for the Rest of the World

One of the most interesting talks at Structure 09 was by our old IBM friend Willy Chiu. We first met Willy when he did performance work related to WebSphere and then talked to him as he built their high-performance test labs to help customers with large Web applications. For the last few years he has been driving the construction and use of large Cloud labs around the world.  What Willy talked about at S09 was some of the really interesting use cases he's discovered "elsewhere" (not the  high-tech, geeky focus that dominates much of the Cloud dialog). These are really interesting. Suppose you are a country like Vietnam that wants to invest in industry development. The Cloud (and we would add wireless communication) is complete game changing. A government or economic development agency can put in a modest (by Google or Amazon comparison for sure) Cloud data center and quickly create on-demand infrastructure to use (this is analogous to the use of Amazon by startups today except startups are a very small part of the US IT economy but could be the dominating part of a development economy).  This not only provides a lot of painless infrastructure, removing from entrepreneurs the task of buying, installing, connecting and running their own computers, but also lets the government provide standard solutions or stacks further reducing the IT knowledge needed to use IT. Maybe we've all been looking in the wrong place for where the Cloud will take off. The implications are broad. If this vision is right then the issue isn't the trickiness needed to enable the construction of the next Twitter, Facebook or Wave — the focus is how to make the basics really easy to use for what we would think of as completely boring (but certainly green field) applications.

Best Joke at Structure 09

In his fireside chat, Marc Benioff kept using the term aZUNE to refer to Microsoft's Cloud Platform. You have to wonder if the naming mavens thought of this when they picked Azure? The second best joke was when the Google guys were pointing at interesting things Google had published and kept saying "if you ‘Bing' for it you will find it." There were lots of Cloud puns but generally you "had to be there." BTW, Azure was delightfully well represented at the meeting and on the side reported that they are on track for announcing pricing this summer and a commercial release by the end of year (what they said at the STB analyst meeting as well). Remember that Azure isn't competing with Amazon (selling raw VM's). The MS goal is to provide the preferred Cloud solution for their 3MM developers and 400,000 business partners. So far they are on the path of under committing and over delivering, and letting the market tell them what they should focus on next.

Cloud Squeezing

The VC panel at Structure 09 was quite interesting, as was the case last year. There was uniform reticence about investing much in capital expensive infrastructure: one VC said that when someone comes in with a pitch on how they will be more cost effective than Amazon they just laugh. This evolved into a deeper discussion on the problem that it poses for investing in valuable infrastructure management software and systems as well. There is growing appreciation that it makes sense to learn in large Cloud environments and use that learning to design products for the broader market (this is Microsoft's System Center strategy for example) which makes the larger Cloud providers very interesting early customers to serve.  However a very large fly in the ointment comes from the Amazon business model:  Bezos is a retailer, and like all successful retailers, is very good at cost minimization. As he tells his investors, the good part of having a low profit margin is the large barrier to entry it creates for smaller competitors given Amazon's experience and economies of scale. As an expected consequence, Amazon, like WalMart, is very good at squeezing suppliers, including software suppliers. Google proudly pays no software license fees on their 2MM servers, and Amazon clearly pays as little as possible. So if you hoping to make good money selling innovative stuff to Amazon and learn from the experience (or any other large Cloud provider) think again.