Susan Jennings Kantari, [email protected]
Cloud SMBs Likely to Be Acquired, Oracle “Wandering,” VMware Leading
Companies: AAPL, AMZN, CA, CRM, CSCO, CTXS, DELL, EMC, ETR:SAP/SAP, GOOG, HPQ, IBM, MSFT, ORCL, RAX, RHT, RNOW, TYL, VMW July 28, 2011
Research Question:
What effect will cloud computing have on established IT companies, and which companies will be the winners and losers?
Silo Summaries Summary of Findings 1) INDUSTRY SPECIALISTS SMBs are early adopters of the cloud while the Fortune 1000 are These five sources believe smaller and midsize expected to adopt self-contained clouds in the next three to six businesses (SMBs) will be acquired by larger firms, months. Widespread adoption is expected in five years. such as IBM. Leaders include Workday, VMware and Citrix in SaaS, SoftLayer, Amazon and Rackspace in Established IT companies will acquire smaller cloud IT companies IaaS and Azure and Salesforce.com in PaaS. Microsoft, in the next six to 12 months. Citrix and Nimbula were thought to be the most innovative in cloud computing. One source said Hewlett- Oracle Corp. (ORCL) lacks a coherent cloud strategy. An industry Packard and Oracle have yet to find their place. Another specialist described Oracle as “wandering” while a security source described Oracle as “wandering.” A third source specialist said its solutions are too expensive for SMBs. said security is an issue for Google, Amazon and Rackspace, and was the only one to speak negatively VMware Inc. (VMW) was named a cloud computing leader by nine about VMware, which he said is losing share among sources throughout all silos. users with ultra-dense equipment.
Two software executives said Amazon.com Inc. (AMZN) is an IaaS 2) CLOUD SOFTWARE EXECUTIVES leader. It may lose share to the growing number of competitors, but All four sources named VMware as a leader, in still will see revenue rise as cloud computing expands. particular for PaaS. Other potential winners include VMware’s Cloud Foundry, Opscode, RightScale, Red PaaS leaders include Microsoft Corp.’s (MSFT) Azure, Hat, Salesforce.com and Google. Oracle is lagging in Salesforce.com Inc. (CRM), VMware and Red Hat Inc. (RHT). cloud innovations and lacks a coherent strategy. Its VMware, Citrix Systems Inc. (CTXS) and Workday Inc. are SaaS infrastructure software licenses are expected to be leaders. For IaaS, SoftLayer Technologies Inc., Amazon, Rackspace affected by the cloud as less-expensive alternatives Hosting Inc. (RAX) and Microsoft are in the lead. become available. Amazon’s revenue in IaaS should continue to rise, but it likely will lose share to the Two government IT sources said Apple Inc.’s (AAPL) products were growing number of competitors. being integrated into more enterprise and government workplaces. This confirms similar comments from our June 9 RIMM report. 3) SECURITY SPECIALISTS One of these three sources said security integration will come in the form of more partnerships in the next six to 12 months while another said cloud providers have yet to prove themselves in security. Two of three sources Established IT VMware’s Oracle’s named VMware as at the forefront. One source Companies to Position in Position in the described Oracle’s offerings as too expensive for SMBs. Acquire Cloud IT the Cloud Cloud Another said Amazon is a leader, but the third source SMBs said Amazon has stronger marketing than technology. Industry Specialists 4) GOVERNMENT IT PROFESSIONALS These three sources cited security concerns as the Cloud Software N/A main reason for slow cloud integration. Another source Executives said Google and Microsoft are the early leaders as they Security have gone through the stringent approval process. Two Specialists sources said Apple products are being integrated into more enterprise and government entities. Government IT N/A N/A Professionals 5) BUSINESS IT PROFESSIONALS These three sources cited many winners in the cloud Business IT computing sector, including Microsoft, VMware, N/A N/A Professionals Salesforce.com, SAP, Oracle and Google. Amazon will be added to the list if it can prove its reliability and Rackspace for IaaS.
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Background Blueshift Research’s Jan. 20 report revealed a crowded cloud marketplace, with different leaders at the IaaS (Amazon and Rackspace), PaaS (VMware and Google) and SaaS (Microsoft) layers. Blueshift also found that VMware was leading the virtualization of large company legacy systems.
CURRENT RESEARCH This report will address how traditional IT companies will be affected by cloud computing and which cloud computing companies are emerging as the market leaders. Blueshift employed its pattern mining approach to establish and interview sources in six independent silos: 1) Industry specialists (5) 2) Cloud software executives (4) 3) Security specialists (3) 4) Government IT professionals (3) 5) Business IT professionals (3) 6) Secondary sources (3)
Blueshift interviewed 18 primary sources, including two repeat sources, and included three of the most relevant secondary sources focused on Apple Inc.’s (AAPL) approach to the cloud compared with its competitors, a comparison of Microsoft Office 365 and Google’s cloud-based services, and a study of 1,500 UK organizations’ cloud IT intentions.
Silos 1) INDUSTRY SPECIALISTS These five sources believe smaller and midsize businesses (SMBs) will be acquired by larger firms, such as IBM Corp. (IBM). Leaders include Workday, VMware and Citrix in SaaS, SoftLayer, Amazon and Rackspace in IaaS and Azure and Salesforce.com in PaaS. Microsoft, Citrix and Nimbula Inc. were thought to be the most innovative in cloud computing. One source said Hewlett-Packard Co. (HPQ) and Oracle have yet to find their place. Another source described Oracle as “wandering.” A third source said security is an issue for Google, Amazon and Rackspace, and was the only one to speak negatively about VMware, which he said is losing share among users with ultra-dense equipment. He believes Salesforce.com will gain share. Our gaming specialist believes the cloud will be integrated into the next generation of gaming devices, and already has become part of Sony Corp.’s (TYO:6758/SNE) PlayStation 3 and Microsoft’s Xbox.
Blogger and owner of a privately held Internet solutions provider, Chicago area The source expects cloud orchestration and cloud application/OS management tools to take off within the next year, and named Microsoft, VMware and Citrix as the most likely enterprise leaders. The marketplace currently is scattered and more focused on marketing and not the technology. Amazon and Rackspace hold the IaaS market, purely from a marketing standpoint. Citrix and Nimbula are the most innovative cloud computing companies based on a recent acquisition of Cloud.com and an alluring sales model, respectively. Fortune There is still a problem where 1000 companies are expected to adopt private, self-contained clouds in the the marketplace is more than next three to six months. happy to get rid of managing . “Microsoft, VMware, Citrix—the big players—will be offering [cloud hardware, but they seem to orchestration and cloud application/OS management tools] first, at least on an enterprise scale. There is still a problem where the forget that they still need to marketplace is more than happy to get rid of managing hardware, but administer and manage their they seem to forget that they still need to administer and manage their applications. applications.” . “Here is what I’m hearing from customers, verbatim: ‘I hate dealing Blogger & Owner Internet Solutions Provider with my hardware, and I want to be on the cloud.’ I ask, ‘Why the
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cloud?’ Customer says, ‘I don’t know, but I want the cloud.’ The motivation is fear of dealing with hardware and fear of being left behind in the marketplace. It’s really interesting that it is a global marketing problem right now, not a technical one. Many smaller ‘cloud’ providers don’t even offer true cloud services. They are just rebranding Web hosting, and customers are buying in.” . “I’m just seeing common sense security practices from the IT side. It’s funny the news shows security as a huge issue, [but] IT is treating it as the same issue it has always been and the end customer still doesn’t seem to care too much.” . “I look at the winners from a marketing perspective at this time, and for positioning Amazon and Rackspace are in front. Amazon has the music cloud, EC2 services, and great branding power in the cloud arena. Rackspace as well. On the consumer side, it will be interesting what happens with Apple’s music cloud down the road.” . “My favorite [cloud computing company] is Nimbula. Great people behind it. And a great sales model to get people like me to use the product for free until a certain point of capacity. And Citrix since they recently made a smart acquisition of a small open-source group of Cloud.com.” . “I am seeing the early signs of merger acquisition. I have seen some small niche players being gobbled up by the larger players. And the smaller niche players don’t even have full product offerings yet; it’s just the technology. I don’t see [the overall] clear winners/losers yet.”
Justin Lundy, cybersecurity specialist and CEO of Tegatai LLC In order to stay in the game, Google, which has been hacked and exhibited poor Expect to see an increasing cloud security, and Microsoft will need to absorb other security companies. Similarly missing security features have hurt Amazon’s and Rackspace’s market focus on secure cloud share. VMware also is losing market share based on a new licensing model that computing solutions that give financially penalizes users with ultra-dense equipment. This source expects users the ability to focus on smaller companies like Salesforce.com to gain market share via innovation. their core business while . “According to Gartner [Inc.] estimates, the worldwide cloud services streamlining operational market is expected to exceed $150 billion by 2014. As the competition struggles with security, the winners in this space are companies that efficiencies and thoroughly are able to navigate the security landscape effectively.” mitigating enterprise risks. . “Expect to see continued investment in cloud computing [from Fortune Larger companies are having 1000 companies], namely secure cloud computing over the next difficulty innovating as fast as decade.” the smaller, more agile firms. . “Small businesses are adopting cloud computing extremely rapidly. Today a team of four individuals who are well-versed in cloud services Cybersecurity Specialist & CEO can perform the work of a dozen people from several years ago.” Tegatai LLC . “Expect to see an increasing focus on secure cloud computing solutions that give users the ability to focus on their core business while streamlining operational efficiencies and thoroughly mitigating enterprise risks. Larger companies are having difficulty innovating as fast as the smaller, more agile firms.” . “These firms [IBM, Oracle, HP, Microsoft and Apple] have latched onto the cloud like barnacles to a ship. They may not know where the ship will go, but they all know they want to be along for the ride. IT had gotten stale, and the traditional leaders are using the cloud computing buzz to revitalize their marketing efforts and mostly give their same solutions a new spin. Again, to see who is navigating the competitive cloud effectively, look at the secure cloud computing leaders.” . “Microsoft and Google will have to acquire a few secure cloud Microsoft and Google will have computing companies to truly innovate and maintain their growth rates to acquire a few secure cloud as they are large, lumbering behemoths. Salesforce.com has always computing companies to truly made an attempt to raise the bar, and I only expect their market share innovate and maintain their to increase. They are smaller and much more willing to innovate. . “[Amazon and Rackspace] are losing market share due to expensive growth rates as they are large, and, in many cases, missing security features and functionality. Up-and- lumbering behemoths. comers that are addressing the secure cloud computing issue in a Cybersecurity Specialist & CEO comprehensive, cost-effective manner are poised to become the new Tegatai LLC market leaders.”
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. “VMware is losing market share due to a new licensing model that unfairly punishes users that have extremely dense equipment. Foolishly, they have had to resort to defending their action; however, they are clearly not backing down.” . “Google is losing market share because it has been hacked six ways to Sunday. Companies are finding it hard to trust their data with them, and are eagerly seeking alternatives.”
Cloud computing advisor to the industry’s senior management, Dallas SMBs have shown strong promise in being the market leaders. Based on current trends, this source said a number of small providers likely will hold on as long as they can until they sell out to one of the larger companies, like Dell or Microsoft. Other big companies, like HP and Oracle, are “wandering” and do not know how to use cloud computing to their advantage. . “Small- and medium-sized businesses are where I think the action is going to be when you get past the big guys, like Google and Salesforce.com. … There are just a ton of small and medium companies that are private equity or have angel investors that are really making a mark and are really below the radar right now. They’re filling niches that the big guys can’t fill. They’re attacking [the cloud] differently. … [The industry is] mostly opportunity- driven whereas these [SMB] companies are trying to build up to avoid becoming obsolete.” . “If you look at Dell and how they’re conducting mergers … I put them with the top 10 winners. … I am also impressed with Microsoft and what they are doing. I think they have a very sound overarching strategy. … They are in a position to win, and Dell is doing the same. [Sales]force.com’s platform is attracting people to try to build that out.” . “CA [Inc./CA] doesn’t get it. I think HP is struggling even though it has a cool hardware strategy going on with Microsoft. But HP doesn’t have a cloud. They don’t know what a cloud is.” . “Oracle and HP both want to be the one-stop shop, but I don’t think any company—no matter how big they are—is going to have one provider.” . “Oracle is wandering.” . “IBM is a little more light. They want business partners, and that is a strategy. IBM is on an acquisition mode for products.” . “Microsoft has a lot of choices: [Office] 365, Azure. I think Microsoft is in a good position to take a big chunk of this [market] in terms of software enterprise.” . “Apple is nowhere on the enterprise landscape other than with mobility.” . “Apple is going to have to learn how to deal with enterprise. It’s like Microsoft and Dell 20 years ago.” . “Workday for HR is going to knock the ball out of the park with software solution for payroll. … It’s the lower cost, pay-as-you-go model.” . “There is also a little company called Spiceworks [Inc.]. Their gimmick is that they give you help-desk software for free. You just have to put up with advertising. Vendors like HP are paying to advertise their product and aimed at small companies [with about 10 desktop computers]. ... [Spiceworks has] gone two or three rounds of fundraising, and they claim to have over a million users.” . “The [IaaS segment] are outsourcers because outsourcers don’t want to think about cloud computing as different from their model—and it is. ... There is a company called SoftLayer that is good. There are a lot of guys out there that can do IaaS better than Amazon and Rackspace. Amazon gets kudos for creating the space in a lot of ways, but it is not easily able to serve the corporate structure.” . “SoftLayer is a player in this [IaaS] space. They are private equity based. I think we’ll see 25 of [IaaS] guys grow up faster than Amazon or Rackspace, and then we’ll see an acquisition occur. … I don’t think they’re going to be long-term players. They are going to hold off as long as they can and then sell off.” . “I don’t really see VMware as platform-as-a-service. … It supplies virtualization stuff. … When I think of platform- as-a-service, I think of building out apps and putting them out to production. I don’t think VMware offers that.” . “It is interesting to see where platform-as-a-service is going to go. … I see Azure, [Sales]force.com and open- source guys doing OK.” . “I’ve seen some companies dabble with Google Apps and not really be happy with it.” . “VMware and Citrix, I really see them as virtualization guys. … It’s too early to call [Citrix] a winner.” . “There are a lot of people who want to be an SaaS company. … It’s just so fractured right now. Saleforce.com is the big chest thumpers, but they are only a player in the space even though they think they are the player.”
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National video game consultant based in Kentucky Console manufacturers are expected to incorporate cloud services into their next The video game industry is the generation of consoles so gamers can save their games and retrieve them from largest form of entertainment friends’ consoles or handheld gaming devices. Sony already is in such talks. . “The video game industry is the largest form of entertainment in the in the world in terms of total world in terms of total sales. More people play video games than go to sales. More people play video the movie theaters in America. With that type of demand, video game games than go to the movie console manufacturers will adopt some form of cloud services with theaters in America. With that their next-gen consoles.” type of demand, video game . “We’re seeing a trend in cloud storage in gaming ... and, of course, four years ago Sony launched a rather large cloud computing initiative console manufacturers will through PS3s.” adopt some form of cloud . “There are already discussions from Sony about using cloud storage for services with their next-gen the PlayStation 4. Currently, gamers are required to save their game on consoles. a local storage device or hard drive in the console. In the future, gamers will save their game to the cloud so they can retrieve it on a National Video Game Consultant friend’s console or a handheld device like a PSP.” . “One should take notice of how video game content will be delivered over the next few years. Currently, gamers use DVD media to play games. Digital downloads are the future. It is already happening through additional content for games. In the future, entire games will be available, at retail launch, via download on the Xbox, PlayStation and Nintendo Wii U. Consumers will be purchasing and playing games from the cloud without having to truly ‘download’ content. Of course, a lot of this depends on the availability of broadband to the user base. Furthermore, consumers are required to purchase a premium online service through Xbox Live for $60 a year.” . “There are rumors that Xbox will announce a new structure to its service through a tiered package: Silver, Gold and Platinum. It only makes sense that the Platinum service would include some cloud services for game saves, purchasing and even video game rentals.”
Former IT professor for the University of Hartford College of Engineering, Technology and Architecture The market is flooded with vendors and providers, and cloud computing is still so new that predicting a leader would be difficult. However, the usual big contenders, like Google and Microsoft, likely will gain instant popularity based on name recognition. . “There are no losers at this point. The concept is really just beginning to take off, so there are a lot of providers in the running with no clear winner yet.” . “Right now, the only traditional company that has adopted the technology is Microsoft in that they are now offering an entire Office Suite, including Exchange Mail server, in an online cloud environment with a subscription fee for each corporate user you want to add.” . “Google has been doing it for a while, and for free. They have Google Apps online, which is an MS Office clone.”
2) CLOUD SOFTWARE EXECUTIVES All four sources named VMware as a leader, in particular for PaaS. Other potential winners include VMware’s Cloud Foundry, Opscode Inc., RightScale Inc., Red Hat, Salesforce.com and Google. Oracle is lagging in cloud innovations and lacks a coherent strategy. Its infrastructure software licenses are expected to be affected by the cloud as less-expensive alternatives become available. Amazon’s revenue in IaaS should continue to rise, but it likely will lose share to the growing number of competitors.
Executive with Standing Cloud, a PaaS provider Cloud adoption will start to accelerate soon and will be widely adopted within five years. Obstacles include security and software architectures. This source expects Amazon’s cloud revenue to keep growing in the IaaS space but its market share to dwindle because of competition. He likes Apple’s iCloud and thinks Google Apps is good but needs improvement. Oracle is lagging in cloud innovations. He believes many IT professionals are trying to get away from the Microsoft environment because the company does not invest in fixing bugs and compatibility issues.
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. “The adoption [of cloud computing] is beginning now, but slowly. It will start to accelerate in a couple of years and be a wholesale shift by five Oracle has been publicly years from now.” skeptical of rather than . “I think there are two things holding up [wider adoption]. One is security embracing the cloud, so they concerns of various kinds.” have an interesting opportunity . “Many applications in enterprises do not have a software architecture that can really take advantage of the cloud and its scalability, both up to deliver cloud-oriented and down, so there is no reason to move them.” products without needing the . “PaaS providers, us included, need to continue to make their services grand strategy. Unfortunately, easier to use and more comprehensive. One innovation that’s really they’re doing this pretty slowly. needed on the development side is some better way to build cross- device applications. Having to build for the Web, [Google’s] Android, Executive, PaaS provider and [Apple’s] iOS is pretty burdensome, and there may be additional platforms going forward. I’ve seen a couple of companies that are working on aspects of this problem.” . “Some of these companies, like HP, IBM, and Microsoft, are really struggling to come up with something cohesive. The fact that they are large and dominant companies seems to make it difficult for them to come up with point solutions and individually valuable products, rather than grand strategies that are essentially indecipherable marketing-speak.“ . “Oracle has been publicly skeptical of rather than embracing the cloud, so they have an interesting opportunity to deliver cloud-oriented products without needing the grand strategy. Unfortunately, they’re doing this pretty slowly. Oracle Database and WebLogic are available on a monthly subscription basis, but the pricing really doesn’t accommodate multitenant cloud services.” . “Apple is different than the others in that it doesn’t really sell to corporate IT directly. It’s a consumer products company, so they’ve been able to tap into particular needs and indeed created some of the need for cloud with the iPhone and iPad.” . “[In the IaaS space] Amazon’s cloud revenues will continue to grow rapidly while their market share plummets. Four years ago, they had 100% share, but 451 Group says there are 500 public cloud IaaS providers today and 33,000 data center providers that will all eventually have an on-demand offering. These providers all have a lot of customers and real, noncloud revenue far exceeding that of [Amazon’s] EC2, and they’re not going to just give it up. So as people move to IaaS, many or most will stay with their current provider. Consequently, I don’t think any single player will dominate the market long term. Obviously, consolidation is happening and it probably will continue to happen, so we may see more of an oligopoly than we have in precloud infrastructure.” . “[In the PaaS space], our company will be the dominant player. There are three aspects of our model that are crucial. We run on a wide variety of infrastructure services; we can support any technology stack; and we separately deploy per customer ... rather than use a multitenant software architecture. ... This architecture provides much more flexibility. No one else is doing all of these things.” . “I think VMware, Cloud Foundry, Opscode and RightScale will all do well in the application layer. They’re all a little different than [our company] and mostly complementary.” . “[There are] some big players [in SaaS] who will continue to succeed— Oracle, Salesforce, IBM—but there will be open-source and smaller companies in each category as well.” Everyone I know, talk to, or . “Apple’s iCloud seems like a great idea to me. Increasingly, consumers even know of is trying to get will want to have their data available wherever they are and through away from the Microsoft whatever device they’re using.” environment as quickly as they . “Google Apps need to continue to progress in feature set if they are possibly can despite the lack of going to really take over. I use it heavily, but there are bugs and limitations that keep it from being my final format. The Documents fully viable alternatives. Their need to have redlining, and the Presentations need to do better on mindset is to keep customers tables and some other formatting things.” through lock-in rather than by . “The appeal of Google Apps to those who are moving to it is not just the providing continuing or cloud aspect. It’s also the fact that it’s not Microsoft. By the way, I used increasing value. to be a Microsoft fan, so this opinion is not about religion, it’s about value.” Executive, PaaS provider . “I have not tried Microsoft’s Office 365 and don’t really plan to.
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Microsoft has had a decade or more to fix the bugs and compatibility issues among the Office products, but they just don’t invest in this. Everyone I know, talk to, or even know of is trying to get away from the Microsoft environment as quickly as they possibly can despite the lack of fully viable alternatives. Their mindset is to keep customers through lock-in rather than by providing continuing or increasing value.”
Executive with a developer of database software Cloud security concerns are more about perception than reality, but still will keep some businesses from pushing important data and applications to public clouds. Amazon is the clear leader in public cloud infrastructure, but many smaller and more targeted cloud environments are likely to spring up. This source reported a shift from infrastructure to PaaS, being led by VMware, Red Hat and Salesforce.com’s Heroku. Microsoft has a strong infrastructure and platform offering with Azure. Oracle’s revenue from software licenses will be affected by the cloud. . “I think pretty much every company we talk to—and that spans the range from small start-ups to large companies—are all looking to figure out how to utilize the cloud.” . “There are two big obstacles [to wider cloud adoption]. One is the security issue. It’s not necessarily true that a cloud is more insecure than your own data centers, but the perception is that someone else has control of your data. For companies that are extremely data-driven or have regulatory issues or their business is extremely dependent on that data, they’re more hesitant to move those core pieces of data to a public cloud.” . “Additionally, there’s a perception of loss of control over your infrastructure since somebody else is managing it. Of course, you can argue that a company like Amazon that’s doing this on a massive scale can probably give you a better uptime than your internal IT team. … There is a perception that if someone like Amazon is managing your infrastructure and there’s an outage, you can’t do anything but sit and wait for them to fix it.” If you look at a company like . “Those things will definitely slow adoption for certain applications or certain pieces of mission-critical data. Companies won’t move those Oracle that sells infrastructure out to the public cloud in the next two, three, four or five years for sure. software, a lot of their revenue But those companies will still try to make their own data centers more comes from licenses of cloud-like and reap some of the benefits of efficiency.” software they sell. The advent . “One area that we’re watching closely is a shift toward platform-as-a- of the cloud is going to impact service. The first clouds were like Amazon’s infrastructure-as-a-service where you can essentially boot up machines on demand. What we’re that. You can go to Amazon and seeing now is companies like VMware, with Cloud Foundry, and Red boot up a virtual machine for a Hat, with their OpenShift offering, building platforms on top of this few cents an hour. infrastructure. For an application developer, it abstracts the idea of machines and infrastructure and allows you to focus on building your Executive Database Software Developer application and then pushing that out to the cloud. Over time, that should mean quicker development cycles and reduced costs.” . “I think VMware has positioned themselves really well there. Their bread and butter is virtualization, but they’re moving up the stack to the platform level. Red Hat has done this as well. Both of those companies are well- positioned to take advantage. You also see a lot of start-ups working in this area. The most prominent was a company that was acquired last year for a few hundred million dollars by Salesforce.com, called Heroku.” . “Amazon is certainly the leader in infrastructure-as-a-service, both in the number of deployments as well as how rapidly they’re iterating the features that they offer developers and IT. They’re definitely ahead of the game. Rackspace is also a player not to be discounted. They have good cloud and managed hosting offerings.” . “VMware is smaller than IBM, Microsoft and Oracle, but they’re up there with IT leaders and they’ve certainly embraced the cloud and are innovating. On the other hand, if you look at a company like Oracle that sells infrastructure software, a lot of their revenue comes from licenses of software they sell. The advent of the cloud is going to impact that. You can go to Amazon and boot up a virtual machine for a few cents an hour, and people are going to want to do that with their software as well.” . “Microsoft seems to be embracing the idea [with Office 365] that, at least on the software side, everything is going to be delivered as a service. I think they’re working toward that. I think they’re going to have some challenges with that. They haven’t had too much success in the past with their online businesses. That’s not necessarily in their DNA to do.” . “What we’ve looked at more closely is what Microsoft is doing on the infrastrcuture side with Azure, which is a very compelling offering. They’ve built out their own cloud, which is essentially a hybrid between infrastructure
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and a platform. To me, it looks like a compelling offering for a company that’s a Windows shop today and wants to start taking advantage of the cloud. The question is, will people perceive it as too proprietary? A lot of clouds are built on open-source software. At least perception-wise, people think of open source and the cloud together. Here you have a cloud that’s totally Microsoft-based and people may perceive that as another lock-in, so that could be a challenge for Microsoft.” . “From what I’ve seen, Apple’s iCloud looks like a great product.” . “Google is doing a very good job with Google Apps of targeting what were traditionally Microsoft shops. I think they’re doing a great job with a cloud-only strategy for their apps. For example, a company of our size ... would never think of buying Microsoft Exchange or anything like that. We run totally off of Google Apps. They have infrastructure offerings as well with Google App Engine, which falls into the platform-as-a-service category.” . “The worry with Google is you never know what’s core to their business. Certainly search is, but everything else is not necessarily core to their business. I’d be hesitant to bet my whole business on Google App Engines because I don’t know what their long-term strategy is. On the other hand, if you look at Amazon or VMware or Microsoft, you know they’re making their money off of selling infrastructure, so you can be confident they’re going to be there for the long haul.”
Executive with Apprenda Inc., developer of an application server to deliver SaaS in the cloud; repeat source The key competition in the cloud will be at the PaaS level, in which VMware has emerged as a leader. Amazon continues to improve and is the standard for IaaS. Salesforce, NetSuite and RightNow are among the top SaaS providers. . “For IaaS, Amazon Web Services continues to improve release after release after release. Despite their hiccups, it’s a clear winner.” . “In PaaS, I really like what I see from VMware’s Cloud Foundry project. It seems to be a ways from market, but the vision is cohesive and The real fight for dominance in compelling.” the cloud will be over PaaS. It is . “In SaaS, we all know the existing leaders: Salesforce, NetSuite, RightNow. Salesforce continues to expand horizontally beyond sales the next generation of automation and will be a contender in multiple categories. As more on- middleware, a category that premises ISVs [independent software vendors] move to the SaaS tends to be the string that model, you will see leapfrogging positions in all of the little niches of allows the big IT vendors to the software industry.” connect the dots between . “Fortune 1000 companies are definitely moving quickly to understand, pilot and start testing the waters with cloud solutions. I don’t see them developers, frameworks, making huge changes in how they consume IT overnight since they databases. It’s very much a have large existing investments in on-premises equipment and linchpin in the solution software that need to be used and depreciated first, so the adoption portfolio. will be gradual but still very meaningful. Even for simple uses like firing up development and test environments on public IaaS, they can face Executive, Cloud App Developer regulatory and governance hurdles that are partly big company issues and partly the issues with emerging cloud vendors needing to round out their certifications, policies, SLAs [service level agreements], etc.” . “SMBs are definitely able to adopt cloud solutions in a holistic way much more quickly. … Even in our own company, we consume almost all of our applications in a SaaS fashion.” . “We’ve blogged about this for a long time, and analysts and market leaders are now singing the same tune: The real fight for dominance in the cloud will be over PaaS. It is the next generation of middleware, a category that tends to be the string that allows the big IT vendors to connect the dots between developers, frameworks, databases. It’s very much a linchpin in the solution portfolio. Keep an eye on VMware, Red Hat, Microsoft, Oracle, Salesforce.com and, of course, Apprenda.” . “I think VMware’s Cloud Foundry and SpringSource solutions are really leading the pack, and it’s a model we are very much aligned with.”
CTO for a firm whose technology helps companies move from legacy systems to cloud computing Leaders in IaaS are Amazon, Microsoft and Rackspace. For PaaS, the leader is VMware. The SaaS field is wide open, with M&A expected. Oracle is a potential loser because of its lack of a coherent strategy. Google could win big if it can make
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its software as user-friendly as Microsoft’s. Amazon and Rackspace are among the leading players in cloud infrastructure while VMware is in good position in the battle over cloud platforms. . “Amazon, Microsoft, Rackspace are the leaders in IaaS. For PaaS, it’s VMware. SaaS is a big, crowded and confusing field.” . “Microsoft is doing well with Azure and Office 365. IBM, Oracle and HP have a lot of offerings branded as ‘cloud,’ but do not yet have a coherent strategy. IBM and HP can only gain from the long-term trends. Oracle, with its big base of enterprise infrastructure software, could be a potential loser.” . “Google Apps has the potential to be the biggest winner if they can focus more on consumer usability. Microsoft 365 is late but seems to Amazon, Microsoft, Rackspace be making a solid push, and they excel at consumer usable software, are the leaders in IaaS. For which could give them a long-term edge over Google. Apple’s offering currently seems uncharacteristically ‘me too’ at the moment.” PaaS, it’s VMware. SaaS is a . “Virtualization has been heavily embraced; moving to the cloud, less big, crowded and confusing so. We see green field applications that may start life in the cloud field. either by leveraging SaaS or by deploying an internal application to a cloud provider. However, much of the IT effort is around existing CTO, Technology Firm applications. These typically have technical barriers to cloud deployment, such as old technology and/or being tied to some internal system, as well as administrative and compliance barriers. The security policy was written with the assumption of an internal system.” . “The decision making is faster [at smaller businesses] and the barriers are far fewer. The main hurdle here is the capability to understand what the options are and cut through the hype.” . “Within IaaS, VMware, Eucalyptus [Systems Inc.] and others are driving toward open standards for creating, managing and scaling instances.” . “In PaaS, the long-term trend is toward more enterprise stack offerings. The current PaaS options are either closed, like Salesforce, or somewhat academic, such as Google’s app engine. I think [Salesforce.com’s acquisition of Heroku] helps it make a more open PaaS, and I think that’s part of where VMware is headed with its acquisition of SpringSource.”
3) SECURITY SPECIALISTS One of these three sources said security integration will come in the form of more partnerships in the next six to 12 months while another said cloud providers have yet to prove themselves in security. Two of three sources named VMware as at the forefront. Other leaders are Citrix, Microsoft and Rackspace—the latter two attracting SMBs that will adopt the cloud more quickly. One source described Oracle’s offerings as too expensive for SMBs. Another said Amazon is a leader, but the third source said Amazon has stronger marketing than technology.
Marketing manager at Clarium Group, a boutique IT services/solutions firm Citrix and VMware have the strongest cloud offerings at present. The trend now is toward virtualization, which allows thin- client computing with a cloud gateway (something Citrix offers with its acquisition of Kaviza). Security is always a concern, but cloud providers have yet to prove themselves. Amazon’s marketing is stronger than its technology. . “Adoption is obviously slow; most people don’t understand cloud computing fully because the definition keeps morphing. It’s beginning was in servers, then morphed into storage and has progressed to now being pushed forward with IT as a service.” . “Adoption is slow because of trust issues; think of the downtime with Amazon. But the adoption rate will change over the course of next year, primarily starting, I suspect, with server configurations and security configurations; some method of virtualization; and data storage in terms of disaster recovery.” . “Right now everyone’s going to shift from infrastructure, data and security to virtualization. It will end up a thin client and access to the Internet. But people aren’t ready to accept that yet.” . “There will be some quasi code of [security] standards, which is being talked about here and there among the industry organizations. Cloud security is based on the ‘five nines’ mentality, being secure 99.999% of the time.” . “So many vendors have rushed to push cloud, but have failed to think through the technical side of services. There’s a lot more marketing than technology, but it should be the other way around. That’s what will promote trust with clients, and build sales results.”
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. “In terms of product providers, there are a lot of players in the cloud. I would venture to say that VMware seems to be at the forefront, along Amazon did well initially with Citrix.” because they beat the buzz . “VMware and Citrix are really neck and neck. VMware had a leg up by creating alliances. Citrix’s acquisition of Kaviza has changed the and were first in line, but that’s platform with VMware.” another case of the marketing . “Kaviza is known for the virtual desktop, called VDI-in-a-box. It’s an being stronger than the interface that allows you to have one place on the computer that’s a technology. That’s hurt them gateway for going into the cloud. So Citrix is definitely at the forefront.” with PR. . “Amazon did well initially because they beat the buzz and were first in line, but that’s another case of the marketing being stronger than the Marketing Manager technology. That’s hurt them with PR.” IT Services/solutions Firm . “The tradition leaders like IBM have an upper hand in that they have presence and brand recognition. But the cloud is such a complex matrix of services and components. Everybody’s edging forward. Apple is trying to promote data storage through the iPods, Androids are trying to do the same with telephones, and Microsoft is trying to push services along with Dell, Intel [Corp./INTC] and HP.” . “In three months alone, Rackspace has really created a margin of success, because they realized that initially they were just offering components at a high price. Someone decided ‘we’re doing this all wrong; we’re not here to promote ourselves as a data center or hardware provider, we need to promote ourselves as soup to nuts.’”
Solutions manager for a solutions provider, including cloud security Compliance in particular will be an in-demand cloud solution. Platform providers like Rackspace and Microsoft will clean up by attracting SMBs. Traditional IT providers like SAP AG (ETR:SAP/SAP) and Oracle need to come down in price and scale to suit SMBs. Third-party integrators will lose no ground as cloud-based applications must still be integrated. . “What will drive adoption is having the peace of mind that security and compliance is OK—maybe more around compliance, right now.” . “Right now companies are sticking to noncritical applications and use cloud as a failover. But eventually the compliance guys are going to catch up. … If you have anything in your card data environment that connects to virtualization or the cloud, you have to plan to protect yourself.” . “We’ll see a lot more adoption of security in the cloud. I think there’s a disconnect in thinking, that development doesn’t need to be that secure. A security person knows that if you don’t bake it in early, it will be a nightmare down the line.” . “A lot of the agencies that I’m talking to are focused on the private cloud versus public, so to speak. They have their communities of interest that could use the shared infrastructure. And, again, one of the challenges I see is that a lot of them don’t understand how compliance will impact them, and it will.” . “Half of the issues around SaaS is the integration. A good portion of the cost of moving to SaaS is moving to integration, same with PaaS and IaaS. However you go, you need it integrated such that the data is secure and protected.” . “The small and medium businesses are getting more excited [than Fortune 1000 companies] about cloud computing. The cloud lowers the bar for small businesses to scale and leverage that to grow. So Microsoft with cloud services, and Rackspace will win big. The cloud allows smaller companies to compete with the bigger guys. It gives them velocity and elasticity they can grow with.” . “For companies like SAP and Oracle, the biggest challenge they have is cannibalizing their revenue streams. How do they monetize cloud applications without messing up their revenue streams? Cloud is all about subscription. Guys like Oracle are doing stuff like Exadata, these soup-to-nuts implementations of a database virtual environment that they can then host as a service. But typically the entry level has to be about $2 million, and the only companies able to afford that are the Fortune 500 and the government, so they’re really looking at embracing the crème de la crème of accounts. I don’t foresee Oracle being that successful, and that price range means there’s opportunity for the smaller cloud players.”
Cedric Jeannot, CEO of I Think Security, a data security solutions provider VMware, Rackspace and Amazon are leaders in cloud computing, but many new competitors are entering the market. Businesses move into the cloud piecemeal, buying one application and then moving on after the first solution proves
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successful. However, most cloud providers fall down in security because they attempt to create security solutions in-house. The next six months to a year will Most [cloud providers] who see far more partnerships in security. need a security partner don’t . “VMware is extremely good. You know the technology’s behind it, they know what they’re doing, and it’s not a one-man operation. They’ll be believe so; they think they can very successful.” do it themselves. They’re better . “Amazon is a leader, and Rackspace is very good. I’m predicting a off partnering with another change in a year or two. There are so many newcomers in the market; entity. Cloud companies will they may not have an infrastructure and must rent one from AT&T. So the new players will be more like service providers.” usually fail in security because . “Businesses are clearly adopting the cloud; they’re past the state of they don’t have the technology knowing they need it, to seeing how they want to deploy it.” scale and it’s not their industry. . “For SMBs the impetus is cost savings, not necessarily because they really need it.” CEO, Data Security Solutions Provider . “The time of shipping CDs and installing applications is almost over. Maybe 90% of technology companies are cloud-based. If you provide a service, you can reach a larger audience from the economy of scale. A company may subscribe to maybe a trucking application, then to payroll and security, until everything is cloud-based. Even games are cloud-based, on Facebook or whatever.” . “Most [cloud providers] who need a security partner don’t believe so; they think they can do it themselves. They’re better off partnering with another entity. Cloud companies will usually fail in security because they don’t have the technology scale and it’s not their industry.” . “My guess is that in the next six months to a year, you’re going to see many more partnerships. Cloud providers will change their thinking to ‘We’re going to get the best technology to put in our stuff.’ It will be good for both of us, those businesses and security.”
4) GOVERNMENT IT PROFESSIONALS These three sources cited security concerns as the main reason for slow cloud integration. One believes agencies will take 10 years to integrate to the cloud. Another source said Google and Microsoft are the early leaders as they have gone through the stringent approval process. The third source, although not committed to a vendor, is impressed by VMware and EMC Corp. (EMC) but believes Microsoft may have the upper hand for municipalities. Two sources said Apple products are being integrated into more enterprise and government entities.
Senior leader, NASA This major player in NASA’s ongoing IT consolidation efforts said the federal government prefers to contract the cloud computing integrators of such hardware and software in order to get the best taxpayer value at every cloud service level. He expects Apple to get 3% to 8% of the federal computing budget despite the government’s increasing purchases of iPhones. Transitioning federal agencies to the cloud will take about a “glacial speed” of about 10 years, ranking behind its efforts to physically consolidate hardware at its agencies’ data centers. Also contributing to the federal government’s slow cloud adoption are cloud security skepticism, private and public cloud debates in terms of information placement, and, above all, cost. Cost concerns range from bandwidth and electricity fees for related hardware to government layoff of IT workers. . “[Cloud computing] hasn’t really taken off. What’s really happening is we are consolidating the hardware at data centers.” . “It’s more fair to say the government is moving at glacial speed so ... cloud computing with 50 or more agencies sharing it will probably happen in 10 years.” . “The federal government moves at the federal government speed. … The timeline some people predict in the press is ridiculous.” . “Security is the heart of the matter [in terms of choosing particular cloud computing service providers]. ... If you could get a gut-honest answer from a group of agency leaders, most would say over a beer or two.” . “Every IT-related contract that is coming out from two years ago and beyond has some kind of cloud element to it.”
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. “When you are talking about the federal space … the [share] winners are almost always the integrators of these cloud computing services. If you look at federal contracts, they are going to go to people like HP, CSC [Computer Sciences Corp.] … and Lockheed Martin [Corp./LMT], just a few that come off the top of my head.” . “The federal computing and IT space is overwhelmingly an IBM/PC type of space, so Apple just by definition probably won’t get much [federal contracting]. Maybe 3% to 8% of that space will go to them because we are just not standardized to that. There’s a weird anomaly in that. We are buying iPhones like they are candy … Apple is smart enough to understand that they are not going to own the government [market share] tomorrow so they will nip around the edges.” . “The integrators are going to be the cloud computing winners because business and federal executives are too busy to sort through the wheat The integrators are going to be and the chaff.” the cloud computing winners . “We can say that in the area of 70% to 80% [of the time] integrators are going to be the winners for cloud computing within the federal because business and federal government.” executives are too busy to sort . “It’s likely we are going to have the integrators build systems that through the wheat and the support cloud computing for us in our installations. … If I am a CIO, I am chaff. going to want four layers of physical security and I don’t know how many more levels of electronic security so that I can look at any Senior Leader, NASA congressperson and say I did the best I could. ... It would have to take a national level effort to hack the system that I have here. ... It’s just not going to be ‘Joe’ in his basement eating Hot Pockets. That’s where the rubber hits the road on this issue.” . “What I have to do is consolidate my agency, and they want me to consolidate with many other federal agencies. The first thing I need to do that [in terms of cloud computing] is triage what information is classified and sensitive information.” . “The two [decision-driving] costs are bandwidth and electricity because you can imagine the amount of what all these racks upon racks of servers needed [to support cloud computing]. They make the electrical meter spin like a helicopter blade.” . “At its core, cloud computing is consolidation of many app and devices onto a common platform. ... The fear within an agency is … that 50¢ to 80¢ of every federal spent is on labor. ... When you are cutting costs with something like cloud computing, what you are doing is telling me I have to send people home.”
Vice president at a government-oriented IT services provider Cloud computing has a role in government but for enterprise rather than for classified information. The General Services Administration has moved into the cloud more than the Department of Defense has. DoD has home-grown closed cloud environments. Cloud solution providers must meet rigorous requirements to be listed on Approved Product Listings (APLs), where Google and Microsoft reside with some cloud offerings. . “In addition to security concerns, there’s also the simple fact that the government has contract requirements. It’s not like private industry where a CIO can say, ‘Make it happen.’ There’s an extremely rigorous regulatory process, and a vast amount of documentation.” In addition to security . “Government is a tiny percentage of the clientele of Microsoft or Google. The security and documentation requirements are so stringent concerns, there’s also the that vendors have to go through a full product cycle before they’d be simple fact that the able to meet those requirements. The only way to do that now is to government has contract have a third-party integrator come in and apply that security layer on requirements. It’s not like top of enterprise applications.” private industry where a CIO . “What the government is looking for are vendors who meet the government requirements, or integrators who can add security to those can say, ‘Make it happen.’ vendor products so that they’re compliant.” There’s an extremely rigorous . “Vendors need to learn how to meet those compliance standards; regulatory process, and a vast they’re not going to be lowered. If anything, they’ll be raised over the amount of documentation. next several years. If vendors want to compete, that’s the barrier to entry.” VP, Govt-oriented IT Services Provider . “The barrier’s high, and some commercial vendors choose not to meet
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that but will never be deployed in this environment. Google and Microsoft are two that are willing to meet those requirements and are reaping the rewards.” . “A good example is the iPad, which is completely consumer-based. Now it’s on the APLs and you’re seeing it migrate into enterprise government.” . “Microsoft and Google are the big two for government. There’s a specific implementation of Google apps which has been approved for the federal government. Microsoft Office 365 got approval in April. . “Google Apps and Office 365 are used mostly for document creation and e-mail services of unclassified information.” . “IBM probably has a play in this environment. It’s a large government contractor.” . “You might see the cloud at the GSA or other federal environments that don’t have the same security that the DoD or Department of State will have. The defense community is very interested in the cloud and agrees the cost savings will be astronomical, but it’s still in its infancy.” . “There are other types of knowledge management that reach into more classified information areas. The biggest need in that environment is how to share the various intelligence that exists. [Reed Elsevier Group’s/LON:REL/RUK] LexisNexis has had a pilot program.”
IT and government information director for a Massachusetts municipality This source is cautious about moving data into the cloud, but does plan to virtualize servers to cut costs and achieve energy savings. The city subscribes to Tyler Technologies Inc.’s (TYL) Munis software, which is available as a service to all municipalities. This source is impressed by VMware and EMC but believes Microsoft has the upper hand in municipalities. . “We’re not rushing to the cloud. Our biggest concern is that you can’t control where the data is hosted, which data center. We’re a municipal entity so would like to keep it in the U.S., and only a handful of DCs can guarantee that.” . “We’re in the process of launching a virtualization project, so that all of our servers will be virtualized into a couple of servers, with some onsite storage—a hybrid cloud solution.” . “Our motivations are mostly energy savings and cost cutting.” . “We’re pretty early on so haven’t contracted with any companies yet. We’re still trying to procure the money.” . “Amazon S3 has been a big provider, and doing a lot of work with GIS [geographic information systems].” . “I’m pretty impressed by recent developments at VMware and EMC. They used to deal only with bigger companies, and if you were a smaller company you just looked elsewhere. But they’ve completely turned that round, offering well-tailored services to smaller installations such as ours.” . “We use a company called Munis. We have a three-year contract with them. Even if I wanted to, I can’t break the contract. So for better or worse, it’s a system we have in place right now, but certainly, I’m thinking about going with a Web-version of the Office suite. Whether Google or Microsoft is the final winner, I don’t know yet. I have a feeling Microsoft has an upper hand in the municipal setting.”
5) BUSINESS IT PROFESSIONALS These three sources cited many winners in the cloud computing sector, including Microsoft, VMware, Salesforce.com, SAP, Oracle and Google. Amazon will be added to the list if it can prove its reliability and Rackspace for IaaS. Security concerns will slow cloud adoption, according to one source, but another said security in the cloud is a nonissue.
President of a risk management, insurance and brokerage solutions provider and consultancy; repeat source Security is a major hurdle to faster cloud adoption. Cisco, VMware and Symantec will benefit from making acquisitions in the security arena. Amazon is a likely winner, but has yet to prove itself in reliability. Salesforce.com must change its PaaS model, which is proprietary and not portable. Rackspace is emerging as a powerful IaaS provider. Integrators like Accenture PLC (ACN) are adapting to become service brokers rather than classic integrators. . “The big hurdle is getting over security. A large organization with heavily regulated data is intimidated by moving it outside their firewalls. I don’t believe we’ll see any spike in adoption in the next 18 months, just flat and gradual adoption as the providers start to ensure that the security standards are there.” . “I see an emerging trend in the next three to five years of cloud services, not just of e-mail and CRM. It’s proceeding steadily, instead of in leaps.”
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. “Cloud providers aren’t necessarily creating security solutions from the ground up, but are acquiring certain components from vendors, and Cloud providers aren’t combining it with our cloud. In this, Cisco, Symantec and VMware are winners.” necessarily creating security . “The commodity-based services that we all see are rapidly deployed, solutions from the ground up, like Salesforce.com. But we’re starting to see the emergence of but are acquiring certain specialty applications, community clouds or private clouds focused on components from vendors, and a vertical.” combining it with our cloud. In . “That’s why we’ve chosen to set up cloud services for claims handling and risk management. That’s mission-critical to the Fortune 1000, but this, Cisco, Symantec and not necessarily a core competence for the IT team.” VMware are winners. . “I don’t foresee see any particular leap in the technology. The President industry’s still centered around leaps in the data privacy and security Brokerage Solutions Provider perspective. So many regulatory hurtles have to be crossed, like where does the data reside? A global entity with a lot of Fortune 1000 customers has got to be aware of where that data lands at the end of the day. A lot of cloud providers can’t articulate that well, and there will be a huge shift in transparency in the next 12 months. There has to be.” . “The expectation is 24/7/365 without interruption. But it’s technology, and computers break.” . “Amazon’s got to keep its systems up and running. They’ve had a couple of missteps in reliability, so they’re in a delicate position as to whether or not they’ve got the discipline to create a cloud.” . “I somewhat consider Salesforce.com a platform-as-a-services provider. But the downstream people using Salesforce.com might be limiting themselves to a degree; you’re using their development language and platform restrictions. It’s not portable. Amazon was written in Java, and can be picked up and moved to another cloud provider. Those who put stakes on Salesforce.com may find themselves boxed in. But there’s some shift in Salesforce.com with recent acquisitions. They may be trying to get out of that restrictive platform development model, but time will tell.” . “Rackspace is still trying to reinvent itself ... to an infrastructure-as-a- services player, and they’re now shifting to the cloud and virtualized Amazon’s got to keep its load balancing. They’ll make the transition fine, but have some systems up and running. messaging to overcome.” . “From a commodity perspective, I expect Salesforce.com, Amazon and They’ve had a couple of Microsoft are doing things behind the scenes from a specialty or private missteps in reliability, so cloud perspective. We’re just starting to see other cloud services they’re in a delicate position as coming up in the financial industry.” to whether or not they’ve got . “What you’re seeing is a shift from the traditional integrators with the discipline to create a cloud. client/server technologies, to a more service-broker model. So the integrators shift from ‘I know how to integrate Microsoft’s CRM with President your in-house system’ to brokering the services from other providers.” Brokerage Solutions Provider
Head of digital marketing for a large investment firm This company puts more trust in larger, more stable cloud providers like IBM and Salesforce.com than in smaller players, which reportedly do not have the credentials to play in the “big-boy space.” Apps are tempting for mobile devices, but create a “fat client.” The cloud at its best creates a thin client. Still, cloud providers must be as easy to use as apps. Large enterprise software vendors like SAP and Oracle are moving effectively from in-house solutions to offering cloud- based solutions. . “We have a comprehensive plan for global use of the cloud in a wide variety of business sectors. It will be hybrid, internal and external as much as possible, where data security and ownership is not critical.” . “There are multiple motivations. Ours are the same as everyone else, being speed and the ease of development, with fewer infrastructure components. It’s not so much about cost savings. Ultimately, it may not be cheaper. But speed and ease of use, accessibility and disaster recovery are other motivations.” . “One concern is pragmatic, being that a solution does or doesn’t integrate well with our internal systems, and another is security.” . “Security is a mixed bag. Most of the smaller [cloud providers] will try to create security on their own, without bringing in partners, and bump into problems like integration issues.”
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. “Larger organizations are somewhat more limited. They can’t easily put e-mail in the cloud. In the securities business, there’s a phenomenal mound of regulations on data retrieval, so they’re moving to the cloud slower compared with other organizations.” . “The winners are Salesforce.com and SAP, which is moving people from in-house licenses to cloud-based applications.” . “I don’t think there are any losers. It’s a matter of who’s emerging faster. It seems like SAP and some of the other players are looking at business intelligence. Salesforce.com is moving to offer database in the cloud.” . “I never understood how third-party integrators make money, but there’s a huge number of smaller and medium- sized integrators growing on the back of this business. When client/server came out there were thousands of companies specializing in power builder applications, doing implementations for people.” . “Right now, in that race where every third guy is delivering cloud solutions, there will be a big shakeout. First there were hardly any firms; then some that got big fast, like Fujitsu [Ltd./TYO:6702]. That’ll stop as a lot of smaller guys won’t keep up.” . “It’s a gold rush right now, but there’ll be consolidation, and rapidly. In the cloud, things happen more quickly.” It’s a gold rush right now, but . “Platform-as-a-service is even more emerging. There are some people there’ll be consolidation, and delivering that successfully, like Amazon. Salesforce.com wants to be PaaS, and just announced its database-as-a-service. But there are few rapidly. In the cloud, things who are really multitenant-as-a-service.” happen more quickl. . “The space will be lead heavily by Google, Microsoft, Oracle and SAP. Head of Digital Marketing The big players will lead the services, and I don’t know if the little guys Investment Firm will be able to pull it off. Most don’t have the credentials to play in the ‘big-boy’ space.” . “When a cloud vendor goes bankrupt, you’re offline, suddenly. Big players will just have more trust.” . “Apps create a ‘fat’ client. ... Everyone’s out there saying, ‘Apps are the way to go!’ But we spent 20 years getting rid of client/server, only to put more software on the client.” . “Small and medium businesses are driven by what apps can do. There’s not a thousand [business] cloud apps right now.” . “iPad apps are fat and optimized for the device.”
President of a midsize insulation manufacturer This company is early in the cloud migration. The source does not have any hesitations about the cloud but also lacks motivation to adopt at this point. He is interested in virtualized servers, which would save both physical and data storage space. He trusts VMware and Microsoft, but is not terribly concerned about security. . “We use a consultant that helps with our marketing. He tells us for security purposes we should look into cloud computing. Security providers are there, like Symantec.” . “We’re interested in storage-as-a-service and virtualized servers. We have one file server here and a second server, so that every 15 minutes one server dumps over to the second, and the second sends all of our data to an offsite warehouse as a backup. A virtualized server would save us a lot of storage space and IT headaches.” . “There are a good many applications we could use, like Salesforce.com, even Google Docs. The storage is huge and, I’m sure, pretty secure. But so far we’ve kept all of that in-house.” . “I see VMware being big, and Microsoft. Microsoft has business’s attention to begin with. If they can provide virtual platforms or storage, I’d feel safe using it. We haven’t got that far yet.” . “I’m not really worried about security. That consultant is trying to convince me we should go directly to the cloud without using our servers, because people can hack into our servers. I keep telling him we have some technology here, but our competitors know what’s in our product. I can’t imagine it’s worth people’s while to hack into us here.” . “I’m more concerned about someone hacking into our bank account and financials than I am about any kind of proprietary information.”
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Cloud Computing
Secondary Sources Our first article discussed Apple’s automatic approach to cloud computing compared with its competitors, which still are using files that need to be synced. Our second article stated that Microsoft’s Office 365 was a response to Google’s increase in customers. Our third and final article stated that 93% of 1,500 UK organizations viewed cloud technology as part of their IT strategy but 41% were unsure of their cloud computing budget.
June 8 TechCrunch article Apple’s “automatic” approach to the cloud is completely different than its competitors’. Amazon’s approach requires developers to build on their servers while Google and Microsoft still are working with files that need to be synced. http://techcrunch.com/2011/06/08/apple-icloud-google- cloud/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 . “‘It just works.’ Steve Jobs kept saying this over and over again on stage. When Jobs does this, it’s never an accident. It’s a message.” . “And it’s a message that was underscored by another word. ‘Automatically.’ Jobs must have said it a couple dozen times during the keynote.” . “Google’s approach has been to make the cloud more accessible to existing PC users. They’re doing this by extending familiar concepts. Google Docs is Microsoft Office, but in the cloud. Your main point of interaction is a file system, but in the cloud. Gmail is Outlook, but in the cloud. Etc.” . “Amazon has essentially turned it into one giant server/hard drive that anyone can use for a fee. But it takes developers to build something on top of it to give users a product to use.” . “Apple’s approach to the concept of the cloud is the opposite of their competitors. Apple’s belief is clearly that users will not and should not care how the cloud actually works.” . “With iPad/iPhone and now OS X Lion, you don’t save documents anymore. They save automatically— but an easier way to think about it is that they just exist, as is, in real-time on all your devices.” Files are something Microsoft . “Files are something Microsoft worries about. Files in the cloud are worries about. Files in the cloud something Google and Amazon worry about. Apple’s iCloud is about are something Google and opening an application and the thing you want to access being there.” Amazon worry about. Apple’s . “Chrome OS is perhaps the closest thing to Apple’s iCloud vision. When iCloud is about opening an you boot up a Chromebook and enter your password, everything appears. Again, like magic.” application and the thing you . “With Chrome OS, everything is always there because everything only want to access being there. exists in the cloud. But Google has been bending over backwards to tack on a file management system to Chrome OS. That weakens their TechCrunch Article cloud argument, in my view.” . “But it’s the Google approach. It’s files, and uploading, and syncing. Some of it is automatic, some is not. It requires some thought. It sort of just works—as long as you know what you’re doing.” . “Apple is going after consumers who have absolutely no idea what the cloud is, and don’t care. Apple is saying they shouldn’t care. It all just works.” . “Google seems to be aiming more for users who understand current computing paradigms and want to transition that knowledge to the future of computing, the cloud. Power users, if you will.” . “And Apple doesn’t believe that Google can match them even if they wanted to because they don’t have complete control of their ecosystem in the same way that Apple does. ‘They can never make this so it just works,’ Jobs stated at one point.” . “In Apple’s core vision, there are three types of products that must seamlessly work with one another: phones, tablets, and the recently ‘demoted’ PC. With Android, Google is currently only strong in phones. Tablets aren’t taking off for them yet. And there is no PC presence—well, beyond the web, which again runs into the Chrome OS bifurcation problem.” . “With that in mind, it may end up being Apple that helps transition users to the cloud, instead of Google despite their emphasis on PC norms.”
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Cloud Computing
June 27 New York Times article Google’s Web-based Microsoft e-mail and Office alternatives are becoming increasingly popular. Organizations such as Intercontinental Hotels Group, the state of Wyoming and others have been recent converts. Microsoft has responded with its own cloud-based solutions with Office 365, which has options such as a $2 per user per month e-mail-only service or $72 per year for cloud-based versions of Word, Excel and Power Point. The $72 is more expensive than Google’s solution but provides the Microsoft name and familiarity. http://www.nytimes.com/2011/06/28/technology/business-computing/28soft.html?_r=4&ref=business (subscription required) . “Halting such defections is a top priority at Microsoft. Its response arrives Tuesday, when the company begins selling Office 365, a cloud-based version of Microsoft’s e-mail, whiteboard collaboration software and word processing, spreadsheet and presentation programs.” . “Microsoft’s plan is to embrace the demand for cloud-based tools for office workers, which promise to be less costly for companies than conventional software, and yet avoid cannibalizing a business that is its biggest single money-maker.” . “The Microsoft unit that includes the Office family of products is a $20 billion-a-year business with pretax profit margins of 60 percent.“ . “The company now claims more than 30 million active users of Google Apps, its collection of online office productivity and communications programs. But about 12 million of those users are university staff and students, who typically get free access to the apps. The standard charge for business and government customers is $50 per user a year. Google will not disclose how many customers pay that fee.” . “Just this month, Google announced a series of large converts. The National Oceanic and Atmospheric Administration, the federal agency that conducts climate and ocean studies, with 25,000 employees, is adopting Google Apps. Others include the State of Wyoming, with 10,000 workers, and the McClatchy Group, a publishing chain, with 8,500 workers.” . “Mr. Conophy, the chief information officer of the InterContinental Hotels Group, decided earlier this year to begin moving nearly all the company’s 25,000 office workers off Microsoft’s e-mail and Office productivity applications and onto Google’s Web-based alternatives.” . “‘We could do this now because the Google cloud apps are ready for prime time,’ Mr. Conophy said.” . “At $50 a year, Google’s pricing seems far more appealing than the standard price for the Office PC software, from $200 to about $400, depending on features. Office 365 prices are from $2 per user a month to $27 per user a month. The $2-a-month service is just e-mail and is intended for companies that want to extend communications to employees currently not served, like factory workers. The $27-a-month offering is for all the online features, including Web conferencing and digital whiteboards for team projects, and a license to the most powerful version of the Office personal computer software.” . “With cloud-based versions of Word, Excel and PowerPoint, plus several new communications and collaboration tools, that offering could be quite appealing, analysts say. The price, at $72 a year, is somewhat above Google’s, but it carries the Microsoft name and familiarity.”
June 23 Informatica article Informatica’s survey of 1,500 UK organizations found that 93% said cloud technology was part of their IT strategy yet 41% were still unsure of their planned cloud spending. Key benefits were increased speed, ease of use when While the majority of accessing applications and reducing costs. organizations plan to http://www.informatica.com/news_events/press_releases/Pages/06232011_ implement cloud technology, cloud_research.aspx . “In a study, which surveyed 1,500 private and public sector the youth of the market was organizations in the UK only seven percent of organizations said that reflected in respondents’ views cloud technology did not form any part of their IT strategy. The on planned spending, with 41 significant level of planned investment, with 84 percent of UK percent still unsure of exactly respondents citing that cloud will definitely form part of their IT plan, what their spend might look further cements the cloud’s recognition by organizations as an established and powerful technology asset.” like. . “Among key benefits of the technology that will help contribute to Informatica Article delivering this competitive edge for organizations is the ability to
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Cloud Computing
increase speed, and ease of use when it comes to accessing business applications as the most important reason for moving to the cloud (86 percent).” . “The ability to reduce costs also remains high on the agenda for both public and private sector organizations, at 82 percent.” . “Over two thirds (73 percent) cited enabling greater business capability as a key consideration when developing cloud strategies.” . “Three quarters (76 percent) believe that moving their IT to the cloud will help to create a technology platform that powers more creative services.” . “While the majority of organizations plan to implement cloud technology, the youth of the market was reflected in respondents’ views on planned spending, with 41 percent still unsure of exactly what their spend might look like.”
Next Steps We will continue to track who is gaining and losing cloud computing market share. In particular, sources said Amazon and Oracle were at risk of losing share while VMware was well-positioned; we will follow up on the accuracy of these comments. Finally, we will determine which large, traditional IT companies are leveraging their acquisitions to gain share in the cloud computing market and which cloud IT SMBs likely will be acquired.
Additional research by Seth Agulnick, Dann Maurno and Marissa Yaremich
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