Notes From Xconomy’s Cloud Computing Extravaganza
“Ask not just what the cloud can do for you, but what you can do with the cloud.” — Sim Simeonov, Polaris Venture Partners
“My opinion is this is a land grab.” — John Landry, former CTO of Lotus, founder, Lead Dog Ventures
“The key is the location of your data. The land grab is really a data grab.” — Josh Coates, founder, Mozy
These were some of the memorable lines from our big cloud computing event, held on Tuesday at Akamai’s headquarters in Cambridge, MA. In reflecting on the event, let me say happily that, in addition to such great lines, very few bad cloud jokes were flying around—and I am pretty sure all of them came from Wade, our chief correspondent and punster. Does the cloud have a silver lining? he asked. Is it a cumulous cloud, dark and heavy, or a light and airy cirrus? Sorry to rain on your parade, Wade, but those jokes left me in a fog.
But it was otherwise an information-packed, quippy, occassionally quibbly, and pretty much always insightful afternoon. Our speakers put cloud computing in its historical context—from the Cambrian explosion all the way through the rise of electric utilities. They showed how businesses today can use this emerging technology for cost-effective and powerful computing solutions. And they also gave us a feel for the real paradigm shift the cloud could bring to the computing world, especially how large software companies might find themselves vulnerable to disruption (although some firms are still in denial about this).
I can’t attempt to do justice to the whole afternoon in one story (you can find the agenda here). But hopefully the audience of roughly 150 who poured into Akamai’s headquarters (and got poured on by the torrential rains that started just as the meeting broke up) all learned a lot. We have posted some photos here. And to go with them, here are my own notes of the highlights and key take-aways from the afternoon.
For starters, there is clear consensus that there is no real consensus on what cloud computing is. Akamai’s Andy Champagne agreed on this, but said one thing he was sure of was that Software as a Service was not cloud. This got interesting stares from Josh Coates, founder of SaaS online backup company Mozy, which EMC bought last year for around $80 million and made part of its new Cloud division. Coates (who raised less than $2 million in venture funding for Mozy, as opposed to his previous company Scale8, which raised $60 million and turned into what he good-naturedly described as a “train wreck”) showed a slide of Wikipedia’s cloud page, which includes the ironic warning that, “All or part of this article may be confusing or unclear.” Coates predicted, “We’re only really going to find out what the cloud is when we look back. Oh, that was the cloud.”
The uncertainty led some to question whether a real revolution/transformation is underway, an attitude that left panel moderator John Landry, the former CTO of Lotus and the founder of Lead Dog Ventures, shaking his head. The transformation is clearly at hand, Landry argued, adding: “There are enormous business opportunities for small companies, not necessarily venture backed.”
Keynoter Nick Carr, whose book The Big Switch: Rewiring the World from Edison to Google is a primer on the rise of utility-style computing, took us back to 1851, when Henry Burden built the world’s largest water wheel to power his manufacturing plant in upstate New York—giving him a huge advantage because he was able to wrest more power from flowing water than his competitors. But Carr then showed photos of the decaying wheel from a few decades later, after the rise of electric utilities had made such personal power plants nearly obsolete, by providing a grid that anyone could plug into.
The IT utility—read cloud—is the next great technology “that’s going to go through a similar transformation,” Carr said. This new era, Carr and most speakers agreed, would bring huge increases in IT efficiency, as server and storage functions in individual corporate data centers (which are highly inefficient, often running nowhere near capacity) could be offloaded to the cloud. That, said Carr, would push down what’s in effect an IT tax on industry and free companies to invest “in innovation, where it really matters.” What’s more, he said, customers are going to get the best of both of the previous worlds—meaning the high efficiency of the mainframe era and “the personalization that has been possible with the PC age.”
But while cloud computing is making computing power extraordinarily cheap and available, there’s still a lot more we don’t know about the transformation than we do know, Carr argued. Already we’re beginning the see different layers of the cloud emerge: infrastructure as a service, platform as a service, software as a service, and desktop as a service. Taken as a whole, we have yet to figure out “how to harness the world wide computer,” Carr said.
Irving Wladawsky-Berger, chairman emeritus of the IBM Academy of Technology, took us back far further than 1851—to the dawn of single-celled organisms and then to the Cambrian explosion, when evolution seemed to have perfected the cell, allowing an incredible diversity of multicellular organisms to emerge. He views cloud computing in this same framework. Now we are at a time when the evolution of the Internet and the power of grid computing are coming together, he says, providing virtual access to all kinds of devices, sensors, and services, with massive scalability. This will help enable real-time information for congestion management, analyzing supply chains, tracking ships, and a lot more, as everything will have digital components. Wladawsky-Berger sees it all as part of the evolution of the Web—which we originally accessed alone and now are accessing more as social groups—into a much more immersive experience.
After the two keynotes we had two panel discussions and a mid-afternoon keynote from Josh Coates. And there were lots of audience questions. Let me hit some additional highlights.
Rich Zippel spoke on Sun’s Project Caroline, an attempt at developing a new hosting platform for cloud services. Zippel charged that some companies (including some represented on the panels) are looking at the cloud as something they can do on top of existing computing systems—like putting an internal combustion engine on a buggy but not bothering to build asphalt roads to run the buggy on, to use his example. Project Caroline, he said, addresses the idea that you need a very new approach to dealing with the cloud. “Our job is to make the rest of [Sun’s] business hell,” he joked.
Zippel also noted the surging demand for cloud services that he sees among Sun customers. “What shocked us was every single large company we have wants cloud technology badly,” he said. That is, they want the advantages of the efficiency, easy deployment of applications, and utility scale that the cloud promises–but they don’t necessarily want to do it outside the company. That echoed a huge concern of the audience members–security. A number of people asked how they could trust cloud providers to protect key data.
Sim Simeonov of Polaris made the point that the cloud brings incredible computing power to startups and small companies of 3-20 people, lowering the cost of experimentation substantially and making it possible to launch a new company with fewer people than before and almost no IT infrastructure. But he also stressed that the cloud can make it possible to launch “new kinds of businesses” that might not have found firm footing before.
It was somewhere in here that Sim remarked, “Ask not just what the cloud can do for you, but what you can do with the cloud.” If you have a company that operates on Facebook and uses Amazon Web Services (AWS) for its hardcore computing, for example, you can easily handle spikes in traffic and only pay for the services you need. Simeonov told of New York-based Animoto, which uses AWS to turn photo albums into movies and experienced a dramatic increase in traffic—from a relative handful to 700,000 users in three days—when the service went viral on Facebook. Animoto had been using 20 servers, but quickly ramped up to 3,500 and then settled down to 1,000 as demand leveled off, he said. And rather than trying to gauge demand and buy servers to handle it, the company just pays Amazon a very affordable rate for what it uses. Beautiful.
All this was echoed by Phil Jacob of StyleFeeder, a Cambridge startup that has only taken in $3 million in funding (half from Highland Capital Partners and most of the rest from Schooner Capital in Boston). The company, which helps people with online shopping by analyzing their tastes and preferences through data mining and machine learning, says it is the largest shopping app on Facebook. And yet, said Jacob, “we own precisely zero servers.” What’s more, the firm, which uses various Amazon cloud services, handled some 20 million messages in May for a cost of about $20.
One question had to do with how cloud platform companies would differentiate themselves. By providing good performance, services, and quality of experience, in much the same way banks compete today, said Wladawsky-Berger. “I think that’s the real battleground that we should want in the IT industry,” he said.
Matthew Gray of Google emphasized that this differentiation was still at an early stage. Companies like Google have learned a lot about how to deploy applications to millions of people and make them usable. And, he noted, there’s much “value to be gained from leveraging that learning.”
Picking up on the electric utility metaphor, Sun’s Zippel stressed that “we’re still at the point of arguing AC and DC power, at that level.” What people really care about—and this point was echoed by others throughout the day—is the data, he said. “Wherever the data is may dictate where the applications run,” he said. “It’s the data that matters, not the applications.”
One of the most interesting parts of the day for me was the discussion about how disruptive cloud computing will be to existing computer companies. “Every time there’s a platform change, there’s a lot of disruption,” said Landry. Big players, he added, seldom make it through such disruptions. Landry said that unlike with some previous revolutions/transformations, big companies—in this case, Amazon, Microsoft, Google, and Sun, for example—could well emerge as winners as providers of cloud infrastructure. But he did not give them much chance of coming up with killer cloud apps. Existing firms, he said, are too locked into their current way of thinking. Startups, which don’t care about what already exists and can design with the cloud in mind, will really show the way to the new world.