A Dispatch from Cloud City

A few end of the year observations from Cloud City (aka Seattle):

Cloud Infrastructure

  • AWS remains a beast. Yet a chink in their armor is emerging…
  • Azure has become the clear challenger to AWS. The much maligned Mr. Ballmer is not getting credit for Microsoft’s embrace and execution on cloud. Unlike most of its cohorts rooted (mired?) in previous generations of technology, Microsoft is well on its way to making the cloud transition.
  • Despite very strong technology and an impressive operational footprint, Google Cloud Platform is still a hobby for Google. They are as yet unwilling to make the necessary non-technology investments to really compete to win here.
  • Private infrastructure clouds just aren’t happening – instead enterprises are both getting more comfortable (surrendering?) with public cloud and continuing to invest in virtualization (VMware obituaries were definitely premature).
  • OpenStack’s identity crisis is warranted. Without a credible ecosystem of OpenStack-based public cloud providers and little enterprise private cloud adoption, the OpenStack bandwagon is left providing ingredient technology to the industry itself, which doesn’t really need what the vendors are selling.
  • Rackspace’s OpenStack bet outcome is increasingly clear: they may not exit 2014 as an independent entity. They should have invested up the stack in higher value services like Amazon, not down (and to add insult to injury, I’ll wager their VMware business still is bigger than their OpenStack business). They’ve lost over half of their market cap this year. While they still sport a premium multiple, the overall trend is towards a SoftLayer kind of valuation which could put them in play for acquisition by the kind of legacy vendors who confuse hosting with cloud (isn’t HP out telling the world their balance sheet has finally recovered from Autonomy?).

Cloud Platform

  • PaaS is still a zero billion dollar category, but could PaaS end up being the level at which enterprises implement private cloud? I see more traction for PaaS than IaaS in the enterprise.

Big Data

  • In the absence of a strong set of customer successes, I think Hadoop may be spending some time in the trough of disillusionment. The challenge is not filling the data lake, the challenge is extracting meaningful and material business results from the lake. It is a data science problem far more than an infrastructure problem. How long will it take to transition to a Hadoop 2 that is robust, deployable, performance, has ecosystem support, etc.?
  • I continue to be amused that Google is so far ahead when it comes to big data that it is a material disadvantage for them. They get dismissed as proprietary while the rest of the industry is enraptured with Google’s technology from two generations back that has been awkwardly laundered through Yahoo.

What else is happening below the clouds on the ground?

10 thoughts on “A Dispatch from Cloud City”

  1. Charles,

    Most of this is spot on from what I have been observing also. Are you able to elaborate on the AWS chink in the armor? Also, how exactly do you define PaaS? My observation is that IaaS has much more traction in the enterprise than PaaS right now, however, many of the IaaS services that are sparking more adoption are up the stack in terms of database services, integration services, continuous deployment, etc.. Are you lumping these into PaaS or are you referring to the classical Azure PaaS, Force.com, GAE, EngineYard, Heroku like offerings?

    Thanks,
    Kyle

  2. Good to hear.

    Not quite ready to get into Amazon’s chink here – going to watch and see who might exploit. But as usual, strengths become weaknesses.

    For PaaS, I am thinking full-on app-level deployment, so Cloud Foundry, Heroku, etc. Cloud Foundry in particular has good on-prem enterprise traction. Enterprises first and foremost want the productivity win and being a mini-AWS doesn’t achieve that (and is really difficult for an IT organization to pull off). Not surprised to hear IaaS-style private cloud efforts getting pulled up the stack because of this.

  3. Insightful as always, Charles.

    I’m not sure Azure is where it needs to be from a marketing/mindshare standpoint or that MS is necessarily investing in such a way that that gap will close quickly. But certainly from a technology foundation standpoint, as well as “eating your own dogfood” standpoint at which Microsoft excels when it wants to, Azure is becoming a contender.

    I also think your sense is right with Hadoop traction. And when you think about it, it’s the same issue as with BI and data warehouse tools in the SQL-centric era – extracting knowledge from information has always been hard, MapReduce doesn’t make that any easier — it makes some things simpler, and can often turn impractical problems into practical ones, but that’s quite different.

  4. Azure’s velocity is very good and in the race of the midgets to challenge AWS, they stand tall. They also have the A team working on it.

    Hadoop is a mixed bag, but definitely a means, not an end.

  5. Well since you don’t reveal what you think the chink is, it is hard for me to comment on it further. All I can say that as an insider, I do not see one (or at least nothing obvious). But there could very well be..curious to know what it is, when you can reveal it.

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