Top 3 Cloud Computing Market Trends for 2011

2011 has been an extraordinary year for cloud computing so far. Amazon Web Services (AWS) set the pace with an aggressive roll-out of products such as Elastic Beanstalk, CloudFormation, Amazon Cloud Player and Amazon Cloud Drive. Just when AWS seemed poised to consolidate its first mover advantage with respect to cloud computing market share, the landscape exploded with a veritable feast of product offerings, business partnerships and acquisitions. Every month another Fortune 500 IT or telecommunications company throws its hat into the cloud computing ring: Dell’s vStart, Dell’s recent partnership with SAP, IBM’s SmartCloud, Apple’s iCloud and HP’s BladeSystem Matrix mark just some of the big names and brands that have entered the cloud computing dohyo, or sumo circle. The cast of new actors has rendered the cloud computing space painfully difficult for analysts to quantify for the purpose of understanding relative market share and growth within the industry. But within this bewildering sea of change, three industry trends have emerged that deserve attention:

1. Outages across the industry signal demand outweighs supply
Demand for cloud computing services has begun to outstrip supply to the point where vendor processes for guaranteeing system uptime have become increasingly challenged. The Amazon Web Services outage of 2011 was the most glaring example of a lack of effective, scalable processes for one of the world’s premier IaaS vendors, but 2011 has witnessed notable outages specific to Sony PlayStation, Twitter, Gmail and Google’s Blogger as well. Expect more outages and service disruptions until the industry fathoms the time to develop processes for delivering on 99.99% SLAs as opposed to merely promising them.

2. Early Consolidation vs. the Proliferation of New Entrants to the Market
The past five months have witnessed Verizon’s acquisition of Terremark, Time Warner Cable’s acquisition of NaviSite, CenturyLink’s acquisition of Savvis and rife speculation that Rackspace lies next on the totem pole of potential buyouts. In tandem with the finalization of these acquistions, a slew of other companies such as Appistry, CA Technologies, Engine Yard, Flexiant, GigaSpaces, RightScale and ThinkGrid have emerged on the landscape and promise to collectively cobble together a non-trivial slice of the market while potentially transforming into significant niche players themselves. Expect new entrants on the scene, particularly in the open source space that will increasingly complicate the IaaS market share dominance of AWS, Eucalyptus, Rackspace, GoGrid and Joyent. Consolidations will continue but the market is unlikely to congeal into a few dominant players for quite some time.

3. The Rise of Open Source Cloud Computing Solutions
Rackspace, Dell and Equinux’s launch of a demonstration environment of OpenStack promises to change the industry by enticing customers to consider toying with its open source platform for free while paying for consultative support services associated with cloud design and management. Meanwhile, Canonical’s decision to change the cloud computing provider for its Ubuntu Enterprise Cloud (UEC) offering from Eucalyptus to OpenStack testifies to the strength of OpenStack and conversely, underscores Eucalyptus’s challenge in defining its value proposition as an Amazon EC2 compatible open source IaaS platform. RedHat’s open source PaaS product called OpenShift marks another leading contender in the open source ring by virtue of its deployment flexibility across the Java, Python, PHP and Ruby environments. Expect that open source IaaS and PaaS offerings will become increasingly robust and scalable. If open source solutions can demonstrate reliable, high quality portability across platforms, the market for less portable, private sector IaaS and PaaS solutions is likely to shrink dramatically. The fortunes of OpenStack, OpenShift and the recently formed Open Virtualization Alliance merit a close watch, in particular.

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Sony PlayStation Network outage continues as a result of “external intrusion”

Sony PlayStation’s cloud computing network experienced significant downtime starting on April 21. The outage affected Sony’s PlayStation Network and its Qriocity music service. Sony PlayStation’s cloud based environment allows users to download and use online games, music, videos and movies. Patrick Seybold, Sony’s Senior Director of Corporate Communications and Social Media, announced that an “external intrusion” was responsible for the attack, generating suspicions that hackers were responsible for bringing down Sony’s cloud based gaming and music platform. The hacker group Anonymous was the principal suspect for the Sony outage after Sony initiated a lawsuit against George Hotz, a PlayStation user with the username GeoHot that jailbroke his PlayStation 3 and distributed jailbreaking tools to other users to download unauthorized applications. In early March, a Northern California court awarded Sony access to Hotz’s social media accounts, his PayPal account and the IP addresses of users who visited George Hotz’s website. The hacker collective Anonymous objected to Sony’s lawsuit against George Hotz, noting, “You have abused the judicial system in an attempt to censor information on how your products work. You have victimized your own customers merely for possessing and sharing information, and continue to target every person who seeks this information. In doing so, you have violated the privacy of thousands.” After Anonymous issued threats to Sony about their handling of the Hotz lawsuit, Sony experienced downtime on its main website, Style.com and the U.S. PlayStation site on April 6, in attacks that have been widely attributed to Anonymous.

But Anonymous denied responsibility for the recent outage by claiming, “For Once, We Didn’t Do It,” and that “While it could be the case that other Anons have acted by themselves, AnonOps was not related to this incident and does not take responsibility for whatever has happened. A more likely explanation is that Sony is taking advantage of Anonymous’ previous ill-will towards the company to distract users from the fact that the outage is actually an internal problem with the company’s servers.” Sony’s technical troubles follow high profile recent releases of Mortal Kombat and Portal 2. Considered alongside Amazon’s EC2 recent outage, Sony’s downtime raises increased concerns about quality of service and reliability in the world of cloud computing. Downtime on Sony’s PlayStation Network began on April 21 and continues as of the evening of April 24, 2011.