|By Greg O'Connor||
|August 27, 2014 10:00 AM EDT||
Editor's note: An abridged version of this post ran last week on the Gigaom blog.
With an ear to the ground and an eye on the sky, Gigaom's Barb Darrow chronicles the competitive factors shaping the bumpy journey that is cloud computing among the superpowers (AWS in fight of its life as customers like Dropbox ponder hybrid clouds and Google pricing). Wherever you stand on the debate over which cloud giant will reign supreme, it's clear the economic forces shaping the market are evolving quickly.
Now comes new cloud computing data based on Total Cost of Infrastructure (TCOI) proving cloud providers are innovating and reducing costs in areas beyond hardware. The result is a more compelling case for cloud as a far cheaper platform than a build-your-own datacenter. Further, the economic gap advantage favoring the cloud provider platform will widen over time.
In many ways, cloud computing is bringing to the enterprise world what Henry Ford did for cars. Ford developed and designed a method for manufacturing that steadily reduced the cost of manufacturing the Model T, thus lowering the price of his car. The result was a decline in the number of US auto manufacturers from more than 200 in the 1920s to just eight in 1940. This astounding 96% reduction in manufacturers over 20 years foreshadows what could happen to enterprises running their own data centers in the not too distant future.
If you're still with me, here's why.
Previously, I posited that the future of cloud computing is the availability of more computing power at a much lower cost. This we call Bezos's law, defined as, "the history of cloud, a unit of computing power price is reduced by 50 percent approximately every three years."
Bezos's law measures the cost of a given unit of cloud computing over a period of time, as compared to Moore's Law, which we know is, "the number of transistors on integrated circuits over a period of time."
Bezos's law is a measure of the rate of change of Total Cost of Infrastructure Ownership (TCIO), while Moore's law measures the rate of change of CPU, a small fraction of the cost of a datacenter or cloud.
Why is TCIO so relevant?
The team from IBM SoftLayer commissioned McKinsey to do a study around TCIO. The comprehensive analysis slide (below) highlights the following about total costs:
- 30% for Labor
- 35% for Hardware
- 55% for Hardware and Facilities
When considering the rate of Bezos's law in light of IBM's analysis, it is clear that cloud providers are innovating and reducing costs in areas beyond hardware.
There are obvious drivers ensuring the compounding trend line as described in Bezos's law will continue for many decades.
- Scale: Amazon, Google, IBM and Microsoft are everyday adding huge amounts of capacity capable of running most Fortune 1,000 companies.
- Innovation: The cloud market is competitive with innovative approaches and services being brought to market quickly.
- Competition & Price Transparency: While the base IaaS service varies among providers, they are close enough for customers to easily compare offerings
Let's assume on average the Fortune 5000 each have seven datacenters for a total of 35,000.
Bezos's law will drive (think Henry Ford - Model T) a similar titanic shift form datacenter to cloud, which will result in 90% reduction (approximately 30,000) in enterprise owned and operated datacenters by 2030.
This is of course obvious given the Gartner prognostication about the future size of the cloud market (Gartner: Public cloud services to hit $131B by 2017). There is likely to be new businesses dedicated to repurposing datacenters to retirement homes or new fangled dance clubs.
Just as people first thought automobiles were toys, early critics said the cloud would only be for limited use -- test/dev environments and spiky workloads. Now consensus is that the cloud can be for almost all applications. Early cars were expensive and unreliable, but the evidence reveals a compelling reduction in TCIO that put the whole country on wheels. It may be the end of the road for the datacenter, but the economic forces shaping the cloud signal it's the beginning of a better idea for the enterprise.
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
Jan. 29, 2015 06:15 PM EST Reads: 5,446
The Internet of Things (IoT) is rapidly in the process of breaking from its heretofore relatively obscure enterprise applications (such as plant floor control and supply chain management) and going mainstream into the consumer space. More and more creative folks are interconnecting everyday products such as household items, mobile devices, appliances and cars, and unleashing new and imaginative scenarios. We are seeing a lot of excitement around applications in home automation, personal fitness, and in-car entertainment and this excitement will bleed into other areas. On the commercial side, m...
Jan. 29, 2015 06:00 PM EST Reads: 4,915
Dale Kim is the Director of Industry Solutions at MapR. His background includes a variety of technical and management roles at information technology companies. While his experience includes work with relational databases, much of his career pertains to non-relational data in the areas of search, content management, and NoSQL, and includes senior roles in technical marketing, sales engineering, and support engineering. Dale holds an MBA from Santa Clara University, and a BA in Computer Science from the University of California, Berkeley.
Jan. 29, 2015 06:00 PM EST Reads: 5,174
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
Jan. 29, 2015 05:00 PM EST Reads: 6,043
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Jan. 29, 2015 03:30 PM EST Reads: 5,110
"People are a lot more knowledgeable about APIs now. There are two types of people who work with APIs - IT people who want to use APIs for something internal and the product managers who want to do something outside APIs for people to connect to them," explained Roberto Medrano, Executive Vice President at SOA Software, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Jan. 29, 2015 02:30 PM EST Reads: 4,391
Performance is the intersection of power, agility, control, and choice. If you value performance, and more specifically consistent performance, you need to look beyond simple virtualized compute. Many factors need to be considered to create a truly performant environment. In his General Session at 15th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, discussed how to take advantage of a multitude of compute options and platform features to make cloud the cornerstone of your online presence.
Jan. 29, 2015 02:15 PM EST Reads: 5,185
SYS-CON Media announced that Splunk, a provider of the leading software platform for real-time Operational Intelligence, has launched an ad campaign on Big Data Journal. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. The ads focus on delivering ROI - how improved uptime delivered $6M in annual ROI, improving customer operations by mining large volumes of unstructured data, and how data tracking delivers uptime when it matters most.
Jan. 29, 2015 02:00 PM EST Reads: 5,768
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
Jan. 29, 2015 01:30 PM EST Reads: 4,752
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
Jan. 29, 2015 01:30 PM EST Reads: 4,866
Since 2008 and for the first time in history, more than half of humans live in urban areas, urging cities to become “smart.” Today, cities can leverage the wide availability of smartphones combined with new technologies such as Beacons or NFC to connect their urban furniture and environment to create citizen-first services that improve transportation, way-finding and information delivery. In her session at @ThingsExpo, Laetitia Gazel-Anthoine, CEO of Connecthings, will focus on successful use cases.
Jan. 29, 2015 01:30 PM EST Reads: 3,232
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential.
Jan. 29, 2015 01:15 PM EST Reads: 4,244
“With easy-to-use SDKs for Atmel’s platforms, IoT developers can now reap the benefits of realtime communication, and bypass the security pitfalls and configuration complexities that put IoT deployments at risk,” said Todd Greene, founder & CEO of PubNub. PubNub will team with Atmel at CES 2015 to launch full SDK support for Atmel’s MCU, MPU, and Wireless SoC platforms. Atmel developers now have access to PubNub’s secure Publish/Subscribe messaging with guaranteed ¼ second latencies across PubNub’s 14 global points-of-presence. PubNub delivers secure communication through firewalls, proxy ser...
Jan. 29, 2015 12:45 PM EST Reads: 2,470
The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focused on understanding how industrial data can create intelligence for industrial operations. Imagine ...
Jan. 29, 2015 12:30 PM EST Reads: 2,856
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impact.
Jan. 29, 2015 12:15 PM EST Reads: 2,765
Jan. 29, 2015 12:00 PM EST Reads: 10,496
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
Jan. 29, 2015 12:00 PM EST Reads: 4,623
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective storage designed to handle the massive surge in back-end data in a world where timely analytics is e...
Jan. 29, 2015 12:00 PM EST Reads: 4,335
"There is a natural synchronization between the business models, the IoT is there to support ,” explained Brendan O'Brien, Co-founder and Chief Architect of Aria Systems, in this SYS-CON.tv interview at the 15th International Cloud Expo®, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Jan. 29, 2015 11:45 AM EST Reads: 4,865
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrategies, will examine why IT must finally fulfill its role in support of its SBUs or face a new round of...
Jan. 29, 2015 11:45 AM EST Reads: 4,538