Category Archives: Industry
Earlier this year, I was part of a team at Gartner that took a futuristic view of the data center, in a scenario-planning exercise. The results of that work have been published as The Future of the Data Center Market: Four Scenarios for Strategic Planning (Gartner clients only). My blog entries today are by my colleague, project leader Joe Skorupa, and provide a glimpse into this research. See the introduction for more information.
Scenarios are defined by the 4 quadrants that result from the intersection of the axes of uncertainty. In defining our scenarios we deliberately did not choose technology-related axes because they were too limiting and because larger macro forces were potentially more disruptive.
We focused on exploring how the different external factors outlined by the two axes would affect the environment into which companies would provide the products and services. Note that these external macro forces do contain technological elements.
The vertical axis describes the role and relevance of technology in the minds of the consumers and providers of technology while the horizontal axis describes availability of resources – human capital (workers with the right skill set), financial capital (investments in hardware, software, facilities or internal development) or natural resources, particularly energy — to provide IT. The resulting quadrants describe widely divergent possible futures.
- The “Tech Ration” Scenario
- This scenario describes the world in 2021 that is characterized by severely limited economic, energy, skill and technological resources needed to get the job done. People view technology as they used to think of the telephone – as a tool for a given purpose. After a decade of economic decline, wars, increasingly scarce resources and protectionist government reactions, most businesses are survival-focused.
Key Question: What would be the impact of a closed-down, localized view of the world on your strategic plans?
- The “Tech Pragmatic” Scenario
- This scenario presents a similar world of limited resources but where people are highly engaged with IT and it forms a key role in their lifestyles. Social networks and communities evolved over the decade into sources of innovation, application development and services. IT plays a major role in coordinating and orchestrating the ever-changing landscape of technology and services.
Key Question: Will your strategy be able to cope with a world of limited resources but the need for agility to meet user demands?
- The “Tech Fashion” Scenario
- This scenario continues the theme where the digital natives’ perspectives have evolved to where technology is an integral part of people’s lives. The decade preceding 2021 saw a social-media-led peace, a return to economic growth, and a flourishing of technology from citizen innovators. It is a world of largely unconstrained resources and limited government. Businesses rely on technology to maximize their opportunities. However, consumers demand the latest technology and expect it to be effective.
Key Question: How will a future where the typical IT consumer owns multiple devices and expects to access any application from every one of their devices affect your strategic planning?
- The “Tech Gluttony” Scenario
- This scenario continues in 2021 with unconstrained resources where people view technology as providing separate tools for a given purpose. Organizations developed situation-specific products and applications. Users and consumers view their technology tools as limited life one-offs. IT budgets become focused on integrating a constantly shifting landscape of tools.
Key Question: Does a world of excessive numbers of technological tools from myriad suppliers change your strategic planning?
The four scenario stories each depicts the journey to and a description of a plausible 2021 world. Of course the real future is likely to be a blend of two or more of the scenarions. To gain maximum value, you should treat each story as a history and description of the world as it is. To gain maximum benefit suspend disbelief, immerse yourself in the story, and take time to reflect on the implications for your business and enter into discussion on what plans would be most beneficial as the future unfolds.
ObPlug: Of course, Gartner analysts are available to assist in deriving specific implications for your business and formulating appropriate plans.
Earlier this year, I was part of a team at Gartner that took a futuristic view of the data center, in a scenario-planning exercise. The results of that work have been published as The Future of the Data Center Market: Four Scenarios for Strategic Planning (Gartner clients only). My blog entries today are by my colleague, project leader Joe Skorupa, and provide a glimpse into this research.
As a data center focused provider, how do you formulate strategic plans when the pace and breadth of change makes the future increasingly uncertain? Historical trends and incremental extrapolations may provide guidance for the next few years, but these approaches rarely account for disruptive change. Many Gartner clients that sell into the data center requested help formulating long-range strategic plans that embrace uncertainty. To assist our clients, a team of 15 Gartner from across a wide range of IT disciplines employed the scenario-based planning process to develop research about the future of the data center market. Unlike typical Gartner research, we did not focus on 12-18 month actionable advice; we focused on potential market developments/disruptions in the 2016-2021 timeframe. As a result its primary audience is C-level executives that their staffs that are responsible for long-term strategic planning. Product line managers and competitive analysts may also find this work useful.
Scenario-based planning was adopted by the US Department of Defense in the 1960s and the formal scenario-based planning framework was developed at Royal Dutch Shell in the 1970s. It has been applied to many organizations, from government entities to private companies, around the world to identify major disruptors that could impact an organization’s ability to maintain or gain competitive advantage. For this effort we used the process to identify and assess major changes in social, technological, economic, environmental and political (STEEP) environments.
These scenarios are told as stories and are not meant to be predictive and the actual future will be some subset of one or more of the stories. However, they provide a basis for deriving company-specific implications and developing a strategy to enable your company to move forward and adapt to uncertainty as the future unfolds. Exploring alternative future scenarios that are created by such major changes should lead to the discovery of potential opportunities in the market or to ensure the viability of current business models that may be critical to meeting future challenges.
To anchor the research, we focused on the following question (the Focal Issue) and its corollary:
Focal Issue: With rapidly changing end-user IT/services needs and requirements, what will be the role of the data center in 2021 and how will this affect my company’s competitiveness?
Corollary: How will the role of the data center affect the companies that sell products or services into this market?
The next post describes the scenarios themselves.
This is just a quick call-out to draw your attention to the research that I’ve published recently.
- Do You Have a Business Case for a Top-Level Domain?
- I blogged previously on this topic, and this research note, done with my colleague Ray Valdes (whose coverage includes online user experience), dives deeply into consideration of the uses of gTLDs, the impact of gTLDs, the shifting landscape of how users find websites, and other things of interest to anyone considering a gTLD or preparing a business case for one.
- How to Deliver Video to Dispersed Users Without Upgrading Your Network
- Many organizations that are trying to deliver video to a lot of users think that they should use a traditional CDN. That’s not necessarily the right solution. This research note examines the range of solutions, divided by the delivery targets — Internet users outside your organization, your own employees at remote sites, Internet VPN users, and mixed-usage scenarios.
- How to Accelerate Internet Websites and Applications
- There are a range of techniques that can be used for acceleration — netwok optimization, front-end optimization (sometimes called Web content optimization or Web performance optimization), and caching — that can be delivered as appliances or services. This research note looks at selecting the right solution, and combining solutions, to maximize performance within your available budget.
(These notes are for Gartner clients only, sorry.)
I wrote, the other day, about Citrix buying Cloud.com, and I realized I forgot to make an important point about OpenStack versus the various commercial vendors vying for the cloud-building market; it’s worthy of a post on its own.
OpenStack is designed by the community, which is to say that it’s largely designed by committee, with some leadership that represents, at least in theory, the interests of the community and has some kind of coherent plan in mind. It is implemented by the community, which means that people who want to contribute simply do so. If you want something in OpenStack, you can write it and hope that your patches are included, but there’s no guarantee. If the community decides something should be included in OpenStack, they need some committers to agree to actually write it, and hope that they implement it well and do it in some kind of reasonable timeframe.
This is not the way that one normally deals with software vendors, of course. If you’re a potentially large customer and you’d like to use Product X but it doesn’t contain Feature Y that’s really important to you, you can normally say to the vendor, “I will buy X if you had Y within Z timeframe,” and you can even write that into your contract (usually witholding payment and/or preventing the vendor from recognizing the revenue until they do it).
But if you’re a potentially large customer that would happily adopt OpenStack if it just had Feature Y, you have miminal recourse. You probably don’t actually want to write Feature Y yourself, and even if you did, you would have no guarantee that you wouldn’t be maintaining a fork of the code; ditto if you paid some commercial entity (like one of the various ventures that do OpenStack consulting). You could try getting Feature Y through the community process, but that doesn’t really operate on the timeframe of business, nor have any guarantees that it’ll be successful, and also requires you to engage with the community in a way that you may have no interest in doing. And even if you do get it into the general design, you have no control over implementation timeframe. So that’s not really doable for a business that would like to work with a schedule.
There are a growing number of OpenStack startups that aim to offer commercial distributions with proprietary features on top of the community OpenStack core, including Nebula and Piston (by Chris Kemp and Joshua McKenty, respectively, and funded by Kleiner Perkins and Hummer Winblad, respectively, two VCs who usually don’t make dumb bets). Commercial entities, of course, can deal with this “I need to respond to customer needs more promptly than the open source community can manage” requirement.
There are many, many entitities, globally, telling us that they want to offer a commercial OpenStack distribution. Most of these are not significant forks per se (although some plan to fork entirely), but rather plans to pick a particular version of the open source codebase and work from there, in order to try to achieve code stability as well as add whatever proprietary features are their secret source. Over time, that can easily accrete into a fork, especially because the proprietary stuff can very easily clash with whatever becomes part of OpenStack’s own core, given how early OpenStack is in its evolution.
Importantly, OpenStack flavors are probably not going to be like Linux distributions. Linux distributions differ mostly in which package manager they use, what packages are installed by default, and the desktop environment config out of the box — almost cosmetic differences, although there can be non-cosmetic ones (such as when things like virtualization technologies were supported). Successful OpenStack commercial ventures need to provide significant value-add and complete solutions, which, especially in the near term when OpenStack is still a fledgling immature project, will result in a fragmentation of what features can be expected out of a cloud running OpenStack, and possibly significant differences in the implementation of critical underlying functionality.
I predict most service providers will pick commercial software, whether in the form of VMware, Cloud.com, or some commercial distribution of OpenStack. Ditto most businesses making use of cloud stack software to do something significant. But the commercial landscape of OpenStack may turn out to be confusing and crowded.
(This is part of a series of “catch-up” posts of announcements that I’ve wanted to comment on but didn’t previously find time to blog about.)
Recently, Citrix acquired Cloud.com. The purchase price was reported to be in the $200m+ vicinity — around 100x revenues. (Even in this current run of outsized valuations, that’s a rather impressive payday for an infrastructure software start-up. I heard that VMware’s Paul Maritz was talking about how these guys were shopping themselves around, into which some people have read that they ‘had’ to sell, but companies that sell themselves for 100x trailing revenues don’t ‘have’ to be doing anything, other than sniffing around to see if anyone is willing to give them even more money.)
Cloud.com (formerly known as VMOps) is one of a great many “cloud operating system” companies — it competes with Abiquo, OpenStack, Eucalyptus, Nimbula, VMware (in the form of vCloud Director), and so on. By that, I mean that you can take Cloud.com and use it to build cloud IaaS of your very own. While you can use Cloud.com to build a private cloud, the reason that Cloud.com commanded such a high valuation is that it’s currently the primary alternative to VMware for service providers who want to build public cloud IaaS.
Cloud.com is a commercial open-source vendor, but realistically, it’s heavily on the commercial side, not the open-source side; people running Cloud.com in production are generally using the licensed, much more featureful, version. Large service providers who want to build commodity clouds, particularly on the Xen hypervisor (especially Citrix Xen, rather than open-source Xen), are highly likely to choose Cloud.com’s CloudStack product as the underlying “cloud OS”. We’re also increasingly hearing from service providers who intend to use Cloud.com to manage VMware-based environments (using the VMware stack minus vCloud Director), as part of a hypervisor-neutral strategy.
Key service provider customers include GoDaddy and Tata Communications. A particular private cloud customer of note is Zynga, which uses Cloud.com to provide Amazon-compatible (and thus Rightscale-compatible) infrastructure internally, letting it easily move workloads across their own infrastructure and Amazon’s.
Citrix, of course, now has a significant commitment to OpenStack, in the form of Project Olympus, their planned commercial distribution. The Cloud.com acquisition is nevertheless complementary, though, not competitive to the OpenStack commitment.
Cloud.com provides a much more complete set of features than OpenStack — it’s got much of what you need to have a turnkey cloud. Over time, as OpenStack matures, Cloud.com will be able to replace the lower levels of its software stack with OpenStack components instead. For Citrix, though (and broadly, service providers interested in VMware alternatives), this is a time-to-market issue as well as a solution-completeness issue.
In my conversations with a variety of organizations that are deeply strategically involved with OpenStack and working in-depth on the codebase, consensus seems to have developed that OpenStack is about 18 months from maturity (in the sense that it will be stable enough for a service provider who needs to depend on it to run their business to be able to reasonably do so). That’s forever in this fast-moving market. While Swift (the storage piece) is currently reliable and in production use at a variety of service providers, Nova (the compute piece) is not — there are no major service providers running Nova, and it’s acknowledged to not be service-provider-ready. (Rackspace is running the code it got via the acquisition of Slicehost, not the Nova project.) Service providers want to work with proven, stable code, and that’s not Nova right now — that’s Cloud.com. (Or VMware, and even there, people have been touchy about vCloud Director.)
It’s not that the service providers have a deep interest in running an open-source codebase; rather, they are looking for an alternative to VMware that is less expensive. Cloud.com currently fills that need reasonably well.
Similarly, it’s not that most of the members of the OpenStack coalition are vastly interested in an open-source cloud world, but rather, that they realize that there needs to be an alternative to VMware’s ecosystem, and it is in the best interests of VMware’s various competitors to pool their efforts (and for vendors in more of an “arms merchant” role, to ensure that their stuff works with every ecosystem out there). Open source is a means to an end there. Cloud.com’s stack, whether commercial or open source, is only a benefit to the OpenStack project, in the long term.
This acquisition means something pretty straightforward: Citrix is ensuring that it can deliver a full service provider stack of software that will enable providers to successfully compete against vCloud — or to have hypervisor-neutral solutions peacefully coexist, in a way that can be easily blended to meet business needs for a broad range of IaaS solutions. While Citrix would undoubtedly love to sell more XenServer licenses, ultimately the real money is in selling the rest of its portfolio to service providers — like NetScaler ADCs. Having a hypervisor-neutral cloud stack benefits Citrix’s overall position, even if some Cloud.com customers will choose to go VMware or KVM or open-source Xen rather than Citrix Xen for the hypervisor.
It certainly doesn’t hurt that Cloud.com’s Amazon-compatible APIs (and thus support of RightScale’s functionality) is also tremendously useful for organizations seeking to build Amazon-compatible private clouds at scale. No one else has really addressed this need, and VMware (in an infrastructure context) has largely targeted the market for “dependable”, classically enterprise-like infrastructure, rather than explored the opportunities in the emerging demand for commodity cloud.
In short, I think Cloud.com is a great buy for Citrix, and VMware-watchers interested in whether or not their vCloud service provider initiative is working well should certainly track Cloud.com wins vs. vCloud wins in the service provider space.
Akamai and Riverbed have signed a significant partnership deal to jointly develop solutions that combine Internet acceleration with WAN optimization. The two companies will be incorporating each other’s technologies into their platforms; this is a deep partnership with significant joint engineering, and it is probably the most significant partnership that Akamai has done to date.
Akamai has been facing increasing challenges to its leadership in the application acceleration market — what Akamai’s financial statements term “value added services”, including their Dynamic Site Accelerator (DSA) and Web Application Accelerator (WAA) services, which are B2C and B2B bundles, respectively, built on top of the same acceleration delivery network (ADN) technology. Vendors such as Cotendo (especially via its AT&T partnership), CDNetworks, and EdgeCast now have services that compete directly with what has been, for Akamai, a very high-margin, very sticky service. This market is facing severe pricing pressure, due not just to competition, but due to the delta between the cost of these services and standard CDN caching. (In other words, as basic CDN services get cheaper, application acceleration also needs to get cheaper, in order to demonstrate sufficient ROI, i.e., business value of performance, above just buying the less expensive solution.)
While Akamai has had interesting incremental innovations and value-adds since it obtained this technology via the 2007 acquisition of Netli, it has, until recently, enjoyed a monopoly on these services, and therefore hasn’t needed to do any groundbreaking innovation. While the internal enterprise WAN optimization market has been heavily competitive (between Riverbed, Cisco, and many others), other CDNs largely only began offering competitive ADN solutions in the last year. Now, while Akamai still leads in performance, it badly needs to open up some differentiation and new potential target customers, or it risks watching ADN solutions commoditize just the way basic CDN services have.
The most significant value proposition of the joint Akamai/Riverbed solution is this:
Despite the fundamental soundness of the value proposition of ADN services, most SaaS providers use only a basic CDN service, or no CDN at all. The same is true of other providers of cloud-based services. Customers, however, frequently want accelerated services, especially if they have end-users in far-flung corners of the globe; the most common problem is poor performance for end-users in Asia-Pacific when the service is based in the United States. Yet, today, doing so either requires that the SaaS provider buy an ADN service themselves (which it’s hard to do for only one customer, especially for multi-tenant SaaS), or requires the SaaS provider to allow the customer to deploy hardware in their data center (for instance, a Riverbed Steelhead WOC).
With the solution that this partnership is intended to produce, customers won’t need a SaaS provider’s cooperation to deploy an acceleration solution — they can buy it as a service and have the acceleration integrated with their existing Riverbed solution. It adds significant value to Riverbed’s customers, and it expands Akamai’s market opportunity. It’s a great idea, and in fact, this is a partnership that probably should have happened years ago. Better late than never, though.
I scribbled off a quick blog post on the CenturyLink acquisition of Savvis but didn’t have time to delve into it in detail at the time. This is a bit of a follow-up.
Savvis has three core businesses:
- Coloation: Savvis has carrier-diverse (though not strictly-speaking carrier neutral), high-quality colocation in data centers around the world. It is one of the most significant players in retail colocation for enterprises. It also has a substantial financial vertical play in its proximity hosting for low-latency trading.
- Managed Hosting: Savvis is among the market share leaders in managed hosting. It is a highly capable provider, ranked for years as a Leader (and at or near the top of the pack) in Gartner’s Magic Quadrant for the market.
- Networking: Although Savvis has a history as an ISP, their significant acquisition of networking assets came with the acquisition of Cable and Wireless North America’s assets (which included a substantial amount of MCI assets that had to be divested in the MCI-WorldCom acquisition), which they did in order to get Exodus. The networking business has been in slow decline for years, although it has some usefulness in competing with BT Radiance, in the proximity hosting context.
As part of their managed hosting business, Savvis has built a significant portfolio of cloud IaaS products. Savvis has historically had a tendency to overcomplicate their product lines, and cloud has been no exception to this rule. The most significant elements in the portfolio are Virtual Intelligent Hosting (utility managed hosting, equivalent to Terremark Infinistructure, AT&T Synaptic Hosting, etc.), and Symphony VPDC (self-service public cloud, equivalent to Terremark Enterprise Cloud, AT&T Synaptic CaaS, Verizon CaaS, NaviSite NaviCloud, etc.), which is divided into tiers of service quality. Savvis also has an array of private cloud services.
We consider Savvis to be highly competitive in enterprise-class cloud IaaS. They do not necessarily have the best service, featurewise, and they are a relatively expensive option, but they have done a credible job of incorporating security into their architecture, emphasized in RFP responses, in a way that customers respond to very strongly. Savvis has also done a good job layering managed services on top of their cloud offerings, and has begun to compete quite aggressively in the cloud-enabled data center outsourcing market segment, targeting mid-market companies.
In short, CenturyLink is buying a very high-quality set of assets. Qwest has a colocation business, but it is marred by poor customer service (it’s pretty hard to deliver poor customer service in a business as simple as colocation, but Qwest has historically managed to do this, although quality varies per-data-center). Qwest also has a managed hosting business, but it’s historically been sub-par to the market and well behind the hosting businesses of AT&T and Verizon. Qwest’s forays into cloud computing are embryonic. Consequently, CenturyLink is vastly accelerating its entry into this business with the Savvis acquisition. Also, given the capabilities gap between CenturyLink and Savvis, customers can probably expect little if any disruption from the acquisition.
It’s clear that carriers, even the less visionary ones, now feel that they need to have solutions to address data center needs, not just networking needs. While some carriers were able to articulate a vision around this relatively early on — AT&T notably — all the other network operators are quickly falling in line, albeit with varying degrees of vision and commitment.
CenturyLink is a carrier, which rolled up a lot of rural telco assets before going on to digest Qwest. Acquiring Savvis signals its cloud computing ambitions — few carriers can afford to be without a cloud strategy, and apparently CenturyLink has decided to buy one rather than to build one. CenturyLink didn’t have much in the way of hosting assets pre-Qwest, and Qwest’s hosting assets were weak; with the exception of pure-plays like Amazon, nearly everyone in the cloud IaaS business has a hosting background. Moreover, while Qwest has been trying to get into the cloud, they are not a player to speak of.
With the Savvis buy, if CenturyLink is smart, Savvis gets largely left alone to continue what’s been a pretty successful colocation, hosting, and cloud IaaS business, Savvis incorporates the Qwest data center assets and kicks their hosting business to the curb (migrating the customers onto Savvis managed hosting), and Savvis stops fooling with a networking business save for what’s necessary to deliver proximity hosting. CenturyLink has announced that they’ll be consolidating their hosting assets with Savvis and having their current CEO run the unit, so that’s a good sign, at least.
I do believe that early industry consolidation may be bad for cloud innovation, but there’s a certain inevitability to the big network operators picking up leading cloud IaaS providers.
The really interesting question now is if Rackspace is a target. Their model doesn’t fit anywhere near as well into a carrier, given their focus on customer service — arguably their culture would be annihiiated in just about any merger with a likely buyer. Moreover, they have focused upon commodity cloud, while carriers are typically far more interested in enterprise cloud. But that doesn’t mean they’re not a takeover target anyway.
On Wednesday, April 13th, I will be speaking at Joyent’s Cloud as a Business Executive Forum, an all-day event that they’re holding at the Le Meridien Hotel in San Francisco.
I’ll be delivering a presentation on the cloud computing opportunity for service providers, as follows:
Service providers face unprecedented opportunity to grow their revenues and profits and deepen their customer relationships as more and more SMBs and enterprises consider moving their applications to the cloud. But how big, exactly, is the cloud market? From which market segments is the growth coming? How can service providers capitalize most effectively on the growth in the market? How can service providers maximize their margins as cloud products and services rapidly commoditize?
(Per Gartner’s rules for analysts speaking at these kinds of events, my presentation is a market view only, and does not advocate for Joyent.)
The event also includes presentations by Joyent CEO David Young, and chief scientist Jason Hoffman, along with a roundtable discussion with Joyent’s customers and a look at Joyent’s SmartDataCenter software.
If you’re a service provider and are interested in attending, please contact Joyent Sales directly.
The event also anchors my usual monthly visit to the Bay Area, so if you’re interested in meeting in person, please contact your Gartner account executive. (I think my meeting slots have mostly been taken, but these are always somewhat fluid as executive schedules change, and even if I don’t see you this time around, I’ll be back in May.)
Over the past couple of months, I’ve been mulling over a way to structure and segment the cloud infrastructure as a service market. Some of those ideas have appeared on my blog, and have since been refined, heavily peer reviewed, and then trial-ballooned at clients. The result is a new research note, called The Structure of the Cloud Compute IaaS Market. (Sorry, Gartner clients only.)
In brief, I’ve used a two-axis strategy to break the market into eight segments.
The first axis is your general use case. Are you sourcing infrastructure that is focused on a single application (or a group of tightly-related applications, like your e-commerce application)? Or are you sourcing infrastructure for a range of diverse applications, essentially replacing a part or all of your data center? For the former, you are essentially doing a form of hosting. For the latter, you have a whole host of significantly more complex requirements.
The second axis is the level of management services. The first possibility is unmanaged — you’re doing pretty minimal operations, probably because this is a test/dev environment. The second possibility is self-managed — the provider offers the IaaS platform (data center, hardware, and virtualization), but you do the OS layer on up yourself. The third possibility is that the core foundation is service-provider managed — they also handle the OS management, usually with a security emphasis (patch management et.al.). The fourth possibility is that some or all of the rest of the application stack, minus the app itself, is service-provider managed (which usually means DBA support, maintenance of a Java EE or .Net stack of middleware, etc.).
That gets you eight market segments, as follows:
|SCENARIO||Single Application||Multiple Applications|
|Unmanaged||Developer-centric cloud hosting||Virtual lab enviroment|
|Self-Managed||Scale-out cloud hosting||Self-managed virtual data center|
|Core Foundation Managed||Simple managed cloud hosting||Turnkey virtual data center|
|Application Stack Managed||Complex managed cloud hosting||Cloud-enabled data center outsourcing|
Each of these segments has very different buyer profiles and requirements. No single service provider serves all of these segments. At best, a service provider might serve a few of these segments well, at the current state of the market. These are all cloud IaaS, but each segment serves a different kind of customer need.
Want more details? Read the research note.