August 19, 2013
Volume XLIV, Issue 12
Cloud Computing: A $100 Billion Juggernaut
Excerpted from Doc Marketing Report
Although the phrase "cloud computing" can conjure up all kinds of whimsical images, the hard data behind this burgeoning industry is nothing to take lightly.
While many have written off the Software-as-a-Service (SaaS) sector (i.e., cloud data storage and retrieval, web host solutions, domain hosting, enterprise-level file sharing, etc.) as a mere "fad", others have approached it with a keen awareness that the winds of change are indeed blowing.
According to venture capital powerhouse Bessemer Venture Partners, the combined market capitalization of publicly-traded cloud computing companies just recently surpassed the $100 billion dollar mark.
As ironically resistant to change as some software industry pundits can be, there should be little reason to speculate whether or not cloud computing as an industry has arrived; the numbers plainly reveal that it is here to stay.
The 102-year-old Bessemer Venture Partners has definitely participated in its fair share of major turning points in the business world, having provided seed funding for such iconic innovators as Staples, Intel, and Skype.
Recently Bessemer named cloud computing as "the most important trend in the software industry," offering their definition of "cloud computing" to include Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), and Infrastructure-as-a-Service (IaaS).
To underscore this proclamation, they have released the BVP Cloud Computing Index, a dynamic and comprehensive market index comprised of 30 prominent, publicly-traded cloud computing companies such as Workday and NetSuite.
The range of valuations covers a large spectrum, from the $215 million marketing software firm Vocus to the $25.5 billion sales software heavyweight Salesforce.com.
The current median valuation of the companies in the index is roughly $1 billion, and the average valuation weighs in at a little over $3.5 billion. Since the BVP Cloud Computing Index is akin to the S&P 500 in that it is somewhat of a benchmark index, it may be interesting to note that the aggregate share value of the companies on BVP's index is up 168 percent since the beginning of 2012.
If shares of BVP's index were to have been publicly traded, they would have outperformed both the S&P 500 and the NASDAQ 100 by a wide margin during that same time period.
Perhaps one of the most thought-provoking points regarding this recent $100 billion dollar milestone is the fact that many cloud computing companies are still privately held. The implication here is that there is significant room for growth in this sector, especially when you consider that the broader software market is worth a trillion dollars annually.
Although the SaaS sector is rapidly gaining momentum, it still represents only a tiny fraction of the overall software market, indicating that the cloud computing industry as a whole is still in the early stages of its evolution.
As it stands right now, the BVP Cloud Computing Index primarily includes companies that offer cloud computing services as a central part of their business model, versus other companies that offer cloud-based services as a small fraction of their overall business (e.g., HP or Amazon).
This will more than likely change as time goes on and more IT companies begin to integrate cloud computing into their core service offerings. BVP plans to continue rotating companies in and out of the index, making updates as more cloud companies are offered for public trading or are taken private through acquisitions.
Report from CEO Marty Lafferty
 We look forward to announcing the detailed schedule and agenda this week for CLOUD COMPUTING WEST 2013 (CCW:2013) along with additional speakers in prominent roles.
CCW:2013 is the Cloud Computing Association's (CCA) and Distributed Computing Industry Association's (DCIA) business strategy summit taking place October 27th-29th at The Cosmopolitan in Las Vegas, NV.
Here are a few highlights.
The event will begin on Sunday afternoon October 27th with a Media, Mobility, and Big Data Cloud 101 Workshop followed by a welcoming cocktail reception for speakers, delegates, and exhibitors.
We'll start early Monday AM October 28th with an opening plenary session keynote by Amazon Web Services (AWS) Media & Entertainment Partner Eco-System Manager Bhavik Vyas.
ABI Research's Practice Director Sam Rosen will address the "Consumer Transition to the Cloud: Service Provider & OTT Video, Gaming, and Music Services."
Las Vegas Sands Corporation Global CIO Les Ottolenghi will lead a series of sessions voicing the perspectives of enterprise end-users and their needs.
Netflix Architect and Principal Engineer Mikey Cohen will examine key "Cloud Migration Considerations."
Rackspace Cloud Products Program Manager Tom Hopkins will keynote on "Strawberry Coconut Cloud — You Choose the Flavor."
IBM Cloud Architecture Executive Mark Sorency will explain "How to Build Your Cloud Strategy."
AT&T Mobility Enterprise Architecture Manager Melody Yuhn will address "Mobile Storage Considerations."
DataDirect Networks Director of Marketing for Cloud, Content & Media Mike King will answer the question, "Does Object Storage Actually Fit into File-Based Workflows?"
Dell's Enterprise Cloud Evangelist Michael Elliott will discuss "Hybrid Clouds — The End State."
And Dell SecureWorks Director of Product Management, Cloud Security, Mark Wood will offer guidance on "Selecting Technologies to Secure Your Cloud."
Leaders from the following organizations, among others, have already made plans to attend:
Comcast, Microsoft, MP3 TechSupport, NBC Universal, Sony Games, Sony Pictures Entertainment, Sprint Nextel, Toshiba, Trend Micro, Warner Bros., A10 Networks, Appalachian State University, Aspera, Citrix, DataDirect Networks (DDN), Dell SecureWorks, eGistics, GenosTV, Intertrust Technologies Corporation, The PADEM Group, Rafelson Media, SoftServe, and the author of 21st Century Television: The Players, The Viewers, The Money.
Join them. This year's CCW:2013 themes are "Revolutionizing Entertainment & Media" and "The Impact of Mobile Cloud Computing & Big Data."
There's no question that advances in cloud computing are having enormous effects on the creation, storage, distribution, and consumption of diverse genres of content.
And most profound among these effects are those involving the increased proliferation of portable playback systems and the accompanying generation of unprecedented amounts of viewership, listenership, and usage information from audiences globally.
The ubiquity and widespread acceptance of user interfaces that reflect the dynamic interactivity exemplified by smart-phone applications is rapidly replacing the flat linearity of traditional TV channel line-ups and changing expectations for a new generation of consumers.
Cloud-based information and entertainment-of-all-kinds accessible everywhere always on each connected device will become the new norm.
Perfect data related to consumer behaviors associated with discovering and consuming this content will displace metering and ratings technologies based solely on statistical sampling.
Two CCW:2013 conference tracks will zero in on the latest advances in applying cloud-based solutions to all aspects of high-value entertainment production and storage, as well as media delivery and analysis options; along with the growing impact of mobile cloud computing on this sector, and the related expansion of big data opportunities and challenges.
DCINFO readers are encouraged to get involved in CCA's & DCIA's CCW:2013 as exhibitors, sponsors, and speakers.
The CCA is handling exhibits and sponsorships. Please click here for more information.
The DCIA's role is to provide keynotes, panelists, and case-study presenters to participate in our comprehensive agenda of sessions in ENTERTAINMENT & MEDIA and MOBILE CLOUD & BIG DATA.
Please click here to apply to speak at CCW:2013. Share wisely, and take care.
BitTorrent Launches TV Show Pilot
Excerpted from RadioTimes Report by Susanna Lazarus
TV is no longer just available through that box sitting in the corner of your living room. Nowadays you can create your own TV schedule, watching what you want when you want it online. In the past twelve months we've seen Internet services such as Netflix and Amazon come on in leaps and bounds by analyzing feedback from their users to commission original content.
And today yet another site has joined the race to churn out its own programming.
BitTorrent — the online service allowing users to share copies of TV shows, films, and musicals for free, has launched a new venture with Converge Studios, offering its 170 million users the chance to decide whether its first TV pilot gets made or not.
Fly or Die — a concept inspired by American production duo Rock Mafia - will take viewers on a tour of the music industry, from its glitzy facade to its less glamorous reality and featuring cameos from Vanessa Hudgens, Gavin DeGraw and Jesse McCartney.
Rock Mafia's Tim James and Antonia Armato have collaborated with Justin Bieber, Mariah Carey, and No Doubt, and will be the basis of a script that "blurs the lines between truth and fiction."
The pilot will be pitched online as a BitTorrent Bundle - or, in simpler terms, a means of distributing licensed content among users through a password.
Once the Fly or Die bundle is accessed, it can be downloaded to devices for viewers to watch the trailer. Anyone then willing to share their email address will also be granted access to seven bonus videos, music, information about the characters and "an invitation to join the community that will creatively shape Fly or Die's future: impacting everything from storyline to distribution."
"We were working on a project and wanted to go direct-to-fan," said Converge CEO Tim Staples. "We came to BitTorrent with a crazy idea — a new way to get content developed and distributed. For us, it was an opportunity to take a great show and test it; to develop iteratively, together with our audience."
What's unique here is the file-sharing nature of BitTorrent's users, which the service will be relying upon to get their own un-pirated content available to a broad demographic. It's "television, built for the Internet", according to the people behind Rock Mafia.
Viacom Close to OTT Deal with Sony
Excerpted from CED Report by Brian Santo
TV models that have lasted decades are nowhere near dead, but they are definitely beginning to fray around the edges.
Viacom is ready to have some of its most popular channels, including Nickelodeon and MTV be carried by an over-the-top (OTT) provider — Sony — according to reports in The New York Times and the Wall Street Journal.
Sony currently makes and sells boxes that consumers can use to access other OTT such as Amazon and Netflix. It also has an app, called Crackle, through which it makes available some movies and TV shows from its own library.
But it does not currently have its own OTT service. The two papers say it is developing one, however, and that's what the deal with Viacom would be for. Speculation is that the service might be delivered through the Playstation 4.
If verified, this would mark the first time a major programmer would be making its content available in a bundle through an OTT company, as opposed to traditional cable, IPTV, or satellite multichannel video program distributors (MVPDs).
Abacast Aims at the Bullseye
Excerpted from Radio World Report by Jim Kott
Much has been written lately about cloud-based services and the benefits they are providing businesses and consumers. Abacast, a provider of online audio streaming and monetization services since 2001, has recently released its "cloud-based ad insertion" technology. Here is an overview of the technology and a few ideas about how it can benefit the radio industry as it continues to invest in digital delivery.
Cloud-based ad insertion enables live broadcasters to provide advertisers with different ways to target audiences, no matter what player or device those audiences are using to consume content.
Inventory CPM rates for targeted ads are typically 50-to-100 percent higher than non-targeted ads, and because advertisers are only reaching the audiences they desire, ad inventory tends to be much easier to sell.
With cloud-based ad insertion, a user listening to a live stream can receive a certain in-stream ad while a person listening to the same live stream — on a different device in a different location, or of a different age or gender — can receive a different ad, inserted right into the same live programming.
Common audience targeting options include audience geo-location, player or device, and any data that broadcasters collect about their audience, such as age or gender or even favorite food. Examples of target audiences that can be reached include "all smartphone listeners," "all listeners in the top 20 DMAs that are on desktops," "all listeners in the Eastern US regardless of device," "all male listeners in the 25—34 age range in a group of Zip codes," "all listeners listening on the TuneIn player," "listeners in the South who say they like ice cream" and of course many more.
With cloud insertion, in-stream ads are inserted on the server side right into the content and therefore sound like they are part of the broadcast. When the encoding of the ads matches the content, it's virtually impossible to tell a broadcast ad from an inserted online ad.
One key aspect of cloud-insertion is that it utilizes what is called "chunk-based delivery."
Chunk-based delivery converts video or audio streams into discrete files that are two-to-10 seconds in length and distributed using HTTP. The Internet is built to deliver content via HTTP on a massive scale. Apple's HTTP Live Streaming (HLS) and Adobe's HTTP Dynamic Streaming (HDS) are examples of chunk-based delivery implementations.
It's safe to say that all streaming will be moving to these "chunk-based" technologies, opening up new possibilities for targeting, increased revenue, decreased costs and more partnership opportunities.
Even with the exploding number of new mobile and other connected devices — it feels like new gadgets come out every week — broadcasters can serve targeted audio or video ads to these audiences immediately. There is no lag time or development cost to create special targeting code for the new device. Rather, targeting is supported immediately through the player's built-in HLS or HDS support.
On the revenue side, because advertisers pay more to reach the audiences they want to reach, and because cloud-insertion provides the ability to target discrete audiences, broadcasters will realize higher CPMs and thus more overall revenue.
On the cost side, because the content is distributed via standard HTTP, any Content Delivery Network works as a conduit. Broadcasters can shop for the best CDN based on price, reliability or other factors. Currently Abacast's cloud-insertion is used on three different CDNs — Abacast's, Amazon and Akamai — with more to come.
Advertising inside live streams now has the capability to be completely dynamic, based on audience characteristics that include geo-location, device, player, demographics and even the service that the listener uses (i.e. aggregator, portal, media guide, etc.). Targeted cloud-based ad insertion technologies will be an imperative driver for increased revenue as we continue to see consumers using many different devices to consume content at the time and place of their choosing.
Intensive Graphics Run in the Cloud No Longer Pie in the Sky
Excerpted from The Australian Report by Jennifer Foreshew
Higher education and federal government are among the first users to locally trial Nvidia Grid's graphics processing unit technology designed for the cloud.
The technology will provide users of graphically intensive computer aided design, animation and visualization software with highly responsive virtual desktops and rich multimedia experiences.
Nvidia Australia/New Zealand country manager Mark Patane said before Nvidia Grid these applications were too graphically intensive to be virtualized and run in the cloud.
Nvidia Grid was officially announced in the US in March and has been rolled out in the past six to eight weeks. Dell, HP and IBM are offering Nvidia Grid-based servers. Citrix, Microsoft and VMware are offering Nvidia Grid-enabled software.
The technology has also garnered interest locally from the utilities and manufacturing industries.
"So fairly intensive 3D graphics can be done basically from anywhere and from any device," Mr Patane said.
"Even from an Apple iPad because all the computing is done back in the central machine and the other big benefit is the fact that the IP remains with the central computer."
"All we are doing is just transferring pixels and that is what makes it so fast."
Melbourne-based high-performance computing solutions consultancy XENON Systems has been appointed as the first Nvidia Grid Demo Center for Australia and NZ.
"We have got about half a dozen trials happening around Australia and they are ready to roll it out," Mr Patane said.
He said the first orders for the technology were expected this month.
Xenon's new device-agnostic cloud-based solution, powered by Nvidia Grid graphics processing technology allows better control of content and assets, particularly for the film and creative industries, which face issues around leakage of work.
The technology would also help universities deliver courses online and remotely that were previously not possible.
"The remote grid and remote graphics opens up to not just industrial design but architecture, engineering, all those disciplines that require pretty heavy-duty 3D graphics," Mr Patane said.
Xenon Systems founder and managing director Dragan Dimitrovici said per seat the technology would cost the same as buying a workstation.
"The most important part is lowering the total cost of ownership because an IT manager now needs to manage two servers instead of 25 workstations," he said.
"I think it would be 30 to 40 per cent cheaper in the overall cost and it probably will end up being even higher."
How to Choose a Cloud Video Encoder
Excerpted from Streaming Media Report by Troy Dreier
At the recent Streaming Forum conference in London, encoding expert and Streaming Media contributor Jan Ozer guided the audience through the tricky subject of cloud encoding. Ozer started by sharing his own confusion over what the terms cloud computing and cloud encoding mean, and just how simple the answers are.
"What is cloud computing?" asked Ozer. "Cloud computing for me was a very generic concept. It was like, yeah, you just encode something in the cloud, and it was interesting to me when I dug down a little bit and discovered that at the base of it you can actually rent a machine from Amazon. So, cloud encoding and cloud computing traces back to general computers that are existing somewhere in a data center that Amazon has. You basically rent this computer by the hour or by the minute depending upon the configuration."
Not that all cloud computing is through Amazon, even if is sometimes seems that way. So now that Ozer has established what cloud encoding is, what are the benefits?
"The high-level benefits of cloud encoding are lower capital expenditure cost and elastic scalability. And the scalability aspect will vary by the encoding vendor, as you will see," Ozer continued.
There are multiple types of cloud computing solutions. Some require users to rent a cloud instance and install their own software, while others handle all the backend operations.
"At one level, any encoder that runs on Windows or on Linux can be a cloud encoder. You buy the instance in the cloud, you install the software itself, you've got a cloud encoder," Ozer noted. "At the other extreme is the pure software-as-a-service, and that's Encoding.com, that's Zencoder, that's Amazon.com."
For companies considering a move to the cloud, Ozer also addressed when it makes sense to switch from appliance-based encoding, and how to choose a cloud encoder. Watch the full presentation here.
China to Subsidize Cloud Computing Providers
Excerpted from China Daily Report by Gao Yuan and Yuan Hui
China is considering subsidizing local cloud computing providers in a bid to boost the growth of the sector, a government official said on Friday.
"The government plans to give Chinese cloud computing players financial and regulatory support very soon as cloud computing technology is poised to become a major driver for the nation's information technology (IT) industry," Zhou Zixue, Chief Economist of the Ministry of Industry and Information Technology, said at the China Cloud Computing Expo (CCCE 2013) on Friday in Huhhot, the Inner Mongolia autonomous region.
Zhou did not disclose the amount of the budget for the possible subsidies.
The government will also implement new industry regulations and is set to highlight information security rules, he added.
The DCIA served as a media partner for CCCE 2013.
NSA's PRISM Not Distorting the Future of Cloud Computing
Excerpted from TechZone Report by Erik Linask
In a recent blog entry, TMC CEO Rich Tehrani discusses the potential impact of the recent revelations surrounding the NSA's PRISM program on tech companies. While he may be right, and there may be some impact, it will not likely be far reaching on long-lasting. The fact is we have become too accustomed to having access to data, resources, and information at our fingertips and are hardly willing to engage a technological regression for the sake of a protecting a few bytes of data.
Think about it: when did you last pick up a physical map or phone book? If you don't have young kids, how long has it been since you played a board game? (But I bet you've played Candy Crush or Angry Birds.) Do you get still have a physical newspaper or TV Guide delivered to your home? (Yes, there are many who do, but that number is significantly smaller than it was pre-iPhone).
The point, simply, is we have become slaves to technology.
The same holds for business, especially at a time when our personal and business lives have become so intertwined it's sometimes hard to separate them. We work on weekends and while away on vacation, and likewise, we often manage our personal affairs from the office. It's the new normal.
Knowing that, I took the opportunity to ask some members of the cloud computing industry what they felt the impact of the PRISM leaks might be on their market. I received several interesting responses, but most, in some capacity, acknowledged the revelations may cause concern, but there is little we can do about it and the ultimate impact will be negligible.
Whether for business of personal use, most of us use multiple devices and many different applications and services to be efficient in our various capacities. Many of these services leverage the cloud. We know it, and we will continue to use them because they enrich our lives.
"People kind of assume anything you put on the Internet can be found; as soon as you turn on your computer, your data is available to anybody," says Cloudant's Sam Bisbee. "That's the price we pay for the cool functionality we want and this connected world."
Does it mean we become ignorant to the fact our data may be exposed? Certainly not. In fact, as BIA's Alon Israely notes, it may result in an added level of due diligence when selecting cloud providers and vetting their security measures.
The consensus seems to revolve around the fact that we've always believed Big Brother is out there — now it's merely been confirmed, which isn't really going to change our behavior much.
"We are all tracking what people do on our websites — Google is tracking everything we're doing and profiting from it. We also know security demands are being driven by the same government that is doing similar tracking," notes Hostway's Aaron Hollobaugh. "I don't think what's been revealed recently by the NSA will have a dramatic impact on the type of trusted relationships we can create with partners and customers."
Sandy Steier from 1010 Data and Chris Smith from Cloud Technology Partners agree. While the confirmation that our government has access to some of our data may be disconcerting, we shouldn't be surprised. Nor should that realization be cause for undue concern, as the NSA's reach will extend into the cloud or into your own data centers, and we may as well become comfortable with that knowledge and the governance and regulatory controls that come with it.
Wiretapping has always been a reality, so the fact that federal agencies are now looking at our data should come as no surprise — it was only a matter of time after our communications began moving from circuit- to packet-switched networks. That time is here.
"As much as we may be scared of Big Brother, at the same time, we leverage technology and there are a number of great tools you can add onto to your Inbox or data stores that deliver a lot of great analytics," notes Israely. "That's a third party potentially watching your data — is that worse than the NSA?"
So while this has become a topic of conversation, this isn't likely to have a significant business impact — though it may have an impact on people's view of the Federal government, painting the NSA and other entities as the new bogeyman. Nobody is running to Verizon stores to turn in their phones; people aren't shuttering their Facebook accounts; and Android phones are outselling Apple at last count.
To see what all the folks I spoke to had to say about cloud computing and the NSA, check out the Cloud Expo NY 2013 videos on the TechZone360 videos page. Also note that security and privacy will be among the many cloud-focused topics we'll be discussing at ITEXPO in Las Vegas at the end of the month — check out the agenda for ITEXPO and Cloud4SMB Expo to create your custom schedule for the week.
Google Poised to Become the next Amazon in Cloud
Excerpted from MarketWatch Report by Benjamin Pimentel
After Amazon, Google is poised to become the next cloud giant, an analyst said Monday. Google's cloud services, which offers businesses web-based computing infrastructure, applications and services, could bring in $10 billion in revenue for the Internet giant, "potentially larger than YouTube," Baird analyst Colin Sebastian said in a note.
"We demonstrate that Google is in the early stages of capitalizing on an 'AWS-like' strategy to offer a broad range of cloud services to small and medium-sized businesses and larger enterprises," Sebastian said.
AWS refers to Amazon Web Services, which has underscored the growth potential of cloud computing, offering businesses Web-based, lower cost IT infrastructure and services.
Instead of setting up their own data centers and paying hefty licensing and maintenance fees, companies use another provider's network paying only for the computing capacity they use.
It's a fast-growing arena in which Google is well-positioned to expand.
"We believe that Google Apps alone could capture 20% share of the corporate e-mail market," Sebastian wrote. "Just as important, Google is already able to address much of the public cloud stack including Google AppEngine and Google Compute Engine."
Google's cloud business could be "at least a $10 billion opportunity for Google, and like AWS, will likely lead to significant disruption for some traditional I/T vendors," he added.
Google shares were down 0.8% in late morning trades on Monday.
The Developing World Gets Unlimited Digital Storage
Excerpted from NY Times Report by Quentin Hardy
You may have thought it was just everyone you knew. In fact, at least one company is hoping that about 200 million more people worldwide are leading digitally swamped lives, in need of organizing.
On Tuesday Telefonica Digital, the London-based international business division of the Spanish telecommunications company, announced a global partnership with Evernote, an online archive for things like notes, photos, Web pages, and digitized voice recordings. In Brazil, where the business is starting, Evernote Premium accounts normally costing $45 a year will be free to customers of Telefonica's local mobile brand, Vivo.
Twenty-two other countries, in both South America and Europe, are expected to get the deal in the near future. Telefonica has 247 million mobile customers, but won't be offering the same package in Germany because of contractual conflicts.
"We're trying to build long term relationships with users all over the world," said Phil Libin, Evernote's chief executive. "We are good with technophiles in most countries; Telefonica has a much bigger audience." Evernote already has 2 million users in Brazil, he said, but this agreement was a way to accelerate growth.
It might seem that digital overload — or at least the way people store stuff — would differ from one country to another, but Mr. Libin said his product was generally used the same way everywhere. "We're all knowledge professionals now, educated, mobile, professional people," he said. "The thing people have in common everywhere is that they have too much information."
What remains to be seen is whether a $45 value in the United States, where Evernote still has 30 percent of its 66 million customers, is worth it to people in the less-developed countries that Telefonica serves.
According to the company, the longer people use the service, the more likely they are to upgrade to the Premium offering. Sixty-five percent of people who initially sign up don't really use Evernote. Of those who stay, initially only one percent pay for Premium, which offers additional storage and the ability to search for documents, among other things. After three years, however, 22 percent of customers are paying.
Wayne Thorsen, vice president of global products at Telefonica, argued that it may seem like an even better deal in Brazil. Telefonica has more than 80 million subscribers in Brazil, he said, "and for many of them this connectivity is all they have. Forty percent of them don't have a financial relationship outside of their mobile phone provider."
On the other hand, people without access to banking or credit cards might have other priorities than storing their photos online. Many of them may also move over to Evernote's basic account, which is free.
"We're looking to have a long term relationship with the customers," Mr. Libin said. "We want to be their lifetime external brain."
Three Emerging Cloud Trends: Offshoring, Networking, Big Data
Excerpted from Datamation Report by Jeff Vance
The cloud may not have quite reached maturity yet, but it's getting there. Plenty of businesses rely on the cloud for mission-critical applications, and cloud adoption is steady enough in the U.S. that offshore public cloud providers fear they'll never catch up to Amazon, Google, Rackspace and other cloud providers in the US.
"The initial resistance to public cloud has begun to subside and customers are beginning to realize its efficiencies as the solutions mature," said Ian Marriott, research vice president at Gartner. According to Gartner, spending on public cloud services is expected to grow 18 percent in 2013 to $131 billion. By 2015, Gartner believes the public cloud services market will exceed $180 billion.
Remember all of those jobs that were outsourced a few years back? Well, many of those jobs may be displaced again, this time by cloud services. In the near term, Gartner believes that cloud services will "complement," rather than displace, offshore IT jobs, but I would argue that most jobs ripe for offshoring are also at risk of being automated out of existence.
After all, while outsourcing is cheaper than labor in the U.S., automation pushes those costs down even further. When IBM announced layoffs earlier this summer, many of the job cuts were in India — in other words, these were jobs previously outsourced that have now been eliminated altogether.
There is a major obstacle to the cloud's rampant growth spurt, however, and that is the public Internet. If infrastructure and applications no longer reside in-house, how do you connect to them?
Over the Internet, of course.
Yet the public Internet doesn't offer the reliability the enterprise needs, but the alternative, expensive private links, isn't affordable for many businesses.
Cloud services are evolving in a way similar to how PCs caught on. Remember back in the early 90s when many of us had PCs, but each was its own tiny computing island? Email was confined to academia and a few government outposts. The early stages of the cloud followed a similar trajectory.
Yes, various clouds were connected over the public Internet, but the public Internet isn't up to the task of sharing large volumes of data in real-time, so, in essence, many business clouds were islands — and many bandwidth-hungry apps had to remain on premise.
"The closed enterprise network is a thing of the past, and there is no going back. To compete in today's hyper-connected business world, business networks need to break open and allow users to access on-premise as well as 'cloud' applications in the most seamless way possible," said Sonal Puri, VP of VP Sales, Marketing & Alliances for Aryaka, a provider of cloud-based WAN optimization and network acceleration solutions.
Aryaka and other startups like Pertino are banking on the fact that businesses need faster access to cloud resources. So, these cloud-era networking companies have put their advanced hardware in datacenters around the world. Then, businesses simply connect to them in order to get virtual private networks that deliver LAN-like speeds over the WAN, from anywhere and to anywhere in the world.
And this trend may just be the tip of the iceberg as Software Defined Networking (SDN) further abstracts software from underlying hardware.
The advantage of cloud-based networking is obvious. As more mission-critical applications are consumed as cloud services, the applications will actually reside in the same data centers as Aryaka, Pertino and SDN providers. All a business will need to do is get a business-class connection to the nearest data center, and they will then be in the fast lane.
That doesn't let service providers off the hook for how pathetic basic broadband is in the U.S., but at least businesses now have a way out of that trap.
Are you getting sick of all of the hype surrounding cloud computing? Well, I have some good news and some bad news for you.
The good news is that cloud hype is definitely starting to abate. This is purely anecdotal, but as I talk to industry experts, and as I sort through the many story pitches from vendors that show up in my inbox each and every morning, and as I visit various trade shows and conferences, the cloud obsession is markedly less so.
People are no longer obsessing about the cloud the way they did a couple years ago.
The cloud is a given, and now the focus is just about making it better.
The bad news? If you thought the cloud hype was out of control, big data hype could eclipse it.
Big data has a better origin story, with Nate Silver and Billy Beane in early starring roles, and while the cloud took some time to pay off for many organizations, big data often yields results almost immediately.
Big data and the cloud go hand in hand. If it weren't for all of the advances in cloud computing over the past several years, big data startups like Cloudant, Cloudera and CloudPhysics wouldn't exist.
Okay, I cherry-picked startups with "cloud" in their names, but go ahead and throw Skyhigh Networks, SnapLogic and XtremeData in there too.
If cloud computing hadn't pushed down so many costs, from CPUs to storage to running experiments in the cloud to test out new ideas, big data would likely be a big on-premise solution that only large companies could afford. In other words, it would be BI 2.0. Yawn.
As is, companies like SiSense are already targeting the mid-market, despite the fact that big data is still in its infancy. In fact, Anurag Agrawal, CEO of research firm Techaisle, believes that in 2016 global SMBs will spend$1.6 Billion on big data solutions. If his prediction comes true, big data will grow faster among SMBs than cloud computing.
Agrawal predicts that between now and the end of 2016, SMBs will spend $3.9 billion on big data hardware, software and services.
Cloud computing is often considered a great equalizer. A three-person business can access the same cloud services as a Netflix or eBay. Big data could be an even bigger equalizer. The cloud equalizes access to tech resources. Big data could equalize access to market intelligence, especially if big data service providers take the data they've analyzed, make it anonymous, and reuse it for their subscribers. An SMB could conceivably learn as much about customer behaviors as a major retailer.
Of course, incumbents will like do everything in their power to lock up their own data and deem it proprietary, but even if they do, SMBs will still be able to learn plenty from crunching publicly available data.
Or as Stewart Brand once said: "Information Wants To Be Free. Information also wants to be expensive. That tension will not go away."
The emergence of big data practically guarantees it.
Outsourcing Will Assume a More Defined Role in the Cloud Era
Excerpted from Information Week Report by Jack Sepple and Bhaskar Ghosh
One wide-spread thought about cloud computing, to use the electricity analogy, is that it is as simple as flipping a switch.
That perspective, unfortunately, ignores the fact that enterprises require more than just raw power. While the cloud is certainly simplifying some aspects of IT, it is also forcing CIOs to manage a more complex, hybrid environment that includes externally provided cloud services along with their own IT services and older legacy applications.
Given the ongoing challenges companies face with cloud services — chiefly security, data integrity, system and service interoperability, and service availability issues — the role of the value-added outsource provider, while it may change, is not about to go away any time soon.
In fact, the ability to advise companies on the proper design of their business models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, is likely to usher in a whole new era of outsourcing.
Far from putting outsourcers and integrators out of business, these increased demands are likely to make the services of an integrator even more critical, inevitably creating somewhat of a shakeout within the outsourcing industry.
Whereas integration was previously about getting multiple vendors, working across systems and functions, to manage basic services in a common and consistent way, this is changing in an environment where companies are sourcing business and IT processes on the cloud.
The challenge is integrating data across multiple services and then understanding the end-to-end business process that is being serviced so that a company can be confident that its employees and customers will be properly served.
This requires specialized skills in service integration, as well as processes and tools that will automate and monitor IT to ensure coordination and oversight between outsourcers and internal IT functions. In short, it means not just integrating cloud services, but all the services IT provides the business.
As companies increasingly rely on the cloud, the emergence of three classes of outsourcing services and providers is envisioned:
Utility Providers
The value proposition for these providers will focus primarily on efficiency and cost. The essential capabilities of a utility cloud service provider will be driven by the needs of a CIO whose overriding concern is having an IT service up and running when required. Downtime, after all, translates into lost productivity, missed sales opportunities, and poor customer service. Business
Function Providers
These are niche providers with deep expertise in a particular function, such as sales, HR or customer support. The value proposition here will be to make sure a company gets a business function that is properly configured to its needs. As a means to this end, the provider will design applications and services, at scale, that are readily and securely configurable to a client's specific environment, needs and business goals.
Orchestrators
These providers will help companies become "cloud enterprises," or organizations that are more dexterous and agile because they can adapt their business design on the fly. This outsourcer will be more than a pure consultant, but rather a trusted broker with deep operational experience across all major business processes and technology solutions.
Aided by the other categories of outsourcers, they will work with clients to harmonize the pieces while taking a holistic view of IT and business services across the enterprise. While the future of life in the cloud remains unclear, it is indisputable that the rules of the game have and will continue to change—and organizations will live in a hybrid of IT and legacy for the foreseeable future.
Companies that intend to be successful in this environment will need to start changing the way they manage their IT and business operations. They will be forced to carefully assess the risks involved with deploying new technologies, and understand at an ever more granular level the capabilities of their outsource providers.
Most importantly, they will need to learn what it means to operate in a multi-sourced environment, one where the integration of the different components promises to take on greater importance than it ever did before.
Top Cloud Computing Providers Sign-Up to Code of Practice
Excerpted from Techday Report by James Henderson
A selection of New Zealand's top cloud computing providers have signed up to the Cloud Computing Code of Practice in Auckland earlier today.
Launched at the New Zealand Cloud Computing Conference this morning, companies in the process of becoming signatories include accounting software firm Xero, IaaS provider Revera, secure file host Mega and OneNet to name a few.
By committing to the code, companies agree to operate transparently and openly with their customers and the public.
Such cooperation includes agreeing to proactively disclose base information about their service and not to market products as "Cloud Computing" unless they really are.
The disclosures cover 17 areas including security, ownership of data, geographic diversity and what a provider will do when a data breach occurs or a service ends.
"These disclosures are what the NZ cloud community and users have agreed are important," says Paul Matthews, CEO, Institute of IT Professionals NZ.
Matthews believes users of cloud services across the country should ask their providers if they are signatories to the CloudCode and for their CloudCode Disclosures.
"CloudCode signatories believe all cloud providers should operate openly and transparently and provide this information to their customers."
Created to provide professional cloud service providers with the opportunity to benchmark and demonstrate their practices, processes, and ethics, the CloudCode's Register of Signatories today is the first time companies can formally become signatories to the Code of Practice.
Development of the Code has been facilitated by the Institute of IT Professionals on behalf of the cloud community and developed in consultation with more than 250 cloud computing providers, individuals and other stakeholders over a two-year period.
Matthews says CloudCode was a huge leap forward for New Zealand and the initial response was encouraging.
"We're excited to be launching the CloudCode Register of Signatories today and expect to see many more providers sign up in the coming weeks.
Among industry stakeholders to welcome the CloudCode is Privacy Commissioner Marie Shroff, who says:
"By setting a standard for local cloud providers to follow, the code makes sure that participating providers will give the right information to consumers to help them make good decisions.
"This is a very positive initiative from the IITP and I hope it will be widely adopted."
Xero has also shown its support for the plans recently, believing the move demonstrates global leadership.
With founder and CEO Rod Drury already praising the new declarations, the company's Senior Communications manager Richard Wood added his voice to crowd last week, saying:
"The CloudCode declarations will set a line in the sand about what we all call Cloud Computing, give formal responses to the big questions about these services, and set a base level of transparency that everyone will benefit from."
The CloudCode is also receiving international attention, with Australia currently considering adoption and other countries also expressing an interest in implementing the CloudCode in their markets.
For more information about CloudCode, please click here.
Coming Events of Interest
First China International Cloud Computing Expo - Ends on August 18th in Hohhot, Inner Mongolia. The business forum during the expo will focus on exploring trends for the development of the cloud computing industry, especially its application in the post-disaster reconstruction and protecting data.
NordiCloud 2013 - September 1st-3rd in Oslo, Norway. The Nordic Symposium on Cloud Computing & Internet Technologies (NordiCloud) aims at providing an industrial and scientific forum for enhancing collaboration between industry and academic communities from Nordic and Baltic countries in the area of Cloud Computing and Internet Technologies.
P2P 2013: IEEE International Conference on Peer-to-Peer Computing - September 9th-11th in Trento, Italy. The IEEE P2P Conference is a forum to present and discuss all aspects of mostly decentralized, large-scale distributed systems and applications. This forum furthers the state-of-the-art in the design and analysis of large-scale distributed applications and systems.
CLOUD COMPUTING WEST 2013 - October 27th-29th in Las Vegas, NV. Two major conference tracks will zero in on the latest advances in applying cloud-based solutions to all aspects of high-value entertainment content production, storage, and delivery; and the impact of mobile cloud computing and Big Data analytics in this space.
International CES - January 7th-10th in Las Vegas, NV. The International CES is the global stage for innovation reaching across global markets, connecting the industry and enabling CE innovations to grow and thrive. The International CES is owned and produced by the Consumer Electronics Association (CEA), the preeminent trade association promoting growth in the $209 billion US consumer electronics industry.
CONNECTING TO THE CLOUD - January 8th in Las Vegas, NV. This DCIA Conference within CES will highlight the very latest advancements in cloud-based solutions that are now revolutionizing the consumer electronics (CE) sector. Special attention will be given to the impact on consumers, telecom industries, the media, and CE manufacturers of accessing and interacting with cloud-based services using connected devices.
CCISA 2013 – February 12th–14th in Turin, Italy. The second international special session on Cloud computing and Infrastructure as a Service (IaaS) and its Applications within the 22nd Euromicro International Conference on Parallel, Distributed and Network-Based Processing.
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