Monthly Archives: June 2011

Amazon Web Services Follows Microsoft by Eliminating Inbound Data Charges

Amazon Web Services (AWS) promised to eliminate inbound data fees starting July 1 in a move that matched Microsoft’s recent announcement of the same with respect to its Microsoft Azure platform. Moreover, AWS slashed outbound data prices for up to 10 terabytes of outbound traffic per month from 15 cents to 12 cents per GB. After 10 terabytes of outbound data transfer within a month, the next 40 terabytes per month have been discounted from 11 cents to 9 cents (total: 50 terabytes) per GB. And the next 100 terabytes of outbound data transfer per month (total: 150 terabytes) will be discounted from 9 cents to 7 cents per GB. In a blog post, Amazon Web Services remarked: “There is no charge for inbound data transfer across all services in all regions. That means, you can upload petabytes of data without having to pay for inbound data transfer fees. On outbound transfer, you will save up to 68% depending on volume usage. For example, if you were transferring 10 TB in and 10 TB out a month, you will save 52% with the new pricing. If you were transferring 500 TB in and 500 TB out a month, you will save 68% on transfer with the new pricing.”

Microsoft announced its intention last week to eliminate inbound data transfer fees in the context of the case of Press Association Sport, a partner of the Press Association, the national news agency of the UK. Given that the Press Association Sport planned to upload “large amounts of text, data and multimedia content every month,” into Windows Azure, the CTO of the Press Association remarked on the benefits of free inbound data transfers as follows: “Estimating the amount of data we will upload every month is a challenge for us due to the sheer volume of data we generate, the fluctuations of volume month on month and the fact that it grows over time. Eliminating the cost of inbound data transfer made the project easier to estimate and removes a barrier or uploading as much data as we think we may need.” Amazon followed suit a week after Microsoft’s June 22 announcement. In a June 29 blog post, AWS CTO Werner Vogels indicated future price decreases from AWS were forthcoming as the company scaled and rendered its operations more efficient.

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Quantifying Cloud Computing Market Share

Recent years have witnessed a proliferation of analyses about the size and relative market share of vendors in the cloud computing space. According to a post in GigaOM, UBS Analysts estimate that “the total market for AWS-type services will be between $5-to-$6 billion in 2010 and will eventually grow to $15-to-$20 billion in 2014.” Gartner, meanwhile, estimates that the IaaS market will grow from $3.7 billion in 2010 to $10.5 billion in 2014. Forrester predicts that IaaS spending alone will increase from $2.9B, projected to grow to $5.85B by 2015 in their recent report, Sizing the Cloud, Understanding and Quantifying the Future of Cloud Computing.

The discrepancies between these estimates of the current and future state of the IaaS space illustrate some of the difficulties specific to quantifying cloud computing market share, many of which of derive from the following reasons:

• The plurality of cloud computing modalities renders calculations of market share complex. While it’s true that the terms IaaS, PaaS and SaaS remain powerful terms for understanding cloud computing deployments, vendors are increasingly offering more than one variation of the IaaS, PaaS and SaaS trinity. Amazon’s Elastic Beanstalk, for example, constitutes a PaaS offering from the largest IaaS vendor in the space. Meanwhile, Red Hat offers an IaaS product called CloudForms alongside a PaaS offering known as OpenShift. Moreover, analysts may choose to include or not include SaaS, PaaS or consulting services from cloud computing products in their estimation of cloud computing revenue.

• Vendors often refuse to disclose cloud computing revenues, especially if they are privately held or otherwise multi-tiered businesses wherein cloud revenue is miniscule in comparison to revenues from other services. Amazon Web Services constitutes the paradigmatic example, here, but the recent acquisitions of Terremark by Verizon and Savvis by CenturyLink may serve as further cases in point, though most reports suggest that both Terremark and Savvis will function as independent business units within their parent company with detailed revenue breakdowns.

• Within the first half of 2011, Dell, HP, IBM, Oracle, Red Hat, Apple, Go Daddy and Microsoft have made increased commitments to cloud computing deployments in ways that promise to significantly impact the existing market share balance.

• The global nature of cloud computing renders quantification of market share challenging because many U.S. cloud computing vendors operate transnationally in partnership with other channel partners that may or may not report revenue in a transparent fashion. Consider Joyent’s partnership with ClusterTech and Qihoo 360 Technologies in China, for example, in this regard.

Despite these methodological difficulties, we can make some definitive statements about vendor revenue. Consider the following revenue data points, for 2010:

1. IaaS
a. Amazon Web Services: $500–700 million
b. Rackspace: $100 million
c. Terremark: $37.5 million, prior to acquisition by Verizon
d. Savvis: $15.2 million, prior to acquisition by CenturyLink
e. Joyent: $10- 20 million

2. SaaS
a. Salesforce.com: $1.3 billion
b. NetSuite: $200 million
c. Rightnow: $200 million
d. SuccessFactors: $200 million
e. Taleo: $200 million

Revenue for PaaS in 2010 is difficult to locate and widely believed to be miniscule. But given the sheer number and heterogeneity of cloud computing vendors and deployments, these numbers represent little consolation for analysts and investors seeking to understand trends in the cloud computing universe. How will Apple’s iCloud fit into this equation, for example? What about Facebook and Google? In what way will Microsoft’s Office 365 change market share in the productivity software space? Part of the difficulty of estimating cloud market share, here, involves the lack of a common set of standards for measuring the size of cloud computing deployments, in addition to the challenges specific to locating data for annualized cloud based revenue per vendor. Until inter-operability standards emerge, analysts will need to develop new methods of imposing discipline and rigor on the conglomeration of cloud computing forms. Meanwhile, vendors and customers alike should push for inter-operability standards that facilitate apples to apples comparisons of cloud offerings from vendors across the globe.

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Microsoft Releases Office 365 to Stake Claim to Cloud Productivity Software Space

Microsoft Corporation consolidated its position in the productivity software market on Tuesday with the market release of Office 365, the online version of its Microsoft Office suite of software applications such as Microsoft Word, Excel, PowerPoint and OneNote. In releasing the market version of a Beta product circulated in the fall of 2010, Microsoft goes head to head with Google Apps in the competition for enterprise market share from businesses seeking productivity and collaboration tools. Although Office 365 has the potential to cannibalize sales of the popular desktop Microsoft Office suite, Microsoft predicts net revenue from its productivity software will increase as a result of business subscriptions from small to medium sized businesses. Speaking of the product’s target market, Microsoft CEO Stave Ballmer noted: “Office 365 levels the playing field, giving small and midsize businesses powerful collaboration tools that have given big businesses an edge for years.”

In a manner similar to Google Apps for Business, Office 365 allows multiple users to simultaneously edit the same documents and access them from web enabled devices including smartphones. Office 365 is priced anywhere from $2/month per user for email services to $24/month per user for the most powerful versions of the Office productivity suite and Exchange, SharePoint and Lync Online. Office 365 for Small Businesses, intended for a maximum of 50 users with “minimal IT resources,” is aggressively priced at $6/month in comparison to Google Apps, at $5/month per user. Microsoft’s entrance into the cloud based productivity software space was not lost on Google. Shan Sinha, Google Apps Product Manager, noted in a Google blog post that Office 365 was designed for individuals whereas Google Apps was conceived for teams; that Office 365 is optimized for Windows PCs whereas Google Apps works well on virtually any web enabled platform; and Google Apps is optimized for cloud based deployment whereas Office 365 represents “legacy, desktop software,” that has been transferred to a data center and labeled “cloud.” “Apps,” Sinha notes, “was born for the web and we’ve been serving hundreds of millions of users for years.”

Analysts are divided as to who holds the advantage between Google and Microsoft in the productivity software space. On one hand, Google holds a competitive edge both in terms of first mover advantage and the free version of its productivity suite, Google Docs. Microsoft, nevertheless, dominates the productivity software space with 90% of the market and a customer base that is familiar with and loyal to its software. That said, questions remain as to whether Microsoft can ameliorate the problems that caused outages of the precursor to Office 365, the Business Productivity Online Suite (BPOS). Google clearly has more experience and skill with large scale cloud deployments although it remains to be seen how convincingly its productivity suite can gain traction in the enterprise space.

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Verizon’s Terremark Worldwide Pledges to Avoid Vendor Lock-In and Provide Enhanced Security

Just days after Go Daddy announced plans to enter the IaaS space, Verizon revealed its readiness to deploy IaaS and managed services as a result of the consummation of its technological integration with its recent acquisition Terremark. The newly formed entity, Terremark Worldwide, plans to roll-out hosting and cloud infrastructure services by leveraging a network of over 50 data centers located in North America, Europe, the Asia-Pacific and Latin America. Importantly, Terremark Worldwide intends to avoid vendor lock-in by empowering customers to migrate data from one cloud infrastructure to another. Currently, Terremark’s cloud infrastructure services support only the VMWare hypervisor whereas its managed services hosting offering integrates with multiple hypervisors. Kerry Bailey, President of Terremark Worldwide, noted that Terremark plans to integrate with other virtualization platforms as well as develop APIs to help customers avoid lock-in as part of its product roadmap over the next few years. In response to data breaches affecting companies across the U.S., Terremark also plans to provide security risk assessments and vulnerability analyses that leverage Verizon’s expertise in security, risk, and identity and access management services.

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Go Daddy Offers IaaS Cloud Computing, With a Twist

Go Daddy’s recent announcement that it plans to enter the IaaS cloud computing market throws yet another twist into the contemporary evolution of the cloud computing space. Although competing directly with Amazon Web Services and Rackspace, the domain registration and web hosting company proposes an IaaS solution called Data Center on Demand that provides fixed server resources for a monthly fee in sharp contrast to the “elasticity” and “pay per use” attributes of IaaS cloud computing. Moreover, the marketing brochure for Go Daddy’s Data Center on Demand offering asks its customers whether they have professional IT staff, noting, “managing Data Center On Demand machines requires technical expertise.” The disclaimer about professional IT staff reveals that Go Daddy has yet to build user friendly management consoles that do not require the use of shell commands. The service does offer load balancing capabilities that “can load balance any volume of traffic among an entire network of machines” and are “amazingly simple to set up.” The twist in the evolution of cloud computing represented by Go Daddy’s cloud computing product concerns its use of fixed pricing for fixed server resources. Data Center on Demand is currently in a limited release version scheduled for full deployment in July. Go Daddy’s entry into IaaS cloud computing marks a strategic move to leverage its ubiquitous brand name and gargantuan customer base to make a dent in the cloud computing revenues of AWS and Rackspace. Expect small businesses with technically savvy resources to lead the charge amongst their initial round of customers. Larger enterprises are likely to continue to stick with Amazon, Rackspace and more user friendly, pay per use models for now.

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Open Data Center Alliance Pushes Cloud Inter-Operability with Eight Use Cases

Whereas healthcare IT can boast inter-operability standards in the form of HL7 compliant standards that regulate the transmission of structured, electronic health data, the cloud computing space has yet to finalize analogous protocols for the exchange of data. As a result, the Open Data Center Alliance (ODCA) has become one of several organizations pushing for cloud computing inter-operability standards that promise to enable customers to avoid vendor lock-in or inaccurate transformations of their data resulting from data migration from one vendor to another. Featuring a steering committee composed of representatives from BMW, Capgemini, China Life, China Unicom, Deutsche Bank, JPMorgan Chase, Lockheed Martin, Marriott International, Inc., National Australia Bank, Terremark, The Walt Disney Company and UBS, the Open Data Center Alliance represents enterprise customers whose annual spending on IT totals $100 billion. In an effort to accelerate the adoption of cloud inter-operability standards, on June 7, the ODCA elaborated eight use cases and a vision of inter-operable cloud computing that is intended to spur standards bodies to collaborate with vendors to define a set of standards across the industry. Topics addressed by four of the eight use cases include:

•Cloud Provider Security Assurance and Security Monitoring
•Standardized Units of Measurement for IaaS to enable meaningful comparisons of price and functionality across vendors
•Environmental standards regarding the CO2 footprint of cloud computing products and services
•Technical architecture of virtual machine inter-operability and I/O controls

More generally, the use cases address the topics of secure federation, automation, common management, policy transparency and solution transparency. The Open Data Center Alliance has pledged to share these uses cases with the Cloud Security Association (CSA), The Distributed Management Task Force (DMTF), The Organization for the Advancement of Structured Information Standards (OASIS) and TM Forum’s Enterprise Cloud Leadership Council (ECLC).

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Quotes from Apple CEO Steve Jobs on iCloud and device synchronization at 2011 WWDC

The following text is a partial transcription of Steve Jobs’s June 6 keynote address at the 2011 Apple Worldwide Developer’s Conference (WWDC), with a specific focus on Jobs’s remarks on the iCloud. Jobs introduced the vision for Apple’s iCloud product by discussing the contemporary difficulty of synchronizing files across multiple machines and devices. Apple’s CEO goes on to describe the comapny’s vision for iCloud and the changing nature of computing, more generally. Jobs proposes to relegate the PC and Mac to just another device and provide an infrastructure for a personal computing experience that enables synchronization across multiple devices. iCloud also pushes application updates to users in a way “that just works,” thereby absolving users of the responsibility of learning about cloud computing.

Steve Jobs, CEO, Apple Inc, June 6 keynote address at the 2011 Apple Worldwide Developer’s Conference (WWDC):

“About 10 years ago we had one of our most important insights and that was, that the PC was going to become the digital hub for your digital life. What does that mean? It meant that’s where you were going to put your digital photos, where else were you going to put them? Your digital video off your digital camcorder, and of course your music. Right, you were going to acquire, in the device or potentially on your Mac, and you were going to basically sync it to the Mac, and everything was going to work fine.

And it did, for the better part of ten years, but it’s broken down in the last few years. Why?
Well, because the devices have changed. They now all have music. They now all have photos. They now all have video. And so if I acquire a song, I buy it right on my iPhone, I wanna get that to my other devices.

Right. I pick up my iPad and it doesn’t have that song on it. So I have to sync my iPhone to my Mac. Then I have to sync my other devices to the Mac to get that song but then they’ve deposited some photos on the Mac so I have to sync the iPhone again with the Mac to get those photos and keeping those devices in sync is driving us crazy. So we’ve got a great solution for this problem. And we think this solution is our next big insight. Which is we’re going to demote the PC and the Mac to just be a device. Just like an iPhone, an iPad or an iPod Touch. And we’re going to move the digital hub, the center of your digital life, into the cloud.

Because all these new devices have communications built into them. They can all talk to the cloud whenever they want. And so now, if I get something on my iPhone it’s sent up to the cloud immediately. Let’s say I take some pictures with it, those pictures are in the cloud, and they are now pushed down to my devices completely automatically. And now everything’s in sync with me not even having to think about it. I don’t even have to take the devices out of my pocket. I don’t have to be near my Mac or PC.

Now some people think the cloud is just a hard disk in the sky. Right, and you take a bunch of stuff and you put it in your Dropbox or your iDisk or whatever and it transfers it up to the cloud and stores it and then you drag whatever you want back out on your other devices.

We think it’s way more than that and we call it iCloud. Now iCloud stores your content in the Cloud and wirelessly pushes it to all your devices. So it automatically uploads it, stores it and automatically pushes it to all your other devices. But also, it’s completely integrated with your apps and so everything happens automatically and there’s nothing new to learn. It’s just all works. It just works.”

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