|By John Cowan||
|May 2, 2012 07:30 AM EDT||
This is Part III in a series by 6fusion Co-founder and CEO John Cowan on the emerging trend of Cloud Brokerage and the impact it will have on the technology industry and markets. Be sure to check out Part I of the series here and Part II here.
The feedback and fallout from Part II of this post has been quite interesting. I thought for sure the bulk of the flack I would have to take would be from the cloud vendor incumbents I said would be relegated to the world of retail cloud business. But since I posted my perspective I’ve found myself digging in to the nature of the Total Addressable Market (TAM) for the Cloud Brokerage industry.
For those of you keeping score at home, I said the market for cloud brokerage is more that 10 times the market for cloud computing software and related services.
Yes, 10 times.
And it is because this market is so big that cloud brokerage will spawn the next generation of technology innovation.
But before I get to the underlying technologies that are on the horizon and necessary for the future that I, along with my collaborators, envision, let me first spend a few paragraphs to explain why I am not just pulling numbers out of my, um, ‘IaaS’.
On the 6fusion iNode Network the median server in production in the cloud is a quad core dual processor unit with an average of 4TBs of available storage. Using this standard configuration, partners and customers yield approximately $42,000 per year in net billable proceeds. I would classify that number, give or take on either side of it, to be a reasonable annual revenue estimation.
IDC recently reported that the 2011 server shipments topped out at 8.3 million units. At a $42K clip, that is a market growing by a healthy $350 billion each year.
But of course, as we all know, server shelf life is not exactly the same as what you’d expect from a box of Krusty-O’s from the Kwik-E-Mart.
A quick trip down the hall to Gary Morris’s office at 6fusion is always an educational adventure. “Depreciation,” Gary explains, “is a systematic and rational process of distributing the cost of tangible assets over the life of those assets. US GAAP calls for depreciation of servers using the server’s cost, estimated useful life and residual value. Typically, computers, software and equipment are depreciated over a period of 1 to 5 years, with the average useful life being 3 years.”
If we take Gary’s use of the GAAP average as a multiplier, it means there is estimated to be over $1trillion in billable utility computing presently in use around the world.
The point here is that cloud brokerage is underpinned by the availability of both private and public compute, network and storage resources. And it is this massive untapped market that will drive the next wave of innovation.
If the origins of the cloud business belonged to the innovation of companies like Amazon, Rackspace and VMware, then the future of the cloud brokerage belongs to a new cadre of agnostic intermediaries that will enable a true utility computing marketplace to flourish.
The unification of the market is what I refer to as the point in time at which cloud computing technologies in production today can be used to interface to the commodity market. In order for that to happen, cloud brokerage as an industry must form and deliver the underlying technologies necessary to make a true market.
Just what are these technologies? Let’s take a look at three areas of innovation that will underpin the future of the utility computing.
Cloud brokerage technologies are best considered in the context of supply, demand and delivery.
Universal Resource Metering: Quantification of Demand and Supply
I delivered a presentation in Asia a few weeks ago and I opened with a slide that had two simple definitions: Utility and Commodity.
A Utility, I paraphrased, “is a service provided by organizations that are consumed by a public audience.”
A Commodity, according to common definition, “is a class of goods or services that is supplied without qualitative differentiation.”
Theoretically, you can have a utility without it necessarily being commodity. But it rarely ever works that way because in order to have a utility in the way we think about the utilities we consume every day, you must have scale. And in order to achieve scale, the utility must be pervasive and uniform. One should not require any special skills in order to use it. It must be simple and consistent to use. Think about your interaction with things like power or water services or subscribing to the Internet.
Utility is a word used quite often to describe the cloud. In a post a couple months ago Simon Wardley aptly explained the difference between the cloud and a computer utility. The difference, says Wardley, is really only that “cloud was simply a word used by people to explain something that really wasn’t well understood to people who were even more confused than they were.”
So is the cloud really a computer ‘utility’? Not yet.
You see, what the cloud is missing is the factor that truly negates qualitative differentiation – common measurement. You simply cannot claim something to be a true utility if every provider measures services differently. Common utilities all share the characteristic of universal measurement. Think about it. Power. Water. Energy. The Internet. Whatever.
A standardized unit of measurement for the computer utility will be one of the greatest innovations to come from the emerging market for cloud brokerage because it will establish basis from which a commodity market can emerge.
Cloud Infrastructure Federation: Tapping Global Supply
When you buy corn or wheat or soybeans by contract on a commodity exchange today, you don’t buy a brand. You buy a commodity. Cloud brokers of the future will move commodities, not brands. Today, cloud brokers form ‘partnerships’ with service providers. But for a true brokerage model to blossom, there can be no possibility for vendor discrimination. Anyone that brings product to market can and should trade it. The denial of interoperability cannot happen.
With this in mind true cloud brokers will overcome the interoperability hurdle through collaboration and cooperation. This doesn’t mean ascribing to one API framework or another, regardless of how high and mighty the leading retail cloud properties might become. It means absolving oneself from the politics of the API game completely.
The Underlying Transport System: Delivering the Commodity
It doesn’t always happen, but when a commodity contract comes due, something must be delivered. The party that holds the paper for a hundred thousand units of corn must be able to take possession of it. Modern commodity markets are supported by an elaborate network of supply chain delivery systems – from tankers to trains and transport trucks.
The equivalent underlying transport system must exist for the cloud infrastructure market.
Commodity brokers don’t own the transport system for the market. And for good reason. However, if you subscribe to the early analyst view of cloud brokerage, they do. The analysts see brokers facilitating the transaction and delivering the compute commodity itself. To me, they either don’t fully grasp the potential of the broker or they are describing something all together different.
Cloud interoperability is not a new concept. It has been bandied about the blogosphere for several years already. The problem to date is that such movements have been nothing more than thinly veiled product sales pitches. The cloud brokers of the future will drive the innovation to construct the underlying transport system to “connect the clouds.”
In the final part of this series I will explore the future state of cloud computing; a world where the immovable IT asset becomes movable in a commodity exchange.
"We specialize in testing. DevOps is all about continuous delivery and accelerating the delivery pipeline and there is no continuous delivery without testing," noted Marc Hornbeek, Sr. Solutions Architect at Spirent Communications, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 05:15 PM EDT Reads: 357
"Alert Logic is a managed security service provider that basically deploys technologies, but we support those technologies with the people and process behind it," stated Stephen Coty, Chief Security Evangelist at Alert Logic, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 04:15 PM EDT Reads: 320
Take the Long View with Digital Transformation By @IoT2040 | @ThingsExpo #IoT #M2M #API #Microservices #InternetOfThings
Digital Transformation is the ultimate goal of cloud computing and related initiatives. The phrase is certainly not a precise one, and as subject to hand-waving and distortion as any high-falutin' terminology in the world of information technology. Yet it is an excellent choice of words to describe what enterprise IT—and by extension, organizations in general—should be working to achieve. Digital Transformation means: handling all the data types being found and created in the organizat...
Jul. 29, 2015 04:00 PM EDT Reads: 1,064
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
Jul. 29, 2015 03:15 PM EDT Reads: 236
The essence of cloud computing is that all consumable IT resources are delivered as services. In his session at 15th Cloud Expo, Yung Chou, Technology Evangelist at Microsoft, demonstrated the concepts and implementations of two important cloud computing deliveries: Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). He discussed from business and technical viewpoints what exactly they are, why we care, how they are different and in what ways, and the strategies for IT to tran...
Jul. 29, 2015 03:15 PM EDT Reads: 367
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin,...
Jul. 29, 2015 03:00 PM EDT Reads: 466
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of pro...
Jul. 29, 2015 03:00 PM EDT Reads: 1,252
With SaaS use rampant across organizations, how can IT departments track company data and maintain security? More and more departments are commissioning their own solutions and bypassing IT. A cloud environment is amorphous and powerful, allowing you to set up solutions for all of your user needs: document sharing and collaboration, mobile access, e-mail, even industry-specific applications. In his session at 16th Cloud Expo, Shawn Mills, President and a founder of Green House Data, discussed h...
Jul. 29, 2015 02:30 PM EDT Reads: 323
Container technology is sending shock waves through the world of cloud computing. Heralded as the 'next big thing,' containers provide software owners a consistent way to package their software and dependencies while infrastructure operators benefit from a standard way to deploy and run them. Containers present new challenges for tracking usage due to their dynamic nature. They can also be deployed to bare metal, virtual machines and various cloud platforms. How do software owners track the usag...
Jul. 29, 2015 02:30 PM EDT
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affect t...
Jul. 29, 2015 02:00 PM EDT Reads: 1,166
"Our biggest growth area has been the security services, the managed services - the things that differentiate us in the market that there is no client that's too small and there's no client that's too big," explained Paul Mazzucco, Chief Security Officer at TierPoint, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 02:00 PM EDT Reads: 373
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Jul. 29, 2015 01:45 PM EDT Reads: 420
[video] Infrastructure as a Toolbox By @SoftLayer at @CloudExpo New York | #IoT #API #Containers #Microservices
Countless business models have spawned from the IaaS industry. Resell Web hosting, blogs, public cloud, and on and on. With the overwhelming amount of tools available to us, it's sometimes easy to overlook that many of them are just new skins of resources we've had for a long time. In his General Session at 16th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, broke down what we've got to work with and discuss the benefits and pitfalls to discover how we can best use them to d...
Jul. 29, 2015 01:00 PM EDT Reads: 1,946
[session] The Container New World By @KeGilpin | @DevOpsSummit #DevOps #Docker #Containers #Microservices
Containers are changing the security landscape for software development and deployment. As with any security solutions, security approaches that work for developers, operations personnel and security professionals is a requirement. In his session at DevOps Summit, Kevin Gilpin, CTO and Co-Founder of Conjur, will discuss various security considerations for container-based infrastructure and related DevOps workflows.
Jul. 29, 2015 01:00 PM EDT Reads: 1,058
"We do data integration for B2B also application to application, and we do data management and enable Big Data," explained Pat Adamiak, Vice President, Product Marketing at Liaison Technologies, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 12:00 PM EDT Reads: 329
Chuck Piluso presented a study of cloud adoption trends and the power and flexibility of IBM Power and Pureflex cloud solutions. Prior to Secure Infrastructure and Services, Mr. Piluso founded North American Telecommunication Corporation, a facilities-based Competitive Local Exchange Carrier licensed by the Public Service Commission in 10 states, serving as the company's chairman and president from 1997 to 2000. Between 1990 and 1997, Mr. Piluso served as chairman & founder of International Te...
Jul. 29, 2015 11:00 AM EDT Reads: 266
The Cloud industry has moved from being more than just being able to provide infrastructure and management services on the Cloud. Enter a new era of Cloud computing where monetization’s services through the Cloud are an essential piece of strategy to feed your organizations bottom-line, your revenue and Profitability. In their session at 16th Cloud Expo, Ermanno Bonifazi, CEO & Founder of Solgenia, and Ian Khan, Global Strategic Positioning & Brand Manager at Solgenia, discussed how to easily o...
Jul. 29, 2015 11:00 AM EDT Reads: 358
[video] An Interview with @ProfitBricksUSA CEO @AchimWeiss | @CloudExpo #DevOps #Docker #Containers #Microservices
"ProfitBricks was founded in 2010 and we are the painless cloud - and we are also the Infrastructure as a Service 2.0 company," noted Achim Weiss, Chief Executive Officer and Co-Founder of ProfitBricks, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 29, 2015 10:15 AM EDT Reads: 1,107
SYS-CON Events announced today that MobiDev, a software development company, will exhibit at the 17th International Cloud Expo®, which will take place November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software development company with representative offices in Atlanta (US), Sheffield (UK) and Würzburg (Germany); and development centers in Ukraine. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobi...
Jul. 29, 2015 07:00 AM EDT Reads: 185
One of the hottest areas in cloud right now is DRaaS and related offerings. In his session at 16th Cloud Expo, Dale Levesque, Disaster Recovery Product Manager with Windstream's Cloud and Data Center Marketing team, will discuss the benefits of the cloud model, which far outweigh the traditional approach, and how enterprises need to ensure that their needs are properly being met.
Jul. 29, 2015 06:00 AM EDT Reads: 1,668