There were two cloud computing sessions at Web 2.0, both panels run by Tim O’Reilly. One focused on the platform, with Padmasree Warrior (CTO, Cisco) and Shane Robison (CTO, HP); the other focused on apps, with Paul Maritz (CEO, VMWare), Marc Benioff (CEO, salesforce.com), Kevin Lynch (CTO, Adobe), and David Girouard (Google Enterprise). The first session actually spent a lot of time focusing on the role of the modern CTO which, while interesting, is not entirely relevant here, so I’m going to talk about the second session first.
Each of the represented companies had a different emphasis with respect to the cloud, given the business they are in. VMWare helps big corporate clients make their internal environment more cloud-like, e.g., by making information more independent of particular apps and devices, creating an ‘infobank’ that they manage and even enrich for their customers, presumably with things like links. Google is more interested in making the enterprise experience more like the consumer experience, and plans to open up some of the Google stack as a Web platform (not much in the way of specifics there). Adobe also focuses on the client experience, particularly on rich apps supported by Flash and Air (a development toolkit that delivers apps that run across different operating systems). Salesforce is perhaps the most interesting company currently in this space. As well as hosting data and providing compute power, they have also partnered with Google to field a range of open SaaS apps that replace the usual desktop Office programs.
From the vendor point of view, there is a debate as to whether cloud computing is a high margin or a low margin business. To vendors like Amazon, who provide ‘burst computing’ (ECC) and ‘burst storage’ (S3), it’s a commodity business model, which is something they are good at. To vendors like salesforce, it’s clearly meant to be high value and high margin. Another issue is interoperability. Salesforce can integrate with SAP/R3 for existing customers, Facebook (for recruiting), and Amazon for extra storage and cycles. Whatever happens in the cloud, Oracle and SAP aren’t going away any time soon. Meanwhile, SAP is using Adobe products like Flash to improve their interfaces, and VMWare is calling for new data representations and annotation schemes to make content more valuable, clearly a business they would like to get into. Even Microsoft is now jumping into the fray, although Ray Ozzie admits that Azure won’t be ready for 2 years, which puts them well behind the curve.
From a customer point of view, high availability and reliability are big issues, yet vendors seem to be winning their confidence. It is now believed that Gmail is about 5x more reliable than Outlook Exchange, so free doesn’t always mean a lower service level. Security is always an issue, but so is portability (the ability to move your data out of a cloud), since going to a cloud is a big commitment that gives the vendor a serious lock-in advantage in customer retention and product pricing. Lastly, there is the issue of intellectual property, not only who owns my data, but who owns any annotations, links, or other value-addition done to my data.
Going back to the CTO panel, both Cisco and HP seem to be using cloud technology to drive their basic businesses, e.g., HP is incubating MagCloud, a service that will allow anyone to produce a glossy magazine. Tim O’Reilly brought up the interesting question of how paying for cloud computing affects a company’s balance sheet, since what was hardware capex now becomes a service expense. (I assume that depreciation is also an issue.) Other related facts: data centers are 2% of the world’s carbon footprint; emerging countries may go straight to cloud, since there is less of a legacy obstacle; and existing infrastructure players won’t go out of business, since they are selling to cloud companies and they always have big customers, like banks, who are unlikely to go the cloud route.