Most readers of this blog are probably well aware that a new version of the Ubuntu Linux distribution is coming this week, and that it will be putting code from the Open Source EUCALYPTUS Project to work in simplifying the creation of private Clouds that look remarkably like Amazon’s EC2. You’ve probably also read RightScale‘s announcements with respect to Ubuntu, and heard that Sun Microsystems were also making supportive noises about EUCALYPTUS and the EC2 API before their recent change in circumstances.

Earlier today I spoke with Simon Wardley of Canonical (the commercial organisation that sells support and consultancy for Ubuntu) to hear a little more about what those downloading Ubuntu will get… and what it might mean for the rapidly shifting Cloud landscape.

Production of this podcast was supported by Talis, and show notes are available on their Nodalities blog.

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Walk-on parts during the hour-long streamed presentation included two recent podcast victims; EUCALYPTUS Project Director Rich Wolski and RightScale CEO Michael Crandell, both of whom pledged support.

Sun’s official announcement is here.

Sun has also released A Guide to Getting Started with Cloud Computing, which offers a useful overview of the basic issues whilst relegating most of the Sun pitch to a separate section.

GoGrid have, of course, already released an equivalently licensed API of their own.

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In conversation with RightScale CEO Michael Crandell yesterday it would appear that he, at least, sees little need to join this scramble upward.

Show notes for this podcast are available on Talis‘ Nodalities blog.

For those with absolutely no idea what I’m talking about, it’s worth taking a moment to step back and describe this Cloud Computing stack. At its simplest (and this is quite complex and descriptive enough for almost every real-world conversation, thank you very much), the stack can simply be characterised as Applications (or Software), which sit atop Platforms, which sit atop Infrastructure. I have lifted four slides from a recent presentation, to graphically illustrate the stack and to show some of the players found at each layer.

Each layer of the stack is extremely dependent upon the one below, and there is a tendency for the lower levels to be perceived as more of a commodity or utility. As such, pricing tends to be highly competitive and margins on individual transactions are (often) vanishingly small, requiring successful players to operate at scale in order to effectively generate revenue.

Assuming these presumptions to be true, it’s easy to see why those operating at and near the Infrastructure layer might wish to progress upward to a space where there is less direct competition and far more opportunity to charge premium prices.

As Michael and I discussed in our podcast ‘basic’ Infrastructure providers such as Amazon, GoGrid, Rackspace and others are increasingly seeking to enrich their own offerings, adding dashboard and management functionality that was previously the preserve of value-adding third parties such as Michael’s company.

Faced with pricing pressure from direct competitors and potential feature creep from below, it’s certainly easy to believe the truism with which this post began.

Have a listen, though, and hear a rather different view of the space from Michael… who seems perfectly happy where he is in the stack.

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The event was organised by London consultancy firm BroadGroup, and ably Chaired by Tim Jackson. BroadGroup were also pitching their (possibly valuable) new report on ‘the rise and meaning of Cloud Computing,’ but even with my £100 attendee’s discount the £995/ £1,295 price tag is a little too steep for me to buy and review a copy here.

Travel delays meant that I missed the pre-lunch sessions on the first day; ‘Making Money from Cloud Computing’ and ‘Corporate IT & Cloud Computing.’ Luckily (for me, at least), opening keynoter JP Rangaswami was also delayed, and I did manage to hear him later in the day. More on that later, but for the sake of completeness here are the abstracts for the sessions I didn’t manage to record myself;

Making Money from Cloud Computing

“The Cloud represents a wide range of service models from SaaS and storage and server capacity to consumer services. Measuring the costs associated with Cloud computing brings with it a range of variables beyond standard data centre colo space and power. The pattern of demand and usage behaviour and the opportunity cost of and required speed to scale for example, represent key factors to consider. In achieving ROI therefore, how quickly will Cloud be adopted? Which market segments will represent critical targets for Cloud services? Is the economic downturn a catalyst for Cloud? Who will be the key enablers? Where will value and competitive advantage be found? Will Cloud disrupt the licensed software model? What are the business models for Cloud, how do they differ and how will they be monetized?”

Corporate IT & Cloud Computing

“With increasing globalization and mobility, as well as escalating competitive forces and productivity requirements, corporations of all sizes have started to rethink how they should operate. This process is accelerating as the current downturn continues to impact revenues. How quickly will Cloud be adopted in the Enterprise? How difficult will it be for enterprises to switch from one Cloud provider to another? Is lock-in more likely? Which Cloud solutions will prove the best fit for large enterprises and how quickly will Cloud technologies accelerate efficiencies that deliver bottom line results at a time of economic downturn? Or, is Cloud Computing just another tool in the IT box?”

Finance, Investors & Cloud Computing

After lunch, Alexis Richardson of Cohesive FT, Greg Marsh of Index Ventures and Duncan Johnston-Watt of Cloudsoft shared their views on key opportunities for investors in the Cloud.

Alexis began by discussing discussing the economic disruption posed by adoption of Cloud Computing, but warned that Gartner‘s Trough of Disillusionment is not far ahead of us with so many organisations today ‘massively over-promising on the Cloud.’ He suggested that adoption of Cloud Computing is ‘mostly a US phenomenon’ just now, with Europe allegedly ’18 months behind.’

“Independence from the computer is a bigger market opportunity than the adoption of the PC in the first place.”

Clouds are seeing ‘plenty of adoption’ from consumers and small business lured by the flexibility, scalability and on-demand pricing. Despite 58% of CIOs at larger organisations feeling that Cloud Computing will ’cause a radical shift,’ enterprise adoption tends to be more cautious.

Alexis characterised the two extremes, suggesting that consumers and small businesses are welcoming the Cloud, saying

“Yes we can!”

Large enterprises, on the other hand, remain more cautious, tending to

“Just say ‘No!’”

Next up was Greg Marsh, who reminded the audience that Index Ventures is an early stage venture firm, established in 1996, and currently with $2bn under management. Most of their portfolio is in Europe, and includes well-known names such as Love Film, Skype, Last.fm and MySQL. In the Cloud space, RightScale is one of their investments.

Greg suggested that ‘Cloud’ is a broad term that includes many innovations from ‘Grid done right’ to Software as a Service, but stressed that investors are looking for a number of things before giving their money to a new prospect;

• smart teams
• pursuit of opportunities that are massively scalable
• low capital intensity
• market savvy
• A Big Idea

In discussion a member of the audience posed an interesting question, asking whether there were ‘problems of scale’ to counter the ‘economies of scale’ often cited for Cloud-based infrastructure and services. Many of Google’s services, for example, might simply remain in beta because it’s impossible to define and deliver the sorts of reliability and up-time that we would expect from a commercial service. Whilst these services are generally extremely reliable across the board, the reliance upon large numbers of machines in numerous data centres running innumerable processes makes it extremely likely that someone is going to receive a bad service… and there’s very little that Google et al can do about it.

Image via Wikipedia

JP Rangaswami

BT Design’s MD for Innovation & Strategy, JP Rangaswami, then delivered his delayed keynote and began by reminding the audience of Gartner’s definition of Cloud Computing. Broadly, he paraphrased, Gartner stress delivery of service,  scalable elasticity,  multi-tenancy and  a basis in open standards. For those unable to access Gartner’s reports, one of the authors recently did some public paraphrasing of his own.

All of these, Rangaswami argued, were available and understood a decade or more ago.

A theme running through Rangaswami’s presentation – and the final panel of the day – was the suggestion that many potential beneficiaries of Cloud Computing are in danger of being left behind;

“while we pretend the Cloud isn’t happening, while we bring up excuses of security, latency, governance… there are the new Googles and the new Amazons building out… because they don’t care.”

Whilst agreeing that the guarantees and assurances offered by Service Level Agreements, due diligence and contracts can be important,

“let’s not waste time worrying about [the lack of an SLA]. What’s really exciting is today’s equivalent of Google or Amazon or eBay… looking at what’s available today and extending it”

He pointed to the example of Animoto, able to scale rapidly thanks to their use of Cloud infrastructure;

“They weren’t agonising over Governance… they just did it.  25,000 users to 250,000 users. 50 instances to 3,000+ instances in three days.”

Rangaswami suggested that three characteristics make Cloud Computing different to the individually similar technologies preceding it;

• it’s about mobile;
• it’s about data (from ‘data centre’ to ‘data centric’);
• it’s about different values.

“The opportunities look different today. The next Google will be invented by a guy with a credit card. No Venture Capital. No capital needed.

The ‘boring’ issues don’t go away… but they can be dealt with later…”

Technologies & Cloud Computing

The final session of the day explored Technologies and Cloud Computing, where JP and I joined Rightscale CEO Mike Crandell and Amazon Web Services Evangelist Simone Brunozzi on the stage. I was too busy participating to take notes, but felt like it went well.

Day Two: Infrastructure & Cloud Computing

Missing the first session on ‘Consumers & Cloud Computing’ for a conference call, my Day Two began with a panel comprising Xcalibre CEO Tony Lucas, Quest Software‘s European CTO Joe Baguley, Endeavors Technologies‘ CTO Arthur Hitomi, Telkom SA‘s David Lupafya and Alog Data Centres Do Brasil‘s President Sidney Breyer.

Tony talked about the lack of spare capacity to power new data centres in and around London, and pointed to the benefits of off-shoring new data centres to Iceland where power and cooling are plentiful, investment money is welcome, and network links are excellent.

“Is UK investment in the network actually to ensure we can reach our own content, off-shored to places where it can be stored and managed more efficiently?”

David spoke knowledgeably about the rather different situation in southern Africa, illustrating challenges facing the area whilst also demonstrating situations in which infrastructure and practice is actually moving beyond the ‘more developed’ countries of the world.

Privacy, Regulation, Security and Cloud Computing

In a session that delved into the morass of complex legal issues surrounding the movement and storage of data, we learned that ‘choice of law’ clauses in contracts may not be worth the paper upon which they are printed, that European Data Protection laws may be difficult to enforce upon sub-contractors of sub-contractors of sub-contractors in a contract, and of the Affero Clause’s importance in protecting the rights of Cloud developers. Welcome relief from the language of law came in the form of HP Labs‘ Miranda Mowbray, who managed to repeatedly and relevantly link her discussion of legal issues to The Hound of the Baskervilles; complete with readings and foggy slides.

‘Icy Tube Sign‘ image © Sheila Thomson, 2009.

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Event organisers are feeling the squeeze as advertising, travel and ‘training’ budgets present easy targets to Finance Directors seeking to balance their books in the current economic climate.

Amidst announcement after announcement of cancelled and radically down-sized trade shows and conferences, one bright spot in the event management space appears to be anything related to ‘The Cloud.’ There is an understandable perception that Cloud Computing will save money, so that ticks boxes back at HQ. There is also a perception that a sound understanding of the Cloud (and yes, it’s more than simply outsourcing your Data Centre to save some money) will position companies to come out of this economic downturn extremely well placed to exploit new opportunities and grow.

One of those events to cross my radar just before Christmas was Powered By Cloud, which is being held in London – just around the corner from the UK Parliament – on 2 and 3 February. According to the site, attendees will learn;

“What does [the Cloud] mean for your business model?

How fast will this happen?

How can I make money from Cloud Computing?

What technologies will be used?

What are the implications for consumers, privacy and security?

What is the future of Cloud Computing?”

Speakers on the programme look like a nice mix of solutions providers, customers and analysts, and include Amazon‘s Simone Brunozzi, Dave Armstrong from Google, Woodson Martin from Salesforce, Rightscale CEO Michael Crandell, Elastichosts CEO Richard Davies, Simon Wardley and Sam Sethi.

If you’ve got a couple of days to spare, can convince the Finance Director to agree (tell ‘em Cloud Computing saves money…), and can get to London then this looks like a pretty good investment for that diminished travel budget. It might even be worth enduring Heathrow to reach.

And, thanks to Philip Low at event organisers BroadGroup, here’s something that might even make the Finance Director smile… If you use discount code ‘SPKR‘ when you register, you can get in cheaper and save even more money. Enjoy!

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