|By Brian McCallion||
|June 9, 2011 01:11 PM EDT||
On June 7th @cloudexpo I attended a presentation on Eucalyptus by Rich Wolski (founder and CTO of Eucalyptus, known to throw lightning bolts from Mount Olympus when he thinks nobody is looking. He certainly threw a few during his presentation @ CloudExpo that most people didn't notice.) during which he described the genesis of Eucalyptus. Creating a cloud interface indistinguishable from the interface of Amazon AWS was the critical success factor and defined the project. The challenge, Rich explains, was like that of a "Turing Test."
A Turing test is a well known test used to measure the success of early artificial intelligence systems. In a Turing test the user interacts with another 'user' via a keyboard interface not unlike a present day chat system. If after asking and receiving questions and responses from the other user the human user believes the other user is human, then that AI system has met a certain measure of success. IBM's Jeopardy / Watson demonstration provides an interesting example of the Turing test. While IBM focused on the speed of analysis and the depth and volume of data accessed by Watson on my opinion this focus masks the brilliant ability of Watson to simultaneously research and solve for meaning. It's evident but worth noting that for Watson, positing and refining the meaning of the question was significantly more difficult than retrieving the data. And to me it's this kind of "work" that the Turing Test really tests for.
|Decorator Crab in action!|
If the goal of Eucalyptus at inception was to provide an interface indistinguishable from Amazon AWS's interface, what does this mean in terms of the "stickiness" or competitive positioning of web services and their providers? In a marine ecosystem if you are a decorator crab and your unique and carefully constructed shell or wrapper or mediation suddenly ceases to offer you a stable degree of survivability this trouble may be brief and final.
In Amazon's case I wonder if the reason there's been no public conflict between Amazon and Eucalyptus is because essentially, Amazon and Eucalyptus form a symbiotic organism: Amazon AWS provides the Public Cloud and Eucalyptus transmits the Amazon AWS DNA / interface to the Private Cloud. In other words, while Amazon may make money via the Cloud, Amazon may perceive the competitive landscape (seascape) very different from other participants. What if Amazon.com does not directly compete through AWS technology? Instead, Amazon.com operates several hierarchies above from the Masters of the Universe game room. What if for Amazon the cloud play is to completely disrupt and reorganize the datacenter industry ecosystem by unleashing an "event" which disrupts large and small players alike and results in a disruptive redefinition of service delivery, choice of customer, and pricing. And just for good measure, Amazon.com, may in fact remain the leader and lawgiver of the business internet.
Once Amazon put the "Cloud" horse on this multidimensional chessboard, the marketplace forever changed. While one might argue that teaching consumers to purchase things on the internet took ten years, clearly in the cloud and datacenter space, change ripples or waves through the system an order of magnitude more quickly, and appears to be accelerating. @CloudExpo, June 8th 2011 CEO panel, Treb Ryan of OpSource stated that in just six months from now the industry will moved forward in a meaningful way and that issues in the foreground now would not be in the foreground then. Unlike other participants in the Cloud Computing space Amazon has hundreds of millions of end users and millions of businesses using its ecommerce interface to purchase and sell goods. Is Amazon playing in a much larger game and other participants only see the shadows of these moves, but not the body or the head of this organism?
Analyzing the marketplace from the point of view of Amazon.com as an ecommerce SaaS market maker may better reveal the nature of Amazon's behavior in the Cloud ecosystem. Amazon.cpm may be the world's largest SaasS provider by revenue. Think about the the evolution of Amazon's business model and position in the marketplace . In every line of business from its genesis to today Amazon.com has begun by using software to redefine a brick and mortar business and over time increasingly seeks to replace physical commerce activity with the activity of third party participants who actually interact with physical goods and services. In other words, Amazon creates a marketplace, demonstrates success, then increasingly moves to profit by selling other market participants the Amazon.com software services that enable the business. Amzon moves to exit the business of moving physical objects as quickly as it possibly can. Amazon seeks to sell the ecommerce application to other businesses that use that system to serve Amazon's customer base.
What Business is Amazon.com Really In? How Does Cloud fit into this Puzzle?
Rich Wolski @CloudExpo pointed this out to me by simply stating that Amazon's real business is being a SaaS provider of an ecommerce application. If delivering ecommerce services is Amazon's core business, then what is Amazon's Cloud business? And how does what Amazon.com is doing in the Cloud really relate to Amazon's core ecommerce business? If we think about the much cited example of the invention of the telephone, the telephone itself wasn't worth anything until a network of communications could be built. In order to monetize the telephone, Bell had to build out the necessary infrastructure. In recent history, in order for Amazon to extinguish physical books and enable the ecosystem for ebooks, Amazon had to invent the Kindle. Think about the Kindle and how it has fostered mobile tablet form factor computing as you consider Amazon's emboldened move to remake the business internet.
Create the Climate and Ecosystem Necessary for Amazon to Achieve Hypergrowth and World Domination (Exaggerated, but maybe not so much)
Amazon's cloud strategy achieves several key objectives:
- Disrupt the datacenter market in terms of service delivery, quality, provisiong, size of a viable datacenter, and cost. In other words Amazon invented the Cloud. Rich Wolski validated my opinion of this yesterday.
- Disintermediate the major vendors of datacenter compute, network, storage inputs so as to ignite innovation and destroy the viability of current production and pricing models.
Presently, IBM, Intel, HP, Oracle sell to mid-market firms through an ecosystem of distributors and partners collectively called "The Channel.". However, in the Cloud phase ignited by Amazon's disruptive move, the Channel will cease to participate in this ecosystem. Cloud data-center requirements will determine order size, configuration and delivery. And these types of orders can be fulfilled directly by the manufacturers and do not require a Channel to mediate between the manufacturer and the consumer. Intel could, in theory manufacture and deliver industrial size datacenter compute / network / storage units. At the conferences I've attended one area of consensus is that the compute architecture will be Intel. Maybe this is why Amazon AWS is nurturing Nvidia GPUs for floating point intensive workloads. In any case, I expect to see more compute vendors enter the Datacenter space because the order size and volume will might make it feasible for chip manufacturers smaller than Intel to deliver the compute component, but I don't really know how anyone can surpass Intel in terms of volume. Even, so, with the scale of the Mobile build out, Intel's position in the ecosystem is no longer a certainty in this new ecosystem. Presently Cisco offers PODS, which combine compute / network / storage in a pluggable shipping container.
What and How Will the (Few) Cloud Datacenters Buy?
Rather than buying individual servers, network components, and cable datacenters in the Cloud era purchase large "pluggable" blocks of compute and storage directly from the manufacturers. And in this phase, mid-market firms no longer buy a significant volume of compute or storage because the small and mid-market firms will move first and rapidly to the cloud. And once the mid-market fully commits to Cloud, there will be no turning back. And the agility and competitive advantage these midmarket firms will gain, will result in serious erosion of market power of the Global 2000. Once the Global 2000 feel the heat from the mid-market firms, departments in the Global 2000 will likely defect from the corporate datacenter / "private cloud" at an increasing rate. Unable to stem this tide, the Global 2000 will attempt to accelerate deployment of Private Cloud. However, in my opinion, the Global 2000 will largely fail in their private cloud initiatives and the Diaspora / Exodus will continue until all but very "special" applications will run in the cloud. I commonly see Fortune 500 companies outsource applications like SAP and other "mission-critical" applications to managed hosting companies.
As a result, pricing power by the compute and storage vendors will diminish because the consumers, the datacenters will purchase in volume and will negotiate in a manner similar to the way airlines buy from Boeing and Airbus. Technology compute / storage channel sales will dwindle the point that they become insignificant and the Channel as we know it will disappear for these kinds of goods. As a result manufacturers such as IBM HP DELL can now standardize and optimize compute storage for the Cloud Era, but (with the exception of Dell) they won't be happy about it because they will make much smaller margins and will sell much less compute and storage.
In other words, while most trendy analysts at the best firms speak passionately about the "consumerization of the internet and of business applications and web services" Amazon has been-there, done-that, and moved several steps ahead to, the "industrialization of the internet."
Amazon survives and thrives through this extinction event, because this new biome enables Amazon to reach and serve more customers and at a much lower price-point. During and after this event, Amazon sells excess datacenter capacity to the market until Amazon is ready to invest in the iteration of the data-center Amazon needs to achieve hypergrowth stage. In other words, Amazon is a macro player and essentially tipped over the market, creating an "extinction event" if you will, which results in the regrowth of the entire technology ecosystem around the needs of massive scale, cooling, speed, and reliability. Amazon requires this kind of an ecosystem to support Amazon's yet to be grasped and unimaginably bold vision of the world marketplace all running on Amazon's ecommerce platform.
See video of Rich Wolski and CloudExpo
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