Quote to Note: Cloud Revenue Potential
March 5, 2010
Thinkq.com yielded a quote to note. “Microsoft Spies a Billion Dollars in Cloud” reported that Stephen Elop, head of Microsoft business software unit, allegedly said:
Three years, five years, is it [cloud services] a billion-dollar business? I’m quite certain it will be.
I have marked my calendar.
Stephen E Arnold, March 2, 2010
A freebie. Because I mentioned a calendar, I think I must report to NIST, a clock and calendar manager of some repute.
Vendor Lock In. Sorry, It Is Here to Stay
February 23, 2010
A happy quack to the reader who sent me a link to the Forbes Magazine story “The Future Of Enterprise Software.” The write up is one that says, “Yo, cloud computing is coming.” The suggestion is that vendors of enterprise software will no longer “lock in” a customer to a specific system.
Huh?
A commercial company has a mission: make money. One makes money by getting customers and keeping them. In the good old days of the mainframe, there was multi-point lock in. Today, the lock in is somewhat more subtle, but a bit like one of the country club prisoners that some wrong doers enjoy.
For me this passage triggered a chuckle:
Collectively these developments allow corporations to take a step back from software lock-in the way they stepped back from hardware lock-in during the mainframe era. IBM’s mainframes suffered more because of a concern over vendor lock-in than because of inefficiency or performance. And data outsourcing ended abruptly in the client/server era largely because companies were disgusted with service provider lock-in from companies like EDS.
In my experience, here is a run down of what some vendors are now doing:
First, there is the low cost play. Quite a few companies are moving down this path. The idea is to get the customer hooked and then play the “security” or “fear” card. The result is that the company will stick with a particular vendor to get the added value the company delivers. This is a “devil you know” approach.
Second, there is the open source play. Predicated on reducing license fees, most of the open source vendors sell services. Most organizations have at best a couple of wizards who can deal with open source. The rest will pay fees to have the open source experts manage the shop. Hey, it’s still money and it works just like the old lock in model but it has a “green” feel—responsible, natural, lower cost, etc.
Third, there is the cloud play. The idea is that an organization cannot afford or find top notch IT people. The cloud vendor can, so shove the software “out there” and enjoy the reduced costs.
Human nature loathes certain types of change. Once a vendor lands a customer, the vendor manages the customer relationship. The goal is lock in.
In my goose pond, lock in is the name of the game. It has to be because the cost of customer acquisition is too high. The whole point of selling software, systems and services is lock in. Just my opinion, Mr. Forbes.
Stephen E Arnold, February 23, 2010
No one paid me to write this. Because I mentioned lock in, I will report non payment to the General Accountability Office, an outfit that rides herd on vendors who work hard to lock in the Federal government and some succeed pretty darn regularly.
Microsoft Fast on Linux and Unix Innovation
February 15, 2010
It’s Valentine’s Day. I feel quite a bit of affection for the system professionals who have licensed Fast Search ESP, and I hope each finds search love. I think there will be a “tough” element to this love. And like other types of love, there will be ups and downs. Microsoft practiced some “tough love” for licensees of the Linux and Unix versions of Fast Search & Transfer’s Enterprise Search Platform recently. I am in a discursive frame of mind, and I will share my opinion about the “tough love” for the Linux and Unix licensees of the 1997 technology that comprises some of Fast Search & Transfer’s system.
The not-too-surprising announcement that Microsoft would stop supporting Fast Search & Transfer’s Linux and Unix customers surprised some folks. I think a handful of resellers were delighted because customers with non-Windows versions of Fast Search cannot change horses in the middle of the Tigris River, as Alexander the Great discovered in 331 BCE. Some poobahs pointed out that open source search would become a hot ticket for Fast Search Linux and Unix licensees. Others took a more balanced view of figuring out whether to rip and replace or supplement the aging Fast Search system with one of the more specialized solutions now available; for example, Exalead’s system could be snapped in without much hassle, based on my research for Successful Enterprise Search Management, published by Galatea in the UK last year. (Martin White was my co-author.)
Source: http://www.zastavki.com/pictures/1024×768/2008/Saint_Valentines_Day_St.Valentine_004959_.jpg
What I found interesting is that the Microsoft Enterprise Search blog contained some information from Bjørn Olstad, CTO, FAST and Distinguished Engineer, Microsoft. The write up’s title is “Innovation on Linux and Unix,” and it appeared on February 4, 2010.
Mr. Olstad wrote:
When we announced the acquisition two years ago, we said that we were committed to cross-platform innovation—that we’d “continue to offer stand-alone versions of ESP that run on Linux and UNIX,” and that we would provide updates to these versions to address customer concerns and add new features. Over the last two years, we’ve done just that.
The deal was consummated in April 2008. In October 2008, the Norwegian authorities seized some company information, but there has not been much news about the investigation into the pre-acquisition Fast Search & Transfer’s activities. At any event, it is now February 2010, so Microsoft has been operating Fast Search for the period between April 2008 and February 2010. That’s not quite two years, which is a nit, but software works when details are correct. What’s clear is that Fast Search and its Enterprise Search Platform or ESP is pared down and focused on the Windows platform.
I also noted this passage:
When we announced the acquisition two years ago, we said that we were committed to cross-platform innovation—that we’d “continue to offer stand-alone versions of ESP that run on Linux and UNIX,” and that we would provide updates to these versions to address customer concerns and add new features. Over the last two years, we’ve done just that.
CloudXL: Cloud Services Search
February 12, 2010
A happy quack to the reader who sent me a link to CloudXL.com, a cloud service locator service.
I have been one of the voices of caution about vertical search services. The reason is that a broad indexing methods like Google’s generally provides a method for slicing and dicing results. The vertical search engine targets a specific topic area and indexes it well. But over time the types of indexing that a company like Google does makes the broader index more useful. There are exceptions like specialty indexes for antidotes, chemical structures, and ternary phase diagrams. But for general topics, a big data index like Google has an advantage if you know how to work around the training wheels that Google bolts to some users browsers.
I did CloudXL.com useful. The service uses some Google plumbing but the CloudXL.com service provides some useful one-click filters; that is, a Boolean NOT converted to colorful buttons. If you want to see the most recent additions to the service, you don’t need to search. Just scan the home page. If you want to locate a cloud database, you just click on “Categories” and scan the list. When you spot “database as a service, check the box and click submit.
The system displayed three hits and two of them were useful. If you are looking for cloud services, you might want to bookmark CloudXL. There’s no search system. Perhaps a Google custom search engine will be added in the near future.
Stephen E Arnold, February 12, 2010
No one paid me to write this. Because I mentioned clouds, I will report non payment to NOAA.
Startling Cloud Cost Data
February 10, 2010
The story “Cloud Shrinks IT Costs by 90%” contains the type of data I like to use in my public lectures. First, it is a blockbuster number—taking $1.00 in costs and chopping them down to one thin dime. Second, the statistical foundation of the number is rarely challenged as long as I can point to an “authoritative source” like ComputerWeekly.com.
For me, the key point in the write up was:
Companies that are using cloud computing are paying as little as one-tenth for the same processing power as they would for equivalent in-house facilities. This emerged from a floor debate at the Powered by Cloud conference in London this week. Asked what return on investment they had achieved from their cloud experiments, representatives from mobile network operator Vodafone and TV broadcaster Channel 4 said the cost of their cloud-based processing was a tenth of traditional in-house computing. A speaker for Verizon, which offers cloud computing, said its customers were saving between 25% and 75% of the traditional costs.
Let’s assume that this type of savings is accurate. What’s the future of on premises software? Well, grim, I suppose. What happens to traditional enterprise software companies? Well, grim, I suppose. What happens to the rationalized IT executives who no longer have a job? Well, grim, I suppose. What about on premises search and content processing systems? Well, grim, I suppose.
The good news is a return to the type of computing environment that characterized some of my early experiences: industry dislocation, limited choice, high costs, and reduced control. Do you see something different?
Stephen E Arnold, February 10-, 2010
No one paid me to write this article. I will alert the facilities manager of the new executive office building, where cost controls are paramount.
Microsoft Study Discloses Cost Savings from Avoidance of On Premises Software
February 6, 2010
Talk about a weird study. Read, please, “Microsoft Study Reveals Small and Midsize Businesses Using Hosted Services Have Better Financial Performance.” The idea behind this research is to make a case for cloud computing. For me, the most interesting passage in the write up was:
The SMB IT and Hosted IT Index 2010 commissioned by Microsoft researched 3,193 SMBs in a cross section of private industries in 15 countries. Overall, the findings show greater awareness of the benefits of IT among SMBs and a high reliance on IT across all industries and geographies. The findings indicate a clear path toward better financial performance than for those not currently taking advantage of IT advances such as hosted services.
I concluded that anyone in a small or mid sized business with on premises installations of Microsoft’s ubiquitous software would be better off getting this stuff via the cloud. Great conclusion because this suggests to me that Microsoft’s software is dragging down the financial performance of its customers. What?
Stephen E Arnold, February 6, 2010
Nope, no pay for this write up. I will report this sad situation to the Pew crowd, an outfit familiar with outstanding research.
Mark Logic Taps Amazon
January 25, 2010
Cloud Computing “Mark Logic Leverages Amazon” reported that MarkLogic Server offers a cloud option. According to the write up said:
The move will obviously let customers use its widgetry on a pay-by-the-hour basis. A native XML database that implements the W3C-standard XML Query (XQuery) language, the server includes full-text and structured (XML) search. The AWS version consists of an Amazon Machine Image (AMI) with the MarkLogic Server pre-installed.
Mark Logic’s technology has demonstrated its versatility in a number of information-centric environments. With a client’s information within the MarkLogic Server environment, repurposing is a snap. In the last year, Mark Logic has emerged as an information infrastructure company that makes big boys like Oracle quite nervous. With the move to the cloud option, Mark Logic is poised for new services. Mark Logic’s technology exerts pressures on companies in business intelligence, enterprise publishing, and information portal services, among others.
When Larry Ellison worries, I take notice. Important step from Mark Logic.
Stephen E Arnold, January 25, 2010
Yes, I was given a free admission to the Mark Logic user conference in Washington, DC. No, I was not paid to point to this write up about the Sys-Con story. Yes, I will beg Mark Logic to throw large sums of money at me and the goslings the next time I see one of the firm’s senior managers or investors. I will report this intent to the FCC via this footnote. Wow, I feel so much better explaining that I am a shameless marketer.
Startling Fact: Size of Cloud Computing Market
January 23, 2010
Tucked into a story about IBM landing Panasonic as a customer for Lotus Notes was a startling fact. “The global cloud computing market is expected to grow at a compounded annual rate of 28 percent from $47 billion in 2008 to $126 billion by 2012, according to IBM based on various market estimates.” You can see this gem in context at “Panasonic Ushers in the Cloud Computing Era with IBM LotusLive”. That’s a heck of a number.
Stephen E Arnold, January 23, 2010
A freebie. I don’t know what federal agency is in charge of numbers without back up. Maybe OMB?
SAP Does an About Face on Some Fees
January 16, 2010
I think SAP provides the same type of information a long range scout does. The scout goes out, checks out the territory, and then comes back and reports. The scout’s bosses listen to what the scout says and then decides what to do. The whole set up of an organization mode with scouts and bosses “in the rear with the gear” is fascinating to me. Vendors of complex, time consuming, resource intensive old fashioned software are trying to change. With revenue slipping and the economic crisis lingering, SAP provides useful information. Read “Price Hike Ditched as SAP’s Enterprise Support Makes a Comeback” and you can catch a glimpse of what other enterprise software vendors may be pondering; namely, a price cut and cooing to make peace with customers. Losing a customer is an expensive proposition because it is a one two hit. The company loses the revenue and then has to spend dough to find more customers to take up the slack. In my opinion, the most interesting comment in the write up was:
This move shows that SAP is listening to user groups, and therefore its customers, taking on board our feedback and making changes to meet the needs of all SAP users,” he said in a statement.
My thought is that this is a placeholder move. SAP will be under more price pressure, not less. Once the company blinks, the customers know that SAP must cave. Lower prices mean bad news for enterprise software vendors and resellers. Lower prices may force cloud alternatives to lower their rates. In short, am I seeing a phase change in enterprise software? Yep.
Stephen E Arnold, January 16, 2010
No one paid me to write this. I may fly over the SAP headquarters next week, but I don’t think I will visit. Do I report this to the FAA or to the DOT?
Microsoft and a New Cloud Formation
January 15, 2010
A few days ago we tried to access one of the small and mid sized business download sites operated by Microsoft. It seemed to be on holiday. Today I read the CNet report about Web market share. The article “Google Rules Search in December, Bing Drops” provided some numbers showing Google widened its lead in Web search. One comment that struck me was:
Google accommodated almost 6.7 billion queries, capturing a 67.3 percent share of the month’s searches.
I don’t believe these data for one Kentucky Wildcat minute. What I do believe is that the decision engine, a cloud service, is drifting off. But the interesting cloud news was the tie up between HP and Microsoft. I know that Microsoft was not too keen on other vendors’ hardware, particularly when it ships with Linux. I also heard that Microsoft’s data centers have some HP hardware. Now the companies are, according to “HP’s Hurd Calls $250m Microsoft Agreement ‘Breakthrough Stuff,” teaming for a cloud computing play. Allegedly $250 million will be invested to “better integrate corporate software and hardware.”
Simplifying life for corporate information technology professionals is one objective. And the money:
will be spent across a range of areas — including email servers, database management, and cloud computing — to make HP’s hardware work smoothly with Microsoft’s software in a wider variety of settings.
My view is that cloud computing can simplify * some * IT challenges. But the complexities of SharePoint and Microsoft Fast Search won’t really go away. In the cloud, these will be hidden and someone has to pay for the engineers who have to keep these puppies from misbehaving. An investment on this scale suggests that Microsoft knows it has some gaps to fill in cloud computing, but I don’t think HP type engineering will resolve these. Some of those former Alta Vista guys would probably be able to make a contribution in my opinion.
Stephen E Arnold, January 15, 2010
Full disclosure: I am sitting with Tess and Tyson. Both are asleep. No one paid me to point out that putting complex systems in the cloud does not resolve their complexity nor the cost of dealing with that complexity. “Cloud”, you say. I am under the thumb of NOAA.
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