|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.
SYS-CON Events announced today that Juniper Networks (NYSE: JNPR), an industry leader in automated, scalable and secure networks, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Juniper Networks challenges the status quo with products, solutions and services that transform the economics of networking. The company co-innovates with customers and partners to deliver automated, scalable and secure network...
Apr. 25, 2017 02:15 AM EDT Reads: 828
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Apr. 25, 2017 02:15 AM EDT Reads: 8,978
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
Apr. 25, 2017 01:15 AM EDT Reads: 1,288
@GonzalezCarmen has been ranked the Number One Influencer and @ThingsExpo has been named the Number One Brand in the “M2M 2016: Top 100 Influencers and Brands” by Analytic. Onalytica analyzed tweets over the last 6 months mentioning the keywords M2M OR “Machine to Machine.” They then identified the top 100 most influential brands and individuals leading the discussion on Twitter.
Apr. 24, 2017 11:45 PM EDT Reads: 714
Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the USA and Europe, we work with a variety of customers from emerging startups to Fortune 1000 companies.
Apr. 24, 2017 11:30 PM EDT Reads: 2,151
New competitors, disruptive technologies, and growing expectations are pushing every business to both adopt and deliver new digital services. This ‘Digital Transformation’ demands rapid delivery and continuous iteration of new competitive services via multiple channels, which in turn demands new service delivery techniques – including DevOps. In this power panel at @DevOpsSummit 20th Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, panelists will examine how DevOps helps to meet th...
Apr. 24, 2017 11:15 PM EDT Reads: 825
Financial Technology has become a topic of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 20th Cloud Expo at the Javits Center in New York, June 6-8, 2017, will find fresh new content in a new track called FinTech.
Apr. 24, 2017 11:15 PM EDT Reads: 2,266
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Apr. 24, 2017 11:00 PM EDT Reads: 810
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
Apr. 24, 2017 10:45 PM EDT Reads: 1,736
SYS-CON Events announced today that Hitachi, the leading provider the Internet of Things and Digital Transformation, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Hitachi Data Systems, a wholly owned subsidiary of Hitachi, Ltd., offers an integrated portfolio of services and solutions that enable digital transformation through enhanced data management, governance, mobility and analytics. We help globa...
Apr. 24, 2017 10:45 PM EDT Reads: 713
The age of Digital Disruption is evolving into the next era – Digital Cohesion, an age in which applications securely self-assemble and deliver predictive services that continuously adapt to user behavior. Information from devices, sensors and applications around us will drive services seamlessly across mobile and fixed devices/infrastructure. This evolution is happening now in software defined services and secure networking. Four key drivers – Performance, Economics, Interoperability and Trust ...
Apr. 24, 2017 09:45 PM EDT Reads: 3,617
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busin...
Apr. 24, 2017 08:15 PM EDT Reads: 454
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
Apr. 24, 2017 07:45 PM EDT Reads: 2,157
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
Apr. 24, 2017 06:45 PM EDT Reads: 726
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
Apr. 24, 2017 04:45 PM EDT Reads: 2,096
SYS-CON Events announced today that T-Mobile will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. As America's Un-carrier, T-Mobile US, Inc., is redefining the way consumers and businesses buy wireless services through leading product and service innovation. The Company's advanced nationwide 4G LTE network delivers outstanding wireless experiences to 67.4 million customers who are unwilling to compromise on ...
Apr. 24, 2017 03:45 PM EDT Reads: 645
@ThingsExpo has been named the Most Influential ‘Smart Cities - IIoT' Account and @BigDataExpo has been named fourteenth by Right Relevance (RR), which provides curated information and intelligence on approximately 50,000 topics. In addition, Right Relevance provides an Insights offering that combines the above Topics and Influencers information with real time conversations to provide actionable intelligence with visualizations to enable decision making. The Insights service is applicable to eve...
Apr. 24, 2017 03:30 PM EDT Reads: 2,554
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Apr. 24, 2017 03:30 PM EDT Reads: 1,103
SYS-CON Events announced today that Grape Up will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company specializing in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the U.S. and Europe, Grape Up works with a variety of customers from emergi...
Apr. 24, 2017 03:00 PM EDT Reads: 1,907
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Apr. 24, 2017 02:45 PM EDT Reads: 660