Tech Trends

Not Files, But File Servers, In the Cloud

If plain storage is a commodity, on-line storage is even more of a commodity. So figures Egnyte Corp., a one-year-old startup that sells not cloud storage, but cloud storage servers, which look and act just like a local file servers but without all the hassles of, like, buying and maintaining equipment.

Egnyte is also different from storage in the cloud players like Carbonite and MozyPro, says co-founder Rajesh Ram, in that it’s designed to let company employees share files with each other and outside their organization, as well as regularly updates those files, not just leave them sitting untouched in the cloud in the event of a disaster. Their secret sauce, he says, is a virtualized, multitenant architecture that allows them to support as many as 450 customers with one commodity, $2,500 server.

In keeping with its “not just storage” theme, Egnyte doesn’t even price per the amount of storage provided, but instead charges about $15 per “power user” per month for up to ten users. Customers with p to three users get about 20Gbytes of storage per user, rising to a Tbyte per user for companies with up to ten users and unlimited storage for 11 or more users. Given its business, rather than consumer-focused market, these relatively low storage limits pose no problems for its customers, and keep Egnyte’s costs down to a reasonable level, says Ram. If they can indeed hold down their infrastructure costs, it’s an interesting play which might be transferable to other types of servers such as messaging, though Ram says he’ll probably OEM such products rather than develop them internally.  

 

 

 

 

Building A Cloud App? First, Don't Screw Up

My former colleague Mark Hall is predicting IBM's most recent cloud computing initiatives will fail. Mark thinks IBM's first offering, providing Web-based servers for application and test functions, will fail because it won't beat similar offerings from Microsoft and Google on price. He predicts IBM's second service, providing cloud-based "thin clients" (with most of the application processing and data done on a remote server and fed to a rudimentary, low end client device) will fail because "There is something visceral in the minds and hearts of people about having their own PCs."

I would argue there's more than just a "gut feeling" that makes me crave my own "thick client" PC with my very own processor and hard drive with all my own stuff on it. It's experience with Web sites such as LinkedIn and Web apps such as Salesforce.com.

First, the Web isn't always there. For that matter, I can't even get a decent cell phone signal half the time, even in my own house. And I'm going to rely on an Internet connection to see my own work in progress, customer lists and to-do lists? I don't think so.

Second, the Web is too slow -- not for background applications like backup but for anything that requires a crisp response, such as looking up a long-lost customer name in a rush or dashing off a quick email. There's just too much time w-a-i-t-i-n-g for screens to refresh or for drop-down lists to populate. When I'm in crank mode I don't want my computer, or connection, slowing me down.

Third, a lot of Web apps are just too kludgy. True, that's an app dev issue and has nothing to do with the underlying architecture. But have you ever seen a Salesforce.com screen? It's filled with tiny type, multiple identical-looking boxes and odd, run-around-the-block processes for something as simple as attaching a file to an email. And how about those "reply" boxes in LinkedIn, where it takes me about half a minute to figure out where my reply goes?

Finally, remembering passwords to my different cloud apps is just too much for my age-addled brain. On my PC, if I want to launch an app, I click on it -- period. True, configuring my browser to remember all those passwords is fine, except different Web apps and browsers handle this differently, and seem to forget my different user names and passwords just when I need them. Just when I get that all working nicely, a Web app forces me to change my password for my own good. At least my PC trusts me to stay me.

If cloud apps are ever going to take off for the great unwashed like myself, they'll have to 1) reliable, which requires big build-outs of reliable, broadband wireless networks; 2) vcry fast (maybe someone should get going on advanced caching techniques for thin clients and 3) more, not less, user-friendly than their client-based counterparts (which just takes good design.) Finally, give up on the "Web-only" theology and put enough code on the desktop (a la Tweetdeck, the front end for Twitter) so I can just launch it and be on the Web sans sign-on.

Until then, you can have my thick-client PC when you drag my cold, dead, fingers...well, you know the story.

  

Pay As You Go Pricing Death Knell for Software Vendors?

Software licensing is always a sensitive subject for vendors, because it's where all the flashy advertising and talk about strategic value gives way to hashing out just what the customer has to pay. It must get downright scary for software vendors when they hear that some major customers, as they move to cloud (Web-based) computing environments, want to pay for only the software they use, when they use it, and only for as long as they need it.

Alan Boehme is senior VP of IT strategy and enterprise architecture at financial services giant ING, and a major backer of cloud computing, both inside ING and in industry forums. If the promise of cloud computing is that customers buys only the computing resources they need, he asks, why are they still paying software vendors annual per-user, per-site, or per-processor licensing fees that don't reflect actual usage? He'd like to see the licensing of the software itself, as well as associated fees like maintenance and support, pro-rated to the time users actually spend using an application.

If buying computing services over the Web is all about the efficient matching of  resources to needs, it's only a matter of time before someone figures out how to provide very granular, real-time, to the second pricing for application services over the Web. However they tweak their pricing, that has to mean huge hits to the revenue of raditional software vendors such as Microsoft and Oracle. Even Salesforce, the poster child for software as a service, charges an annual fee regardless of how often you log on. How will software vendors pay for all those fancy office buildings, schmooze-filled user conferences and -- gulp! - white papers  when revenue drops 30, 40, 50 percent or more?

For this ex-reporter, it's an eerie reflection of what newspapers are going through: Readers want content, but have been trained by the market to get it for free, or at least at minimal cost. The market is doing a great job at driving efficiencies for customers, but not at funding the intellectual content (software or journalism) that they demand.

 

Surviving (Nicely, Thank You) In A Commodity Co-Location Market

At first glance, there’s nothing duller than what Interxion does: Providing basic data center space (a raised floor, physical security, power (including HVAC and backup) and network connections to stock exchanges, ISPs and telecom providers. The customers have to roll in everything from the equipment racks to the carrier-grade switches, and then manage all that gear themselves.

So how did Interxion earn about €27 million on revenue of €138 in 2008, and why does it expect to grow 30 to 40 percent this year despite the global recession? As Group Managing Director Anthony Foy describes it, their 120,000 square feet of data center space across Europe is just the foundation for a global network of digital bazaars trading in 1) network bandwidth and 2) stocks, bonds, and other financial instruments.

First, the bandwidth: Interxion runs “carrier neutral” data centers, meaning that as many as 45 different network providers might serve the site, compared to only two or three for the average co-location facility, says Foy. That means lower prices for bandwidth as customers play one provider off against another.

The second factor lifting Interxion out of commodity status is that it gives very high-volume traders physical space and network connections right next to each other, speeding electronic trades in stocks and other financial instruments. Eliminating even the smallest delays is critical for computerized systems trying to make money predicting whether the price of a stock will rise or fall in the nanoseconds it takes for a buy or sell order to travel from, say, Frankfurt to London. In addition, European Union regulations require that all trades be made at the best current price – which means, again, getting the very latest price information.

Interxion also enjoys economies of scale (in everything from floor space to electric power and bandwidth) that individual companies, as well as smaller co-location vendors, cannot. Its attractive business model also makes it easier, says Foy, for it to get credit than competing co-los or companies looking to build their own data centers.

 

Sure, Interxion has headaches, ranging from competitors to what I’m sure are demanding customers to rising power costs. But I’d trade their problems, and their margins, to duking it out only on price with competitors offering essentially the same service. They did it by moving beyond cheaper or faster versions of what their competitors offer, focusing instead on the fundamental challenges facing their customers – and lifting themselves neatly out of the commodity death-trap.

Backlash Coming on Kludgy Cloud Apps?

Between the hype and the downturn, all you seem to hear about these days is cloud computing. I recently wrote about how tacos are edging towards the cloud services business, and analyst firm IDC says tough times will drive more customers to cloud services as right-sized, zero-CAPEX alternatives to on-premise applications.

I have no doubt that’s true. But I also think, based on my own recent experience, that there’ll be a backlash at some point against cloud services that are slow, kludgy or just plain not reliable. For example:

I recently blogged about SIMtone, which wants to replace your conventional PC with an ultra-inexpensive device that’s little more than an antenna and a display, relying on anywhere, anytime, broadband connections to access a virtual PC running in a far-off data center. Awesome vision – and I might trust my applications to a wireless carrier when I can move from one side of my suburban Boston office to the other without losing the connection on my cell phone.

Or consider Salesforce.com, whose sales of its Web-based CRM application grew 34 percent in the most recent quarter despite the recession. Sure, there’s no software to install and maintain on my local PC. But waiting for the screen to refresh over the Web is like watching paint try. Having to log on each time I want to run Salesforce is a pain, as is having a browser crash or losing connectivity, trashing the data I just entered. Finding names and attaching files in Salesforce is far slower than in Outlook – and it was sure fun when Salesforce hopefully forced me to reset my password in the middle of a busy day prospecting.

Hey, Salesforce is a lot richer than I am, so they’re doing something right -- especially in a downturn. But I suspect when times get good again that users will want far faster, more intuitive, and easier to use applications than the current crop of cloud apps. As for giving up my “thick client” PC? Only when my cell phone service is as reliable as my local hard drive.

And if you're pitching cloud services, explain how you or your client are going to deliver the basics (reliabiity, speed and an intuitive user interface) before explaining how you're going to change the world. Nothing sinks an earth-changing vision faster than inability to deliver the basics.

Telcos Jump Into Netbook/Data Plan Business

Telcos are jumping into the netbook/data plan business with a vengeance. AT&T is offering netbooks for $99 with a two-year service contract at your local Radio Shack, with Verizon rumored to be next in line. (Several European vendors have also rolled out such offers.) Like with cell phones, the strategy is to subsidize the notebook (the razor) so customers will buy lots of data services (the razorblades.) One reporter points out this makes the actual cost $1,500 over the life of the contract, and with basic Internet access going for $50-60 a month per household, it may indeed not be a bargain. But for some customers, being bled by the month will be preferable to paying up-front for a $300 netbook or $500 notebook.

 No word yet on whether, or when, the telcos might take the much bigger step of offering hollowed-out netbooks (no processor, no disk drive, no operating system) and delivering the entire application stack over their 3G wireless broadband services. Earlier this month I reported on SIMtone, which hopes to provide the delivery platform telcos will use to push applications and data out to these ultra-small PCs. SIMtone predicts we’ll see the first such offerings by the end of the year. Me, I’ll hold onto my real notebook until my cell carrier stops dropping my calls…

Will Dumb Terminals Inherit the Earth?

In these days of hunkering down, cutting back and getting by it’s neat to talk to a venture-backed startup that’s out to change the world. The SIMtone Corp. wants to put the Internet “cloud” on steroids, feeding you everything from processing power to storage and even the user interface on your application from the cloud. Goodbye Microsoft and Intel, presumably, as you’ll need neither an operating system nor a processor – just a modern day version of the dumb terminals once used to access mainframe applications.

Oh, and who will be providing these incredibly rich, incredibly reliable cloud computing services to the starving masses? The telephone companies. Really.

As Chairman and CEO Mario Dal Canto sees it, today’s cloud computing environments require the use of proprietary protocols and expensive, complex PCs at the user end. As the price of bandwidth plummets, and ever-more-powerful virtualization makes it possible to effortlessly scale Internet-based application hosting, SIMtone says to move all – and they do mean ALL – the heavy lifting to the cloud.

The benefits for users? Imagine being able to upgrade your processor, your memory, the size of your hard drive or your application suite with the click of a mouse.  Imagine very, very low-cost mini notebooks like SIMtone’s own SNAPbook essentially given away with service plans the way cell phones are now. Imagine low-cost, maintenance-free computing for small business, education or low-income customers.

There are, of course, a few steps between here and the promised land. One is that wireless broadband is not yet as ubiquitous in the U.S. as in other countries (which is why the SIMtone model has more traction in other parts of the world.) Another is that nervous customers (read: me) are not yet ready to trust all their data, all their ability to communicate, all their ability to even write a note to a wireless connection.

Others are apparently bolder: SIMtone says it has ten “very strong engagements” to provide its services management infrastructure to telcos around the world, and that the first services will roll out later this year. For the telcos, he says, it’s a way to break out of the price wars that come with offering voice and data commodity services. (Several telcos have already announced cloud offerings, but nothing as dramatic as what SIMtone plans.) And it may be just the thing for IT customers short of capital budgets for new equipment, and consumers short on money and PC know-how.

For example: I know a fellow who, working with a wireless mouse from his easy chair, doesn’t know how to run a virus scan  but can find and watch any 60s and ‘70s sitcom on the 32” flat-panel hooked to his Vista desktop. Would he go for an easy-to-use, pay-by -the month, no-computer link to the Web? To quote a certain vice presidential candidate, you betcha.

Having taken the evening off to watch the Oscars, I hadn’t read a scary story about the economy in, oh, 14 hours or so. So I was relieved to get back into “read it and cringe” mode with a story from TechCrunch reporter Sarah Lacy about why the smart VCs are moving their investments from Silicon Valley to overseas haunts such as

China

,

India

and

Israel

.

 

Her basic take is that venture capital isn’t focused on high-tech per se, but on high growth, and emerging markets with rapidly rising incomes are more lucrative than mature markets such as information technology. This got me, as a marketing writer/consultant, wondering if the B2B marketing and PR business is about to go the way of America's auto business, hollowed out by foreign competition.

 

It’s definitely true that talent is global (as evidenced, again, by the Oscars) but the infrastructure to turn great ideas into profits isn’t quite so well distributed. Marketing is, in large part, a language skill, and language is local. (Just look at the English-language Web sites of some foreign-based IT vendors to see what I mean.) I would argue a lot of the marketing/PR infrastructure for B2B products and services will stay local, because understanding the year-in, year-out shifts in language, grammar and cultural references – even changes in mood like the current mania for frugal living in the U.S. – requires living locally.

 

As long as the U.S. remains one of the world’s largest markets, then, B2B startups will still have to spend a good deal of their marketing dollars here in the U.S. Or am I whistling past the graveyard?

 

 

Refine Your Cloud Pitch

Having recently ranted about the lack of clarity in how vendors describe their “cloud” computing offerings, it’s only reasonable to ask me how I would do it. Therefore, some top-level thoughts about how the technologies and  markets are breaking down, as of now.

 

Software as a Service (SaaS): The most recognizable and well-known variation on cloud computing, which includes thin-client-like offerings such as Salesforce.com. (The user interface runs on the user’s machine, the data and most of the back-end processing live on hosted servers in the cloud.) In this model, the “product” is an application showing up on a user’s desktop; the provider takes care of all the back end work, from physical hosting to server configuration, performance management and security.

 

Hosting As A Service: A variation on everything from traditional application outsourcing to co-location (multiple customers in one data center) to application service providers and even – anyone remember this? – time sharing. In this model, the service provider might provide anything from just power/cooling, space and physical security to providing physical or virtual servers to running and managing the entire application stack. Microsoft is among the latest players to jump into the application hosting market (with Exchange), while Google and Amazon, among others, offer the ability to create and manage your own virtual servers in their physical space.

Utilities As a Service Standard data center services such as backup, from vendors such as Symantec, MozyPro (EMC), Amazon, Carbonite and Nirvanix, or security (from vendors such as StillSecure and Purewire) offered over the Internet. Here, the product is not an application a user sees, but an underlying function required to keep those applications available.

 

Application Development/Middleware as a Service: No, this doesn’t mean an outsourcer writing apps or hooking them together for you. It means using a cloud service provider’s application programming interfaces to build your applications (and then host them with the provider) or use their messaging and communication interfaces and standards to link other applications. Salesforce.com claims to be one of the leaders in this space; one risk for customers is being locked into that vendor’s platform for future development and integration work.

 

Each of these four models (and I’m sure there are more) present different benefits, risks and disadvantages for customers, and give providers a chance to differentiate themselves and tell a compelling story. If you’re not being specific enough in describing your cloud offering, you’re missing an opportunity to stand out from the cloud also-rans.

Cloud Positioning Is, Well, Murky

Even before InfoWorld asked me to do a series of stories on cloud computing it was clear that “cloud” is high on the IT radar screen, either despite or –of because of – the economic downturn. It also helps that the definition of the “cloud” is, like its namesake, soft and fluffy enough to cover almost anything. Heck, even I'm a cloud customer now.)

 

 

When I learned to read network diagrams in the Stone Age, the “cloud” meant the Internet. It also meant you didn’t have to know the physical location of a resource (whether a Web page or your CRM app server) because the Web provides a logical address for it. Ergo, “cloud computing” means something 1) located on and delivered via the Internet and 2) whose physical location is unimportant, as long as an application, user or device can find it through a logical address.

But business being business, every vendor who could spell “cumulus” began pitching their stuff as cloud-enabled. Virtualization vendors are now “cloud” vendors since virtualization provides the logical paths to the physical resources. Anyone who provides security, or performance monitoring, or network bandwidth or even electricity, is now a cloud computing vendor since you need their stuff to access the Internet. We even now have “private clouds” made up of virtualized servers and storage that sit in a customer’s own data center. Uh, since when did “cloud” refer to a customer’s own WAN/LAN?

Needless to say, the editors I talk to are very, very skeptical of cloud pitches. If you do indeed provide (or help provide) apps or services over the Internet, explain precisely what you provide. Is it provisioning capabilities that help cloud service providers keep their own data centers running? Is it a specific application (like CRM or backup) you provide to business customers? Or is it an IT service (like security) you provide via the cloud?

If you’re playing in the service provider space – i.e., as an ISP or telecom providing backbone networks to the cloud providers – make that clear also. If your offering is several levels up the value chain from the end customer, it’s a tough sell to an IT book focusing on CIOs and other customer-level decision makers.

A great story, of course, is anything having to do with the downturn, and what some vendors claim is a “bottom-up” groundswell of thrifty business managers moving ultra-fast to cloud services for the cost savings, sometimes even bypassing (and annoying) IT. Do let me know if you have any such stories, as we in the IT trade press always love a fight, especially during a downturn.