We all keep hearing about cloud computing. The opinions are all over the map. From time to time I have commented in cloud computing in my Blog. A few of my favorite quotes…
Cloud computing is a trap, warns GNU founder Richard Stallman.
This was covered in detail in my blog entry Richard Stallman - "Cloud Computing is a Trap!
Larry Ellison said that the computer industry is more fashion-driven than women's fashion and cloud computing is simply the latest fashion.
This was covered in detail in my blog Why Cloud Computing Is Like The Fashion Industry
In some ways I think of cloud computing akin to timeshare computing in the 1970’s. What is clear to me is where there is smoke there is fire. When companies like AMAZON and Microsoft are making big bets on it. There is something there that will effect how Technology is delivered. My latest blog entry is from
Here is a little bit of Information on Tim O'Reilly..
Tim O'Reilly is the founder and CEO of O'Reilly Media, Inc., thought by
many to be the best computer book publisher in the world. O'Reilly
Media also hosts conferences on technology topics, including the Web 2.0 Summit, the Web 2.0 Expo, the O'Reilly Open Source Convention, and the O'Reilly Emerging Technology Conference. Tim's blog, the O'Reilly Radar,
"watches the alpha geeks" to determine emerging technology trends, and
serves as a platform for advocacy about issues of importance to the
technical community. Tim is an activist for open source and open
standards, and an opponent of software patents and other incursions of
new intellectual property laws into the public domain. Tim's long-term
vision for his company is to change the world by spreading the
knowledge of innovators.
It’s a very well written piece on cloud computing I want to share.
by Tim O'Reilly
A couple of months ago, Hugh Macleod created a bit of buzz with his blog post The Cloud's Best Kept Secret. Hugh's argument: that cloud computing will lead to a huge monopoly. Of course, a couple of weeks ago, Larry Ellison made the opposite point, arguing that salesforce.com is "barely profitable", and that no one will make much money in cloud computing.
In this post, I'm going to explain why Ellison is right, and yet, for the strategic future of Oracle, he is dangerously wrong.
First, let's take a look at Hugh Macleod's argument:
...nobody seems to be talking about Power Laws. Nobody's saying that
one day a single company may possibly emerge to dominate The Cloud, the
way Google came to dominate Search, the way Microsoft came to dominate
Monopoly issues aside, could you imagine such a company? We
wouldn't be talking about a multi-billion dollar business like today's
Microsoft or Google. We're talking about something that could feasibly
dwarf them. We're potentially talking about a multi-trillion dollar
company. Possibly the largest company to have ever existed.
I imagine many of my friends who work for the aforementioned companies know all about this, and know how VAST the stakes are.
Windows vs Apple? Who cares? Kid's stuff. There's a much bigger
game going on... And for some reason, its utter enormity seems to be a
very well-kept secret, at least to non-combatants like myself.
The problem with this analysis is that it doesn't take into account
what causes power laws in online activity. Understanding the dynamics
of increasing returns on the web is the essence of what I called Web
2.0. Ultimately, on the network, applications win if they get better the more people use them. As I pointed out back in 2005, Google, Amazon, ebay, craigslist, wikipedia, and all other other Web 2.0 superstar applications have this in common.
Cloud computing, at least in the sense that Hugh seems to be using the
term, as a synonym for the infrastructure level of the cloud as best
exemplified by Amazon S3 and EC2, doesn't have this kind of dynamic.
(More on different types of cloud computing later.)
Of course, it is true that the bigger players will have economies of scale in the cost of equipment, and especially in the cost of power,
that are not available to smaller players. But there are quite a few
big players -- Google, Microsoft, Amazon -- to name a few, that are
already at that scale, with or without a cloud computing play. What's
more, economies of scale are not the same as increasing returns from
user network effects. They may be characteristic of a commoditizing
marketplace that does not actually give outsize economic leverage to
I can't vouch for the authenticity of the following remark,
since I heard it secondhand, but it was from a thoughtful, informed
source: Jeff Bezos is reported to have said that he welcomes cloud
competition from Google and Microsoft, because they'll subsidize their
cloud services with profits from other part of their business, while
Amazon will always have to make it pay. "We're good at commodity
businesses," Jeff is reported to have said, and the facts bear him out.
If cloud computing is a commodity business, then the outsize
profits that Hugh envisioned are not going to be there. This is a
business that will be huge, but it may be more similar to the web
hosting and ISP markets, which are also huge, but not hugely
profitable. (See Rackspace's numbers for a taste.)
But because one of my goals at Radar is to help people think about the
future, I wanted to spend some time on the possible futures and
strategies that could turn cloud computing into the kind of massive
monopoly that Hugh envisioned.
Types of Cloud Computing
Since "cloud" seems to mean a lot of different things, let me
start with some definitions of what I see as three very distinct types
of cloud computing:
- Utility computing. Amazon's success in providing
virtual machine instances, storage, and computation at pay-as-you-go
utility pricing was the breakthrough in this category, and now everyone
wants to play. Developers, not end-users, are the target of this kind
of cloud computing.
This is the layer at which I don't presently see any strong network
effect benefits (yet). Other than a rise in Amazon's commitment to the
business, neither early adopter Smugmug
nor any of its users get any benefit from the fact that thousands of
other application developers have their work now hosted on AWS. If
anything, they may be competing for the same resources.
That being said, to the extent that developers become committed
to the platform, there is the possibility of the kind of developer
ecosystem advantages that once accrued to Microsoft. More developers
have the skills to build AWS applications, so more talent is available.
But take note: Microsoft took charge of this developer ecosystem by
building tools that both created a revenue stream for Microsoft and
made developers more reliant on them. In addition, they built a deep --
very deep -- well of complex APIs that bound developers ever-tighter to
So far, most of the tools and higher level APIs for AWS are
being developed by third-parties. In the offerings of companies like Heroku, Rightscale, and EngineYard
(not based on AWS, but on their own hosting platform, while sharing the
RoR approach to managing cloud infrastructure), we see the beginnings
of one significant toolchain. And you can already see that many of
these companies are building into their promise the idea of
independence from any cloud infrastructure vendor.
In short, if Amazon intends to gain lock-in and true
competitive advantage (other than the aforementioned advantage of being
the low-cost provider), expect to see them roll out their own more
advanced APIs and developer tools, or acquire promising startups
building such tools. Alternatively, if current trends continue, I
expect to see Amazon as a kind of foundation for a Linux-like
aggregation of applications, tools and services not controlled by
Amazon, rather than for a Microsoft Windows-like API and tools play.
There will be many providers of commodity infrastructure, and a
constellation of competing, but largely compatible, tools vendors.
Given the momentum towards open source and cloud computing, this is a likely future.
- Platform as a Service. One step up from pure utility computing are platforms like Google AppEngine and Salesforce's force.com,
which hide machine instances behind higher-level APIs. Porting an
application from one of these platforms to another is more like porting
from Mac to Windows than from one Linux distribution to another.
The key question at this level remains: are there advantages to
developers in one of these platforms from other developers being on the
same platform? force.com seems to me to have some ecosystem benefits,
which means that the more developers are there, the better it is for
both Salesforce and other application developers. I don't see that with
AppEngine. What's more, many of the applications being deployed there
seem trivial compared to the substantial applications being deployed on
the Amazon and force.com platforms. One question is whether that's
because developers are afraid of Google, or because the APIs that
Google has provided don't give enough control and ownership for serious
applications. I'd love your thoughts on this subject.
- Cloud-based end-user applications. Any
web application is a cloud application in the sense that it resides in
the cloud. Google, Amazon, Facebook, twitter, flickr, and virtually
every other Web 2.0 application is a cloud application in this sense.
However, it seems to me that people use the term "cloud" more
specifically in describing web applications that were formerly
delivered locally on a PC, like spreadsheets, word processing,
databases, and even email. Thus even though they may reside on the same
server farm, people tend to think of gmail or Google docs and
spreadsheets as "cloud applications" in a way that they don't think of
Google search or Google maps.
This common usage points up a meaningful difference: people tend to
think differently about cloud applications when they host individual
user data. The prospect of "my" data disappearing or being unavailable
is far more alarming than, for example, the disappearance of a service
that merely hosts an aggregated view of data that is available
elsewhere (say Yahoo! search or Microsoft live maps.) And that, of
course, points us squarely back into the center of the Web 2.0
proposition: that users add value to the application by their use of
it. Take that away, and you're a step back in the direction of
Ideally, the user's data becomes more valuable because it is in the
same space as other users' data. This is why a listing on craigslist or
ebay is more powerful than a listing on an individual blog, why a
listing on amazon is more powerful than a listing on Joe's bookstore,
why a listing on the first results page of Google's search engine, or
an ad placed into the Google ad auction, is more valuable than similar
placement on Microsoft or Yahoo!. This is also why every social network
is competing to build its own social graph rather than relying on a shared social graph utility.
This top level of cloud computing definitely has network effects. If I
had to place a bet, it would be that the application-level developer
ecosystems eventually work their way back down the stack towards the
infrastructure level, and the two meet in the middle. In fact, you can
argue that that's what force.com has already done, and thus represents
the shape of things. It's a platform I have a strong feeling I (and
anyone else interested in the evolution of the cloud platform) ought to
be paying more attention to.
- The Law of Conservation of Attractive Profits
A lot of my thinking about web 2.0 grew directly out of my thinking about open source. My argument in The Open Source Paradigm Shift
was that what we learned from the history of the IBM personal computer
-- a commodity platform built from off-the-shelf parts -- was that it
drained value out of the hardware ecosystem, turning it into a
low-margin business. But profits didn't go away. Instead, through
something that Clayton Christensen calls "the law of conservation of
attractive profits," value migrated elsewhere, from hardware to
software, from IBM to Microsoft. Christensen:
To read the entire article....
Web 2.0 and Cloud Computing
I found Tim O'Reilly article well written and gives you quite a few things to think on. In my opinion cloud computing is here to stay. Its a trend as technologist we need to pay attention too.
Posted by Michael Corey CEO & Founder Ntirety