Your cloud provider is great. Your cloud provider is cheap. Your cloud provider is out of business.

Now what do you do?

If your favorite consumer cloud service goes out of business or simply feels it's time to end-of-life a particular application, it's frustrating but life goes on. More often than not, you weren't paying for the service, anyway. But for an enterprise, losing access to a preferred SaaS application can be devastating.

Just ask Xeround's customers.

Learning From Xeround's Failure

Recently the Database-as-a-Service (DaaS) provider terminated its cloud database service, giving free users a week to pack up and move on, and paid customers just two weeks:

"Xeround’s leadership forum has recently decided to re-focus the company’s effort. This means we will no longer be able to support our service over public clouds, across all of our currently active data centers... We ask you to please export your database instance and migrate your database to another service of your choosing before the termination date... We regret the inconvenience this causes you."

It's a nice thought, if not particularly helpful. Moving to an alternative solution is easier said than done. Migration between products, cloud or otherwise, is never particularly easy, often by design.

In the case of Xeround, which promises 100% MySQL compatibility, migrating to MySQL might not be difficult. But what if you wanted to move to an alternative database? Or what if instead of a database or other somewhat swappable infrastructure you were hoping to migrate off a SaaS application?

Good luck with that.

Open Source As A Safety Net

Could open source help with this? While not a panacea, giving users both a cloud service and an on-premises deployment, with the latter offered as open source, would ensure a robust back-up plan. It might also give them comfort to use the cloud service in the first place.

As Eucalyptus CEO Marten Mickos argues, infrastructure software is almost entirely open source now as developers "require access to the details [of their cloud infrastructure] — not just to have the ability to do the same, but for the ability to verify the quality and modify to fit their needs." Businesses are embracing the cloud because it yields cost and convenience benefits, as Forrester's Ted Schadler posits. Add to this developer peace-of-mind and it's a near-perfect combination.

This isn't really about source code. While some will want to tinker with code, doing so will generally void your contract with a vendor. Instead it's about security once the vendor fails or cancels a service: moving a cloud service to your data center, even if only temporarily, buys you time and makes the initiatl investment in the cloud much less precarious.

What's Your Back-Up Plan?

As organizations move to the cloud, increasingly with a 'cloud first' policy, having a back-up in mind is important. Open source is one option that seems to be working for SugarCRM, Eucalyptus and others. But what's your cloud back-up plan? Frequent data dumps? If you had the chance to migrate your end-of-life SaaS application to an on-premises, open-source deployment, would you do it?

Image courtesy of Shutterstock.

A few years ago, Google's cloud services focused on simply storing and managing objects: email, documents, music, and movies. The 2013 version of Google is now using the cloud to connect and build relationships between them, responding to and anticipating the desires of its users.

Google used its I/O keynote to describe how its vast array of servers is now applying intelligence from everything from music to maps. Google drew cheers when it launched a suite of photo-enhancement apps, including tools to automatically pull put the best pictures from a camera roll, enhance them, and feature them in a selected list of photos.

Google Maps will now automatically generate recommendations to preferred restaurants and destinations, and dynamically reroute users aroudn traffic. Google will even read your Google+ posts — if you allow it — and analyze their content, providing a hashtag for your readers to go deeper and explore the topic of your post even further.

Wow. All this makes Apple's Genius music recommendation engine look positively ancient.

The Next Step: Putting Your Data To Work For You

Google's currency has always been user data, and the transaction has always been a simple one: users contribute data, Google sells ads against it, and both sides prosper. Recent Google I/O conferences have placed a strong emphasis on devices as entry points for that data, especially photos and location.

This year, Google executives appeared to be ready to take the next step.

"We have almost every sensor we've every come up with" right in your smartphone, CEO Larry Page told attendees. Devices are used interchangeably, Page said, implying that data and how it's interpreted should do the same. 

"Technology should do the hard work, so people can get on with doing things that make them happiest in life," Page said.

Photos

Vic Gundotra, the senior vice president responsible for engineering at Google, introduced the new Photos experience. Google said earlier this week that it will now spread 15 GB of data among a user's Photos, Drive, and Gmail storage.  But the new Photos experience will make "Google's servers your new darkroom," Gundotra said.

Specifically, Photos will now intelligently scan your photos and pull out the best ones, supposedly eliminating blurry and duplicate images. Enhancements like skin softening aim to smooth out wrinkles, and red eye reduction and noise filters will help sharpen photos automatically. Google will hunt for and display images that include smiles, not frowns. And an "auto awesome" feature wil automatically pull out a few photos and stitch them together, essentially making them an animated GIF.

For years, Google's servers have only been used for storage. Now, the computing elements within them are being applied to the digital objects within them. Artists may dispute the results - shouldn't I be able to take pictures of scowling children? - but enhancing user photos boosts Google+ and gives users another reason to upload their photos to Google.

Search 

Google, Microsoft, and Wolfram Alpha have engaged in an ongoing war in search for years, with Google jumping out to an early, enormous lead. Wolfram shifted the struggle away from results to answers. Microsoft's point of attack is social. On Wednesday, Google called anticipatory search as the next frontier.

What is anticipatory search? It's the sort of back-end data processing that would allow Google to answer the question "What time does my flight leave?" because it knows what flight you're on based on your email, when the flight leaves thanks to the airline's flight-status API, and how long you'll need to get to the airport based on your location, traffic, real-time transit schedules and the like.

Google first introduced that capability with Google Now, the "cards" feature that shipped with Android 4.0. But the new Cards feature significantly broadens the scope of Google's vision, adding elements like music, games, and public transportation, but also drawing further connections between the two. Being able to command Google to "show mew all my photos from New York" also takes Facebook Graph Search and adds a personal, Google-esque twist. 

Pulling out a feature from Google Glass - voice-triggered actions - Google also announced that a future version of search will "listen" for you to say "OK, Google" and then automatically trigger a search. 

Music

Google's least important announcement of the day involved its new All Access subscriptions, where users will be able to stream milions of tracks from the Google Play library for $9.99 per month. Quite frankly, most of what Google announced has been done already by companies like Pandora, which auto-generates a stream of music based on a seed of a song or artist.

But Google Play's new Listen Now capability will auto-suggest music based on tracks the user already owns, and what it knows about the genre, artist, tempo, and other components. Yes, it seems like an afterthought - and that's sort of the point. 

Maps

Google also unveiled a rethinking of its Maps application, where Google now doesn't provide directions, it directs: to places that the user frequently visits, to restaurants and other destinations that other users or reviewers recommend, and to locations that Google attempts to personalize in other ways.

You might argue that offering directions itself applies intelligence, sorting through numerous routes to the best destination. But the new Maps experience takes it to another level. 

Basically, here's what it all means: data isn't necessarily being devalued in the new computing landscape, but drawing relationships between the disparate elements have become increasingly important. From a consumer perspective, users should expect Google to ask for more and more data, fusing it together and increasingly adding context to it all.

That, increasingly, is becoming the business model of today's Web. Google is just doing it as well or better than anyone else.

VMware has a firm if fading grip on the server virtualization market, but according to IDC analyst Al Gillen, virtualizaton serves as a convenient on-ramp to private cloud, which in turn leads to the public cloud. Is VMware paving IT's path to Amazon, Microsoft Azure, Rackspace and other public cloud providers?

Not exactly.

Virtualization: Still Relevant, Mostly VMware

According to Gillen, who spoke at the Open Business Conference (OSBC) in San Francisco earlier this week, VMware continues to dominate the virtualization market, with just under 60% market share. VMware's installed base, coupled with CIO resistance to change, mean that VMware's hold on virtualization should persist for years. 

That's the good news.

The bad news is that VMware faces fierce competition from Microsoft's Hyper-V, currently claiming over 25% of the market, as well as a strong and growing threat from KVM, now bolstered by a rising OpenStack. KVM deployments grew 50% last year, according to IDC. Xen, the other open-source virtualization alternative, remains robust but isn't growing as fast, though its move to the Linux Foundation may help to revive its growth.

By themselves, however, none of these virtualization competitors poses much near-term risk to VMware. Of far greater importance is a distinct trend toward multi-hypervisor environments, as well as an enterprise shift from virtualization to cloud.

Each of these trends threatens VMware.

Multi-Hypervisor Trend No Friend To VMware's Cloud

According to Gillen, some 15% of enterprises deploy multiple hypervisors today, but Gillen expects that number to double in the next one to two years, with cost being a primary driver for experimentation with new virtualization technologies. The more enterprises experiment with non-VMware virtualization technology, the more likely they will also diverge from VMware's cloud offerings.

Why? Because virtualization is a clear precursor to cloud adoption.

According to IDC's Platform Migration MCS, January 2012, roughly 80% of servers that enterprises are migrating to the cloud are already virtualized, rather than being virtualized as part of the migration. Often, enterprises will rely on their virtualization vendor to walk them into the cloud, with private clouds the first stopping point on the way to public clouds.

As such, VMware has actively been building out both private and public cloud options, creating a clear "upgrade" path for its enterprise buyers. As Matthew Lodge, VMware'e vice president of Cloud Services, emphasizes, VMware enables enterprises to stitch together “what they have in their data centers and their public cloud instance.” All running on VMware technology.

It's a compelling strategy, one also being adopted by Microsoft (Windows Server + Hyper-V + Azure) and Red Hat (Red Hat Enterprise Linux + Red Hat Enterprise Virtualization + OpenShift or OpenStack), among others. 

Virtualization Not The Only Path To The Cloud

But not all workloads follow this single vendor path. Indeed, Gillen cited IDC's 2012 Cloud System Software Survey, which found that transitions to the cloud allow vendors to "sell cloud system software on its own merits and embed a hypervisor as part of the package." Some 53% of those surveyed indicated that they were using a new hypervisor in their cloud deployment, compared to the 47% using their existing technology. 

In Gillen's words, this "opens the door for non-installed alternatives such as KVM into VMware-dominated shops." 

This is particularly true for new applications that are born in the cloud, especially public clouds, rather than old workloads being migrated there. We're already seeing a class of applications skip the private cloud altogether, starting up on public clouds like Amazon. And while many enterprises still haven't dipped into the cloud, it's interesting to see what little variance there is between private and public cloud adoption:

Add to this Rightscale's finding that 77% of enterprises are using multiple clouds, and it seems doubtful that any vendor will be able to gently lead enterprises from its virtualization technology to its cloud. Fragmentation is the norm.

The Cloud? It's Complicated

VMware isn't going away anytime soon, in part because the enterprise moves slowly, and in part because VMware has a compelling cloud story for enterprises when they do decide to graduate from simple virtualization to private and public clouds.

But that "graduation" path is messy, with plenty of room for enterprises to find their way to different hypervisors and competing clouds. For these reasons, the virtualization and cloud markets may well be among the most competitive technology markets we've seen in a long time.

Image courtesy of Shutterstock.

Enterprise IT keeps trying to shove the public cloud genie back into a private cloud bottle, but the majority of developers are having none of that, according to Forrester principal analyst James Staten (@staten7), speaking at the Open Business Conference (OSBC) on Tuesday in San Francisco. Interestingly, these cloud-savvy developers aren't newbie troublemakers just getting started in enterprise IT, but instead skew older and more experienced. Perhaps with Twisted Sister cranking on their Walkmans, this rising breed of middle-aged cloud developer isn't "gonna take it anymore."

Which, of course, is exactly how open source made its way in the enterprise.

Open Source: Not So Young But Very Restless

Back in 2002, Boston Consulting Group surveyed (PDF) the open-source developer community to get a feel for the demographics of the movement. While early open-source development was thought to be marshalled by anarchists and free code-loving hippies, BCG's study revealed that the open-source community was actually comprised of experience IT professionals with an average of 11 years of programming experience.

And while the open source ranks weren't filled with Baby Boomers, they also weren't being pushed by Generation Y. The average age was 30 years old. While not exactly middle aged, it skewed much older than expected.

This shouldn't have been surprising. Often, those who have the most value to contribute are more experienced programmers. In addition, such programmers have also been working in enterprise IT long enough to recognize a better, more efficient way of developing software, and to have the job security needed to take a risk on coloring outside the lines of enterprise IT policies.

Cloud As An Antidote To Corporate Bureaucracy

It's therefore not surprising to see cloud computing also driven by experienced developers, rather than newly minted graduates. According to Forrester's Forrsights Developer Survey, Q1 2013, 71% of cloud developers have at least six years of programming experience, and some 11% have been writing code for over 20 years. These aren't novices trying the cloud because it's "cool."

Indeed, delving deeper into Forrester's data, the primary reason developers turn to the cloud is speed of development:

In other words, as with open source, these developers can't be bothered with corporate bureaucracy. In an earlier Forrester survey, developers said the primary benefit of the cloud is that it's the "Fastest way for me to get my project done and deployed." This calls to mind Redmonk analyst Stephen O'Grady's assertion that "Convenience trumps just about everything" when it comes to cloud adoption.

A Race To Capture Middle-Aged Hearts And Minds

Amazon was the first to spot this market, and is now the preferred  Infrastructure-as-a-Service (IaaS) offering for 71% of developers, according to Forrester, with Microsoft Azure (25%) and Google (23%) playing catch-up. Cloud developers overwhelmingly want IaaS because they want "deep platform access" to things like app servers, web servers, and databases, as Staten noted in his OSBC presentation.

Again, cloud developers are not neophytes. They're serious developers who understand core IT infrastructure but want the freedom to get work done without waiting on corporate procurement or legal policies to catch up.

As such, the IaaS platform that best serves this need will win.

Image courtesy of Jørund F Pedersen, licensed under Creative Commons Attribution-Share Alike 3.0 Unported license.

Legacy enterprise IT vendors may be scrambling to spread the blame in the wake of earnings misses, but one mega-vendor is not, and it's the one open-source advocates have argued for years was doomed to imminent oblivion: Microsoft. For all its stumbles in mobile and online, Microsoft continues to soar in core enterprise infrastructure sales.

The reason? Microsoft pressures the Oracles and HPs of the world in much the same ways that open source and cloud do.

Low Cost, High Value

By most measures, Microsoft's Server and Tools business is booming:

• Product revenue up 11% (Multi-year licensing revenue up 20%)
• Enterprise Services revenue up 11%
• System Center revenue grew 22%
• SQL Server revenue grew 16%, outpacing the market

And while growth has slowed a bit in fiscal year 2013 compared to fiscal year 2012, it's still impressive growth, especially in light of the struggles other enterprise IT vendors have had recently.

Why is Microsoft different? Most obviously, because Microsoft tends to make complex infrastructure affordable and easy to use, while appealing to developers. This has long been Microsoft's recipe for success: lowering the bar to use complex software while also lowering costs.

In other words, Microsoft keeps chugging along in the enterprise because makes life easier for enterprise IT, similar to what cloud and open source do. Or as Apprenda vice president Rakesh Malhotra puts it, "it's less about licensing and more about the complexity/cost/value."

And while Microsoft persists with its proprietary license model, a model out-of-favor in a market trending toward open source and cloud, it still tends to be much cheaper than alternatives like Oracle in the database market. As BMO Capital Markets analyst  Karl Keirstead recently opined in a client note, "Countless customers have told us that the cost advantage of SQL Server is so compelling that their deployment of Microsoft SQL Server databases is ramping."

In short, Microsoft improves enterprise value and lower costs, relative to the other legacy IT vendors.

But What About Mobile?

Ironically, Microsoft has thus far failed in mobile precisely because it has taken the opposite strategy: while Apple and Google (Android) have essentially lowered the cost of mobile operating system licenses to $0.00, Microsoft has continued to try to impose license fees. When that hasn't worked, it has sued Android licensees to try to raise costs to match Microsoft's.

It hasn't worked.

Microsoft has a lot of work to do to catch up in mobile. But in core enterprise infrastructure? Microsoft may be the vendor to beat. 

Not Shrinking From The Cloud Fight

Not that Microsoft rests easily. After all, with trends shifting IT spending to mobile and cloud, Microsoft's traditional Server and Tools division stands to take a beating. According to a new Baird Equity Research Technology study, Amazon, in particular, is siphoning off dollars from the legacy IT pie:

We estimate that for every dollar spent on [Amazon Web Services], there is at least $3 to $4 not spent on traditional IT, and this ratio will likely expand further. In other words, AWS reaching $10 billion in revenues by 2016 translates into at least $30 to $40 billion lost from the traditional IT market. 

In this, however, Microsoft is playing a solid offense, and stands a good chance of succeeding. Among both enterprise developers and CIOs, Microsoft remains their go-to vendor, according to both Piper Jaffray and Evans Data surveys. More pertinently to Amazon, these same enterprises plan to expand their Microsoft Azure adoption significantly, according to Forrester:

Breathing Room...For Now

Amazon stands clear as the 800-pound cloud gorilla, but Microsoft is no slouch. By embracing the cloud early and by continuing to pressure its proprietary peers with low-cost, high-value infrastructure software like SQL Server, Microsoft has kept itself top of mind with CIOs. These same CIOs are therefore willing to give Microsoft breathing room as it transitions its business to the cloud.

This could get interesting.

Who knew that IBM's sales team was so bad? Or Oracle's? Or Tibco's? In a string of earnings calls, each of these titans of enterprise software put their respective sales teams to the sword, blaming them for the companies' poor earnings reports. 

If only it were that easy.

Shooting The Sales Messenger

While we've talked about the decline of legacy software vendors for years, it's only now that the rise of cloud and open source are showing up in the earnings reports of legacy IT vendors. First it was Oracle, signaling an end to the traditional enterprise software licensing model. Then Tibco. Now IBM.

As IBM chief financial officer Mark Loughridge argued,

We had solid profit performance in January, but as the quarter ended hundreds of millions of dollars of very profitable software and System z mainframe deals fell short of the goal line. On the software side of the house they had a very good listed deals and I think this was just pure execution. We should have closed those on a sales side.

It would be easier to believe this if similar results (and excuses) weren't popping up across the legacy IT vendor landscape, and this despite a flat to improving spending outlook by CIOs, according to recent Barclays survey data:

Perhaps the problem isn't the sales teams' execution - a "lack of urgency we sometimes see in the sales force" as Oracle president Safra Catz opined - but rather the very foundation for legacy enterprise software sales: the software license.

It's The Data, Stupid

As Redmonk analyst Stephen O'Grady persuasively argues, the value of software as software has been declining for years. Value has been shifting to data, and software has either become free (open source) or distributed services made available over the web (cloud). Software revenue growth for the big vendors, not surprisingly, has slowed to a trickle, according to IDC data.

This shifting emphasis away from software sales, toward data-based services, has crowned Google as the market capitalization leader among its "peers," a trend that will likely continue for many years:

In fact, as O'Grady highlights, among the PWC global top-100 software vendors, none of the top-20 was founded after 1989. He concludes: "The data is clear: while there is substantial money in software, the difficulty of employing it as a primary revenue mechanism is increasing."

A Flight From Software To Cloud

For this reason, we've seen IBM and others diversifying out of software, bulking up in services, differentiated hardware, and more, as PWC's segmentation of software revenue among the world's top-20 software vendors indicates:

Source: PWC, 2013.

Such a shift won't happen overnight, and will be painful along the way. Very painful.

For example, SAP has been struggling to become a cloud-friendly company, and it's having deleterious effects on its earnings. As Wells Fargo analyst Jason Maynard spotlighted in a recent SAP research note, "increasing demand for cloud solutions is creating a negative drag on software license revenue growth."

Having lived through this at Novell, when we had to replace super high-margin NetWare revenue with lower-margin, lower-priced SUSE Linux revenue, I can state with some certainty that it's a long, tough road (fortunately, one that SUSE seems finally to have completed). Still, some companies, IBM in particular, have managed to make the transition, though no legacy IT vendor has gone to the lengths that Google, Facebook, Salesforce and other new-breed "tech" companies have, essentially making the sales function an automated credit card transaction over the web.

This friction-free, license-free model is the future. 

In this new world, purchasing power moves away from CIOs to developers, in the case of open source, and to line of business executives, in the case of cloud. Where it's not moving, and likely never will again, is to the top lines of the legacy IT vendors. Software has become a service, not a big revenue driver. That fact won't change, and shooting the sales messenger won't help.

Image courtesy of Shutterstock.

The infrastructure rich keep getting richer, and that's just fine, according to Amazon CTO Werner Vogel. As he declared at AWS Summit NYC last week, "infrastructure... is not a differentiator" for the enterprises and startups that keep buying servers to fill their own data centers. Given that Amazon has better scale and operational efficiency, Vogel's argument goes, there's no reason to continue trying to reinvent a wheel better built and operated by Amazon.

Self-serving? Sure. But true? Very likely, yes.

Amazon To Enterprise IT: Fall In Line

As much as enterprise IT may like to pat itself on the back for operational excellence, and naysayers like to point to Amazon Web Services' occasional outages, the reality is that AWS uptime is at least as good as that of enterprise IT, and arguably better. Even more pertinently, regardless of enterprise IT's claims, whether valid or not, developers and others are going to consider using public clouds like AWS. It's too convenient for them to ignore.

As Vogels argues:

"You have to stop wasting time and effort for things that do not matter for your customer. One of those things is your infrastructure. It is not a differentiator... [Our quest for efficiencies] helps you with economies of scale and drives our costs down. We've made the decision to pass those benefits back to you [in reduced costs]... If we are able to drive the cost of this compute and storage down to a point where you no longer have to think about it, tremendous products are going to be built. You will no longer be constrained by your infrastructure."

It's a compelling vision. But is it correct for all companies, all of the time?

The Infrastructure Rich Get Richer

Google doesn't seem to think so. As GigaOm's Derrick Harris points out, Google spent $1.2 billion on infrastructure in the last quarter, which represents a 20% jump over its infrastructure spend ($1.02 billion) in the previous quarter. Google clearly feels that infrastructure helps to differentiate it.

Or ask Microsoft, which has spent $15 billion on its data centers.

The same holds true for Zynga, which used to run 80% of its business on AWS but announced in 2011 that it would be moving to its own private cloud for most of its operations. By 2012 80% of its game activity was running on its private zCloud, with only 20% still hosted on AWS.

While there are some companies - Netflix stands out among them - that continue to run on AWS at large scale, it seems that many enterprises feel that infrastructure does matter. At least, at a certain scale.

However, my guess is that most of these don't truly appreciate why their infrastructure matters. While Zynga argued it could save money by going to a private cloud given its scale, the real value of running one's own data center isn't a cost advantage. It's a competitive advantage, but only when infrastructure is considered a profit center, not a cost center.

Making Data An Essential Aspect Of One's Business

Tim O'Reilly honed in on this point back in 2010, arguing that back-end infrastructure becomes critical to controlling front-end user experiences:

"We are once again approaching the point at which the Faustian bargain will be made: simply use our facilities, and the complexity will go away... We’re entering a modern version of 'the Great Game,' the rivalry to control the narrow passes to the promised future of computing... This rivalry is seen most acutely in mobile applications that rely on internet services as back-ends."

We're already see data, and its underlying data centers, become an advantage for Google, Facebook and other new-breed tech companies, while the legacy tech vendors have become a "rust belt" of sorts, to use The Wall Street Journal's phrase. But data isn't merely an advantage for so-called tech companies. 

Data powers the rise of more effective trading strategies for Financial Services firms. It enables better patient care in Healthcare. It wrings efficiencies from supply chains in Retail. Indeed, data is finally taking shape as the driving force for business in the Twenty-first Century.

So Do You Need A Data Center?

Which brings us back to Amazon. Most enterprises - even large ones - aren't running at a scale where their data-driven applications can't be managed in the cloud, be it Amazon's, Google's, Rackspace's or someone else's. Indeed, I suspect that many, if not most, applications currently running behind an enterprise firewall could conceivably be run in the public cloud.

But as we've seen with Zynga, at a certain size many companies are going to see advantages to running their own infrastructure. Not to lower costs, though they may well find that they can operate their data centers more efficiently than Amazon. But, rather, to increase control of how the manage their data centers to capture, manage, process and put to use data.

Yes, even stodgy old insurance, manufacturing and other "old world" companies. Facebook, after all, is a social media company. Google is a search and advertising company. Zynga helps people play games. And Amazon? It sells books. And yet each of these non-tech tech companies feels that infrastructure is critical. At least, at scale.

Image courtesy of Shutterstock.

It's official: the cloud is boring. While some of you already felt like cloud was BOA (boring on arrival), the reality is that it's been causing all sorts of headaches within the enterprise. Until now.

As Forrester analyst James Staten suggests, new product announcements from both OpenStack and Microsoft Azure got a muted yawn this past week, which is a Very Good Thing, as he explains:

"[H]o-hum releases like these are signs of maturity that signal to enterprises that it’s now okay to invest. Let’s face it. Most enterprises are conservative. We don’t like to be first with any new, risky technology. That’s why we wait for the 2.1 release before trying something new... We’d like other companies to work all the kinks out of the system, live through all the stability issues and fix all the bugs so we can get a solid release to work with."  

As much as people have tried to hype the cloud over the years, hype is precisely the opposite of what was needed to make cloud mainstream. As such, it's arguably a great sign that cloud is about to surrender the hype crown to Big Data, at least as measured by Google searches (as pointed out by Timo Elliott):

It's about time. As a Unisphere survey (PDF) of Oracle users indicates, cloud is becoming strategic within the enterprise, and much more pervasive. As the survey reveals, 37% of enterprise managers are running or piloting private clouds, which is a jump from 29% two years ago. More significantly, an additional 26%  use public cloud services for enterprise applications, a big boost from 14%. 

This jibes with a new Barclays survey of 100 CIOs, which found them piling into the cloud. Indeed, cloud, second only to Big Data, topped the list of IT spending drivers:

In sum, for years we've known that cloud computing would be big. But that's not what CIOs needed to hear. They needed to know that it could also be boring. We have arrived!

Dropbox is making a new push to win over business customers to its cloud-storage business. But its checkered history of security breaches may make it a tough sell in the enterprise.

Dropbox said Wednesday that it has added single sign-on (SSO) capabilities to its storage service, matching a capability that its chief rival, Box.net, has offered for some time. Dropbox also decided to rename its "Dropbox for Teams" business service "Dropbox for Business." The added feature and a name change may not seem like much to hang the new marketing push on, but Dropbox clearly has high hopes of making inroads in the enterprise.

With the SSO feature, companies can set up Dropbox so that employees who sign into their corporate account will also be signed into Dropbox, thus eliminating the need for a second login. The company said it's partnering with Ping Identity, Okta, OneLogin, Centrify, and Symplified. Ping Identity and Okta also provide SSO solutions to Box, which signed up with Ping Identity in 2011 to provide SSO capabilities via its PingFederate technology.

Dropbox doesn't just compete with Box.net, but SugarSync, Google Drive, Apple's iCloud, Microsoft's SkyDrive, and a host of smaller services. But it was Dropbox that Box CEO Aaron Levie skewered with an April Fool's Day prank. Why? Because Levie can see Dropbox in the rear-view mirror.

Dropbox's vast scale — it boasts 100 million users, with 600 million "work files" stored every work week, according to a spokeswoman — represents a threat. Dropbox counts users in 95 percent of Fortune 500 companies, according to Kevin Egan, the vice president of sales that Dropbox hired away from Salesforce.

Someone's Gotta Pay For All This

It's not clear how many of those people actually use Dropbox for business purposes — though it might not matter. Egan said that Dropbox's legacy in the consumer space — it has signed partnership agreements with both HTC and Samsung for free storage when customers buy the Samsung Galaxy S3 or HTC One, plus deals with Yahoo Mail and its purchase of Mailbox — means that consumers turn into evangelists when they enter the workplace.

"Millions of people have signed up using their work email address at Fortune 500 companies," Egan said. "And I think what we want to do is allow them to maintain the level of enthusiasm that they have, but embrace IT more, so they have 100 percent confidence that they have control and visibility."

The opportunity, of course, is that consumers are hooked on free; businesses aren't. Dropbox users can get up to 2 GB of storage for free, with up to 18 GB after various referrals and promotions. For Dropbox for Business/Teams, the price remains $125 per user, per year.

In 2012, however, co-founder Arash Ferdowsi told The Economist that only 4 percent of its users base were paying customers. That makes Dropbox look like the "we'll make it up on volume" strategy writ large — eventually someone's gotta pay, right? Attracting corporate customers helps make up for that.

Right now, Dropbox is asking what those corporate customers want. Tido Carriero, the lead engineer at Dropbox for Business, said future improvements could include things like making the Dropbox interface easier to use for large teams. "But for now, SSO is what they're shouting in our ear," he said.

Security Breaches Still Hurt

Unfortunately, what may be lurking in the back of some minds may be a pair of security lapses. In 2011, Dropbox accidentally pushed a code update that introduced a bug into the company's authentication mechanism, allowing third parties to log into user accounts and access files. Last year, hacks at other Web sites allowed attackers to penetrate accounts used by Dropbox employees, including a document from which they may have been able to harvest email addresses. In August, those email addresses were apparently used to send Dropbox users spam.

Since then, Dropbox has added two-factor authentication, as well as a recent administration console that can require two-factor authentication and monitor employee use, including restricting shared folders and links within the company. But Dropbox has been hurt by the lingering effects on its reputation.

"We haven't won deals — there have been deals that we have not won because of it," Egan said. "Sometimes it's just a matter of timing — explaining our security protocols better, sometimes it's a question of comfort with the business, and sometimes they're a couple of years away from embracing us. It's certainly hard to know what happened, but it's certainly top of mind for a lot of IT admins."

If Dropbox's strategy works, then its next target is government. Carriero said that the company is not FIPS certified. It's probably unlikely that the Pentagon would agree to use a cloud storage solution like Dropbox. A smaller county or town might end up using the service, though.

Storage has become a commodity. Box.net is attempting, through partnerships, to allow as many companies as possible to do stuff with that data. That adds value. Dropbox's purchase of Mailbox is headed in the right direction, but it still appears to be chasing Box, at least in the business space.

Lead image via Shutterstock

Microsoft may be a distant runner-up to iOS and Android in the smartphone race, and still lags Amazon EC2 in the cloud wars, but executives from the Windows Phone and Azure divisions aren't hurting for respect. In the past week, senior Microsoft executives have joined disruptive challengers in the mobile and cloud markets, suggesting that Microsoft's brainpower isn't lacking, even if its market share is.

The first executive departure was Charlie Kindel, the former Microsoft executive who managed developer outreach for Windows Phone, who actually left Microsoft nearly two years ago but just now found his way to Amazon. While it's still anyone's guess as to what Kindel will be doing at Amazon - given his past role with Windows Phone, some are mooting the possibility that he will be helping build out an Amazon phone - this is becoming a bit of a habit for Windows Phone executives to leave for Amazon.

After all, just last year Brandon Watson, also from the Windows Phone developer outreach team, left for Amazon. In his case, Watson joined Amazon to help on the Kindle cross-platform team.

Nor is it just the Windows Phone team that has been leaking.

Today Red Hat announced that it had snagged Radhesh Balakrishnan, Microsoft's Azure chief for Asia-Pacific, to run its virtualization efforts, including OpenShift, Red Hat's open-source PaaS offering. If Red Hat were to borrow from any competitor to steal a march on VMware in the virtualization market, or Amazon in the cloud market, Microsoft was a great place to look.

After all, Microsoft has been cutting into VMware's virtualization market share for years, and Azure has become a solid #2 to Amazon, as a recent Forrester survey indicates:

One way to look at this is that Microsoft is hemorrhaging talent and must be a sinking ship. But I think this would be an incorrect reading. After all, though Microsoft is late to both the cloud and mobile parties, it's making progress in both, and continues to own the affections of CIOs. 

No, I think the better interpretation is that for all Microsoft's execution issues, it continues to have a bevy of super-smart employees. Amazon and Red Hat certainly seem to think so. 

And for every Microsoft executive that leaves, there are many more who are choosing to stay. If anything, these departures say little about Microsoft's fortunes and instead simply indicate that Amazon and Red Hat may offer exciting options of their own. While it's tempting to assume that executive departures are a clear sign of a company's struggles, reading the tea leaves in this way would put Apple, Facebook and Google, among others, in serious jeopardy.

Most people would love to have that kind of "jeopardy."

Image courtesy of Shutterstock.

For decades the enterprise software industry has grown fat on outsized, upfront license fees coupled with ongoing, high-margin maintenance streams. Cracks in the model have threatened  to dismantle the system for years, as reported by The Wall Street Journal back in 2009, with CIOs chafing at paying for low-value, high-cost maintenance.

But if Oracle's big earnings miss last week is any indication, one of three disappointing quarters over the past two years, the cracks have widened to a chasm. As bellwether for the enterprise software incumbents, Oracle's miss suggests that the legacy vendors may struggle to adapt to the world of open-source software and Software as a Service (SaaS) and, in particular, the subscription revenue models that drive both.

It isn't going to be pretty.

Changing How Vendors Get Paid

This isn't just a matter of improving legacy software products. It's a matter of fundamentally changing how these legacy vendors deploy and charge for software. For example, Oracle's entire cost structure is built around the premise of a hefty upfront license and high-margin maintenance (Over 20% of the license fee). Ever read The Innovator's Dilemma? Clayton Christensen's classic addresses just this sort of inability for established companies to change. It turns out to be brutally hard, and often impossible.

Small wonder, then, that SAP has been raising its maintenance fees, trying to milk more money from its customer base as it faces serious headwinds maintaining its license model against upstart competitors like Workday:

Such actions basically force customers to start looking elsewhere, if they weren't already.

If this were just a matter of technology, Oracle, Microsoft et al. would likely weather the storm quite well. Oracle makes great software. There's a reason it's the enterprise database leader, and by a wide margin (though smaller rivals are gaining in popularity).

But building great technology is not enough. Oracle's peers, from SAP to IBM to Microsoft, also charge for software in this way, and across the industry they've been taking a beating as enterprises look to the improved productivity and OpEx of open source and SaaS. Oracle, for its part, blamed its miss on "sales execution," but as Cowen & Co. analyst Peter Goldmacher points out,

...[W]e have a hard time believing that almost all the legacy software names are suffering from poor sales execution at the same time. We believe the primary issue is a fundamental shift in the technology landscape away from legacy systems towards a new breed of better products at a lower cost both in Apps and in Data Management. Virtually every emerging software trend is having a deflationary impact on spend.

Not everyone sees it this way. Wells Fargo senior analyst Jason Maynard urges investors in Oracle to "keep calm and carry on," and expects Oracle's license revenue to grow 5% year over year. 

Good luck with that. 

Developers Rise In Importance

The problem isn't that Oracle and the mega-vendors have lost their hold on CIO affections. They haven't. The problem is that they have little to offer enterprise developers, who increasingly are the gateway to software adoption. Explaining this shift in his excellent The New Kingmakers, Redmonk analyst Stephen O'Grady argues:

With the rise of open source...developers could for the first time assemble an infrastructure from the same pieces that industry titans like Google used to build their businesses -- only at no cost, without seeking permission from anyone. For the first time, developers could route around traditional procurement with ease. With usage thus effectively decoupled from commercial licensing, patterns of technology adoption began to shift....

Open source is increasingly the default mode of software development....In new market categories, open source is the rule, proprietary software the exception.

The top-down approach, in other words, is losing its currency within the enterprise, as both open source and cloud enable developers (not to mention line of business executives) to get work done without getting permission.

The effect on the mega-vendors is overwhelmingly negative, as Oppenheimer analyst Brian Schwartz posits:

We believe something more secular is occurring as cloud computing increasingly entices CIOs to refresh their legacy IT systems with cloud services rather than infrastructure. Additionally, software purchasing is becoming more decentralized with decision-making power shifting away from IT and weakening the selling advantage as a "one-shop supplier." These trends dampen big-ticket on-premise software purchasing and remain a headwind for the infrastructure vendors.

None of which means the big vendors are going out of business anytime soon. In my years at Novell, for example, I witnessed a serious decline in the company's fortunes, even as revenue remained above $1 billion.

Time To Change?

In fact, Novell is a great example of what might happen to the mega-vendors. Ultimately, Novell had to be bought out and then split into pieces in order for its SUSE business unit, now an independent company, to thrive. SUSE can now support its subscription model without all the overhead Novell's legacy business imposed on it.

The same may well prove true for the other enterprise mega-vendors.

Not all enterprises will be affected equally, of course. Years ago IBM reshaped its business to be more services driven, which allows it to embrace new trends like open source enthusiastically. And even Oracle has built out a considerable cloud business (despite starting years later than it arguably should have), to which it can move current customers. Microsoft has been doing the same, transitioning customers to Office 365 rather than lose out on customers moving to Google Docs.

But the revenue profile for these businesses differs significantly from the traditional license/maintenance business, and it's an open question whether any of these companies will be able to turn the corner in their current form.

The Wall Street Journal echoed this sentiment, suggesting that Oracle's "business is being eroded at the edges by smaller, more focused companies offering newer technology," and, I would add, by the very different business models these firms employ. It's a great time to be in enterprise technology...so long as you're not selling a legacy business model. 

Image courtesy of Shutterstock.

Veronica Mars, the critically acclaimed, little-watched television show from the mid-2000s was dead, buried — and nearly forgotten.

I saved it. With my iPhone.

I downloaded the Kickstarter funding app from the App Store. With a swipe of a finger, and my mobile Amazon Account, I pledged $10 to help the producer finance a  movie based on the show. On Twitter, I told all my followers to do the same. Then, with a quick status update to my Facebook page, I encouraged my family and friends to do likewise — and to tell everyone they knew to follow suit. All told, it took less than five minutes, and now one of the best network TV series of the past ten years will live again, this time on the big screen. 

The new Veronica Mars movie has been greenlighted, its financing secured, the star — the lovely and talented Kristen Bell — is signed. Nothing to do now but type out a script. I should at least garner a “producer” credit. The Motion Picture Academy is welcome to thank me at next year's Oscar ceremony. 

On second thought, maybe the Academy should fear me. For I did not merely save Veronica Mars, I am leading the charge to destroy the entire film industry as we know it. My weapons? The technology I carry around with with me everyday. A smartphone, an app, cloud services, crowdfunding, social media and online payments. 

Explosions In The Film Industry

The total gross film receipts in the U.S. last year were just under $11 billion. The average box-office take of a Hollywood film was a middling $16.5 million. This does not include international box office receipts, DVD sales, streaming or network television. The world consumes massive quantities of entertainment. Yes, we have a choice in what we watch and when and where but almost no choice, no direct say whatsoever, in what actually gets made, or by whom. This has always been the case — until now. 

Despite its near-universal appeal, there may be no industry that’s more insular, more inexplicable to the very public it appeals to than the film industry. Technology is changing all of this, exploding the industry outward and, finally, fully empowering those who buy the tickets. Yes, technology has radically impacted the industry itself — think amazing special effects, 3D, green screens, post-production wizardry. We can now download or stream our favorite films and TV series to watch them anywhere at any time — legally or otherwise. But until now, we were effectively powerless in what got made.

No longer. Veronica Mars will likely be only among the first of many multi-million-dollar Hollywood flicks that are produced solely because of the efforts of individuals scattered around the world, pledging anywhere from $1 and $10,000, and sharing their enthusiasm on social media. The crowd is no longer simply marketed to, but is now driving what gets made from the start. 

Crowdfunding

Wikipedia defines crowdfunding as "the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations." Rob Thomas, the creator of the original Veronica Mars series, spent years attempting to turn his creation into a film. Until he turned to the crowdfunding platform, Kickstarter, he failed every time. From The New York Times:

In its three seasons on the air “Veronica Mars” was never even one of television’s Top 100 most-watched series, but in its afterlife it has broken new ground. On Wednesday night fans and supporters of that show about a wisecracking young sleuth (played by Kristen Bell) pledged more than $2 million to produce a “Veronica Mars” movie, less than 12 hours after the fund-raising drive was announced on Kickstarter.

Mr. Thomas told fans they had 30 days to raise $2 million for “our shot” at producing a film, adding, “I believe it’s the only one we’ve got.” And by about 9 p.m. that goal was met, with pledges continuing to come in on Day 2.  

The Web, social media, online payment services — and the always-on connectivity our smartphones provide us — are enabling an entirely new form of financing. These technologies are a;sp enabling anyone to pursue their creative vision or build a better mousetrap by appealing not to a skeptical venture capitalis or a cynical producer, but to regular people who may share a similar passion or interest. The technologies we have in our pockets are simultaneously empowering us to both create our visions and fund those whose visions.

A Funding Platform for Creative Projects

For the Veronica Mars project on Kickstarter, fans could pledge from $10 to more than $10,000, with various goodies offered at each level. For $10, the “backer” receives a PDF of the shooting script on the day of the movie’s release. For $10,000, a speaking role was offered.

Of course, Veronica Mars is a project with a built-in core of fans. Not all crowdsourced projects have that kind of juice to get to their funding goals.

But here's how it might work: A budding young filmmaker uses her smartphone to record a two-minute ‘pitch’ that she uploads to YouTube. Enough people react positively that she makes a Kickstarter project — seeking, for example, $1 million to make her movie and another $1 million to help market it. Not easy, but it might just work — even for people who would otherwise have no shot at raising that kind of money.. 

Crowdfunding, cloud services and mobile devices are remaking filmmaking and film financing. But let's not stop at funding Veronica Mars. The audience still doesn't have an financial stake in the creative endeavors we support. What if Veronica Mars turns out to be a blockbuster? Shouldn't I get a piece of those profits? After all, I was an early financial backer. 

It's not like I'm asking to be onstage at the Oscars with Rob Thomas. Although....

Images from Veronica Mars Kickstarter project video.

Remember when "Other" was just a rounding error in market share reports? Now in the server market, it just might be the main event, as Facebook's Open Compute project, cloud computing, and other trends drive buyers to no-name server vendors instead of IBM, HP, and Dell. Time to short the incumbents?

According to new research from Gartner, server veterans like IBM and HP took a beating last quarter, with shipments plummeting 11.5% and 5.9%, respectively, contributing to an overall 0.2% server shipment slowdown. Meanwhile, so-called "whitebox" vendors that make up the "Other" category saw a 22% rise in revenues, and now account for 35.2% of global units shipped. IDC's market data showed largely the same incumbent malaise, with "Other" pumping revenues 14% year-over-year.

It used to be that such whitebox vendors like Quanta Computer, Wistron and Compal Electronics, all based in Taiwan, could be counted on to quietly build products for their name-brand American partners like Dell. No more. As Chris Gonsalves reports, companies like Google and Rackspace have looked to tailor servers to their requirements by going direct to Taiwan's leading ODMs, which has encouraged these vendors to start selling directly to more traditional enterprise accounts.

It's only going to get worse for the incumbents.

Cloud: Friend or Foe?

After all, the whole focus of cloud computing is to commoditize the server, making it a compute resource enterprises rent rather than buy. While not all workloads will move to the cloud, a big percentage will. In the cloud, enterprises simply aren't going to care whose logo sits on a box they can't even see.

And for those who do persist in managing their own datacenters, things like Facebook's Open Compute project may drive enterprises toward designing in lots of "Other." While Open Compute may not matter to most mainstream enterprises, as Mark Hachman points out, it's one more pressure point that incumbent server vendors could do without.

(See also The 5 Big Questions Dell Will Have To Answer To Survive.)

Ironically, the very thing that most threatens legacy server vendors could also save them, and then ruin them anyway: cloud.

IBM just announced it's getting behind OpenStack in a big way, basing all of its cloud services and software on an open cloud architecture. HP and others have also committed to OpenStack or other cloud platforms. Rather than be cannibalized by the public cloud, these server vendors are trying to extend their brands to private clouds, allowing enterprise customers to rent what they used to buy.

The problem, however, is that these vendors might be too successful. 

A Catch-22 in the Cloud

While public clouds like Amazon's AWS have been on a tear, they've still largely been relegated to test and development workloads. What happens when IBM and HP help make CIOs comfortable with the cloud? It's possible that those risk-averse CIOs will stick with the tried and true incumbents. 

But it's just as possible that once enterprises get comfortable with running mission-critical workloads on a private cloud that carries a shiny Dell logo, they'll take the next step into the public cloud, projected to be a $131 billion market by 2017, according to Gartner. Amazon has long argued that the real benefits of cloud computing are lost when trying to replicate them in private cloud deployments. While it's possible that IT will effectively mimic the public cloud, it's just as possible that developers and line-of-business executives will take their CIOs newfound enthusiasm for the cloud and run with it...straight to Amazon, Rackspace, or another public cloud provider.

In so doing, they'll inadvertently be growing "Other's" share of the global server market... and legacy server vendors' desperation to embrace the very thing that may kill them: the cloud. 

Image courtesy of Shutterstock.

Someone has a problem, and it doesn't appear to be Amazon. In a somewhat shocking declaration, VMware CEO Pat Gelsinger told a group of VMware partners that if "a workload goes to Amazon, you lose, and we have lost forever," as reported by CRN. This is true so far as it goes: the more enterprises move applications to the public cloud, the less need they have for VMware's technology, or for other datacenter-bound infrastructure.

But where Gelsinger really tips his hand is addressing why he wants to keep customers out of the public cloud:

We want to own corporate workload. We all lose if they end up in these commodity public clouds. We want to extend our franchise from the private cloud into the public cloud and uniquely enable our customers with the benefits of both. Own the corporate workload now and forever.

To save customers money? To boost their productivity? To benefit the customer in any way? No, no and no.

Instead, VMware's plea essentially translates to "you have to help us lock customers into our platform," as Benchmark general partner Bill Gurley suggests. It's fine for VMware to say such things in the privacy of its boardroom, but on stage? In front of hundreds of partners and the press? Not wise.

Those familiar with the early days of open source will appreciate the similarities to Microsoft's attacks on open source. When Microsoft wrung its hands about the GPL being "bad for the world," it wasn't really worried about customers. It was worried about its business model. Microsoft knew how to compete with cheap. But free? That was difficult.

Now, VMware is up against a highly disruptive competitor, and by its own admission, it's not winning. VMware President and COO Carl Eschenbach said as much as he tried to rally VMware's partner troops: "I look at this audience, and I look at VMware and the brand reputation we have in the enterprise, and I find it really hard to believe that we cannot collectively beat a company that sells books."

And yet, it hasn't been beating Amazon. Not in cloud workloads, anyway, given Amazon may record as much as $3.8 billion in AWS revenue this year, according to Macquarie Capital. Yes, much of Amazon's volume thus far has come from test/development workloads, but that is almost certainly just a starting point. Remember when Linux was only used for edge-of-the-network, non-critical workloads? That didn't last long...

With any technology disruption, there will be winners and losers, but VMware might want to take a page out of IBM's book, which has somehow managed to weather and even thrive despite serious threats to its legacy businesses. Ironically, even old-school SAP might be able to show VMware the way. SAP now lets customers rent its in-memory Hana database as a service on Amazon.

Perhaps Gelsinger could take a page from his own company's PaaS offering, Cloud Foundry. Cloud Foundry, now part of the Pivotal Initiative, is emphatically open source and explicitly eschews infrastructure moorings. Cloud Foundry, in other words, is the antithesis of the lock-in Gelsinger appears to be advocating. "Lock-in to Amazon is bad," goes the reasoning, "but lock in to VMware? More, please."

Not that VMware is the only conflicted company on earth. Nor is VMware doomed. Not by any stretch. The company continues to have a firm hold on the enterprise CIO. But to keep that hold, it might want to be a bit less blunt about wanting to turn that hold into a stranglehold. After all, one big reason for enterprise adoption of first open source, and now the cloud, is precisely the flexibility to get things done without being locked into any company whose guiding principle is to "own the corporate workload now and forever."

It's hard to believe, but just 10 years ago open source was considered "communist," an anti-American cancer and the terror of corporate legal departments everywhere. Now, as a recent Harvard Business Review article reports, it's business as usual. Mundane, even. Developers are to blame. Getting projects done proved far easier with open-source software than protracted licensing negotiations for proprietary software.

Now this same human desire to evade bureaucracy and foster productivity is driving broad adoption of cloud services, and this time it's not just developers driving adoption. Lines of business executives are also encouraging Shadow IT to skirt enterprise policies. The catch is that it is also introducing all sorts of security and management quandaries. Skyhigh Networks, a new startup launching today and funded by Greylock, aims to give CIOs insight and some control over these cloud services without becoming a bottleneck on productivity.

Data Security And Shadow IT

Today, services like Dropbox, for storage, and Remember The Milk, for task tracking, are used by employees in most Global 2000 enterprises, but rarely with the approval, or even knowledge, of corporate IT departments. Indeed, the use of cloud-based services is by now so widespread that corporate IT really has little insight into the pervasiveness of these cloud services within their organizations, as cloud pundit Ben Kepes has blogged.

Cloud services help achieve a goal which companies strive for, efficiency. However, cloud services can also be problematic, as they bypass the corporate infrastructure. No big deal, right? Wrong. For example, services may have user agreements that, clicked through quickly by impatient users, transfer IP-ownership over any data stored through their services. Cloud services may also store data in a way that allows information to be hacked by dangerous third parties.

Like the enterprise IT reaction against open-source software 10 years ago, there is a reflexive urge to just say no to cloud services and try to shut down all but a short list of approved ones. Good luck with that. It’s too late to try and cap cloud service adoption. A better approach is to get visibility into all the services running today, put in policies for their safe use, and let employees choose the services that work best for them. Just as happened with open source. Once IT got open-source software blessed by the legal department, with the risks understood and managed safely, there was no looking back. It’s everywhere now. 

Giving The CIO (Some) Cloud Control

Enter Skyhigh Networks. Skyhigh lets IT say "yes" by giving an enterprise visibility into all the cloud services employees are already using (usually 10X what IT has already formally approved), and providing tools to manage any risks and enable adoption.  

Skyhigh offers a cloud-based service that is frictionless to central IT and user experience. Give it 30 minutes and it will cleverly discover all third-party cloud services employees have running (e.g., Dropbox, Box, MindtheMilk, Salesforce.com, etc.), and show you a list of the most dangerous. Skyhigh already has risk profiles on more than 2,000 of the most popular enterprise services using risk metrics from the Cloud Security Alliance, which rates 50+ parameters for both security and legal risk. When IT sees everything running, it can put in place governance policies for employees to safely use all but the most dangerous cloud services. Instead of the CI"no" you have the CIO as guide, enabler, trusted adviser. 

Want a free pass to try Skyhigh? Here you go.

Going forward the service will also analyze use of these services for anomalies, powered by a Hadoop cluster engine. If a service or user behaves outside their norm, Skyhigh can alert IT. Finally, Skyhigh can also meter usage to compare to one's subscription agreements. One Skyhigh customer found that it was using 5,000 fewer Salesforce.com seats than it had purchased. That quickly translated into money in the customer's bank.

Skyhigh is currently being piloted by a handful of Fortune 20 companies, half-a-dozen Fortune 100 companies and another dozen 'normal' size companies like Netflix and Lucile Packard Children's Hospital. In each case, CIOs thought they had 25 to 70 cloud services running. An educated guess, but wrong. The fewest they found was 200+ and in two instances 2,000+, one of which includes a company known for its buttoned-down approach to security.

There's no going back on cloud computing. Like open source, it's here to stay. But also like open source, the best way for enterprise IT to confront the cloud is to understand and enable its sensible use. Skyhigh may offer a serious step toward that goal.

Image courtesy of Shutterstock.

Microsoft ended the week with a pair of black eyes: a failure to secure a security certificate brought its Azure cloud service tumbling down, and the company also confessed to being the latest corporate victim of a high-profile hacking attempt.

The Azure failure also affected Microsoft's Xbox game, Halo 4, Microsoft confirmed.

The highest-profile incident may have had the least effect: "a small number" of Microsoft PCs were penetrated by an unknown intruder. No user data was compromised, Microsoft said in a blog post. 

"Consistent with our security response practices, we chose not to make a statement during the initial information gathering process," Matt Thomlinson, general manager of Microsoft's Trustworthy Computing Security unit, wrote. "During our investigation, we found a small number of computers, including some in our Mac business unit, that were infected by malicious software using techniques similar to those documented by other organizations. We have no evidence of customer data being affected and our investigation is ongoing."

The attacks were consistent with other efforts to penetrate computers within Apple and Facebook, Microsoft said. Facebook discovered its attack last week, which followed attacks on the Wall Street Journal and The New York Times via an unpatched exploit within Java, exploited, experts believe, by the Chinese military.

Separately, ZenDesk reported Friday that it too, was hacked, exposing emails that clients Tumblr, Twitter and Pinterest used to communicate it with it for service-related requests. 

Lack Of SSL Certificate Brings Azure Down

At press time Friday night, Microsoft still had not implemented a fix for the Azure issue, caused by a failure to obtain a new SSL certificate. That brought its Azure storage services down across all of its worldwide regions, as well as services that were dependent upon them.

At 9:30 PM UTC (4:30 PM ET), Microsoft discovered that "HTTPS operations (SSL transactions) on Storage accounts worldwide are impacted," the company said.  By 9:45 PM UTC, the the management portal, WindowsAzure.com, and the service bus, plus the websites that Azure serves were also down. By 10:15 PM, the company had begun validating steps to repair the problem, but hadn't formally announced a fix. After users began circulating screenshots of what appeared to be an expired SSL certificate, the company acknowledged its error.

"Windows Azure Storage has been affected by an expired certificate," a spokesman said in an emailed statement. We are working to complete the restoration as quickly as possible. We apologize for any inconvenience this has caused our customers. For more information please go to http://www.windowsazure.com/en-us/support/service-dashboard/." Microsoft also apologized to customers via Twitter.

Microsoft also reported problems with its Compute services, preventing users from creating new virtual machines. That left users who needed to create those virtual machines to host new apps scratching their heads. "Most of our apps are screwed up now!" pinvoke.in, one commenter, complained. "WHATS NEXT? All compute instances die because someone at the data center switched them off?"

Unfortunately for Microsoft, this sort of thing has happened before. At the end of February 2012, Microsoft failed to account for the leap day at the end of the month, Feb. 29. As a result, the Azure services was down for more than 12 hours before Microsoft could issue a fix. Microsoft hasn't said whether or not the recent outage was a result of an oversight, or a more serious technical error.

Oddly enough, Netflix began reporting problems of its own on Friday night, leading to the intriguing possibility that two cloud services may have been failing at the same time. But although Netflix has gone down before when Amazon's AWS service failed, Amazon's own AWS service dashboard didn't indicate any problems.

In 2006, Oracle promised customers it would always support and update its growing portfolio of business applications. By then it had swallowed PeopleSoft and Siebel Systems and it had to reassure customers that their investments were secure. Fast-forward seven years, and Oracle's promise, which it called Applications Unlimited, is coming back to haunt the software maker.

While trying to hold on to PeopleSoft and Siebel customers, Oracle was just getting started on its own Fusion Applications. The company marketed Fusion as its next-generation application suite that would bring together the best of its e-Business Suite and the software it had acquired for billions of dollars. Oracle believed Fusion would eventually spark a mass migration from the older applications to the latest and greatest from its own stable. But a new survey from Forrester Research has found Oracle was wrong, and customers are holding the company to its word and sticking with the older software with which they're familiar.

Oracle's Dilemma

By refusing to switch to the more expensive Fusion apps, Oracle customers are making it difficult for the company to grow application revenue, according to Forrester. "In recent years, Oracle's application revenue growth has underperformed both the overall software market and SAP, resulting from slowing growth in existing apps and too little revenue from its Oracle Fusion Applications," according to the report, entitled "Oracle's Dilemma: Applications Unlimited Versus Oracle Fusion Applications."

Forrester's numbers are sobering. The survey of Oracle clients found 65% had no plans to move to Fusion Applications and another 24% were on the fence. The biggest barriers were Oracle's muddled application strategy and the immaturity of Fusion, which became generally available in November 2011.

At the same time, recent acquisitions of software-as-a-service companies, such as Taleo and RightNow Technologies, are not bringing in enough revenue to take up the slack, according to Forrester. Oracle customers show little interest in trying the SaaS products, with only 11% of survey respondents interested in making the move.

Making matters worse, Oracle is in danger of losing business from some of its customers. Forrester found 29% of the companies it polled were planning to move to another vendor's SaaS product or packaged application. The main reasons for their unhappiness with Oracle were high licensing costs, high maintenance costs and difficulty in upgrading.

Impact on Oracle Customers

Oracle's lackluster revenue growth could eventually have an impact on customers. When revenue from a vendor's products are flat or declining, the company often treats the software as a "cash cow, milking maintenance revenues and cutting back in its investment in enhancing and supporting them," Forrester says.

While there are no signs that Oracle is heading down that path, the company is unlikely to let Applications Unlimited customers stay where they are forever. Oracle has sunk too much money and resources in Fusion Applications to let customers ignore them, Forrester says.

Oracle is expected to step up efforts to get customers to move to Fusion or its cloud infrastructure products. How the company will do that is not known, but it could decide to make life harder for companies that stay with the older technology. Forrester is advising companies to start preparing for the added pressure they will be feeling from Oracle.

For Oracle, Forrester believes it's "make-or-break time" for its applications business. The company's Fusion Applications are its main strategy for growing software revenue and defending against a number of fast-growing SaaS competitors.

Forrester believes that won't be enough.

Oracle is likely to kick-start its growth strategy with more acquisitions, and the likeliest candidates will be fast-growing SaaS companies. In the meantime, Applications Unlimited customers should ponder their next move.

Oracle did not respond to multiple requests for comment.

Image courtesy of Shutterstock.

Remember SUSE? Way back when it was the cutting-edge Linux distribution, and held its own with Red Hat. But that was a long time ago, long before Microsoft adopted it as its pet and Attachmate took it over as part of its Novell acquisition. With Red Hat dominating the enterprise Linux server market, Canonical owning the Linux desktop market, and Google's Android running roughshod over everyone in the mobile market, what, exactly, is left for SUSE?

In The Clouds

Cloud, perhaps? After all, Alan Clark, director of Industry Initiatives, Emerging Standards and Open Source at SUSE, and a friend of mine, was elected in 2012 to chair the OpenStack Foundation board. OpenStack seems to have real momentum, but ever since Red Hat got involved, it's hard to see OpenStack turning out much different from Linux, where Red Hat wins in part because it's such an active contributor. Already Red Hat has gone from a somewhat light contributor to the third-highest contributor after Rackspace (OpenStack's founder) and HP.

SUSE? It barely makes the list of top-10 contributors.

In open source, being the source of the code is more important than owning the source code, and Red Hat is on pace to be the dominant contributor to OpenStack. This can't be comforting to SUSE. 

Even if we look at the Linux distributions that individuals run on Amazon Web Services (AWS), Rackspace and other public clouds, SUSE shows up as a rounding error, with Canonical's Ubuntu commanding the market and Red Hat Enterprise Linux clone CentOS coming in second. It's telling that when HP, a longtime SUSE supporter, had to choose an operating system to power its own public cloud, it chose Ubuntu. 

All of which leaves SUSE in a precarious position. 

On Life Support?

No, SUSE is not dead yet.  As longtime Linux pundit Steven J. Vaughan-Nichols told me, 

@mjasay From the outside looking in, SUSE still has some presence on servers, and it still seems strong on mainframes.

— sjvn (@sjvn) January 25, 2013

This is true, but in a conversation with a former SUSE employee who is familiar with SUSE's past and current performance, revenue from SUSE's hardware partners like HP and IBM has been constant but stagnant over the past few years. As he puts it, these longtime SUSE partners want a hedge against Red Hat, but they know that their businesses largely depend upon Red Hat. So they give SUSE just enough business to keep it alive.

This doesn't tell the whole story, though. Other sources inside the company tell me that last year SUSE exceeded its sales targets. Last year, as Forrester notes, SUSE brought in $200 million in revenue and expects to ratchet that up to $234 million.  Life is easier for SUSE now that it has jettisoned the need to upsell Novell's (pretty tired) management products. 

Post-Novell, all SUSE needs to worry about is Linux, and SUSE Linux has always had a reputation for serious quality. Now that it has seriously focused itself on the enterprise server market, eschewing erstwhile "sexy" markets like mobile, it's a much more coherent story to tell would-be customers. It remains relatively strong in Europe, as Paulo Frazao highlights, and its role as a hedge against Red Hat puts it in a good position with VMware, in particular, as Ian Waring suggests.

But even as a Red Hat hedge it plays second fiddle to CentOS, of which I was reminded by Kevin Schroeder. No, not with the server vendors, who generally avoid CentOS in an attempt to placate Red Hat. But over the past few years I've seen very large enterprises shift applications, including mission-critical applications, to CentOS as a way to cut costs. And in terms of general interest in the two platforms, well, a chart says a thousand words:

Still, this doesn't help SUSE. While I believe the company is wise to focus on the enterprise market, and not distract itself by chasing mobile or even desktop markets, doing so leaves it to compete against its old nemesis, Red Hat, without any compelling reason for the market to drop its preferred RHEL distribution for the Avis of Linux.  SUSE may well "try harder," but all it seems to have earned for its troubles is a permanent position as a distant, second-place hedge against Red Hat, whose lead continues to grow in the markets about which SUSE cares most. That's a dangerous position for any company.

Lead image courtesy of hotamr. 

Ruthless competitiveness is what Oracle Chief Executive Larry Ellison uses to win in business. So no one should be surprised that how he defines the cloud depends on what's needed at the time. Inevitably, this sometimes shows the emperor has no clothes, or at least is down to his Armani skivvies.

While something in Oracle's massive portfolio may fit the industry definition of a cloud service, it is not the company's new integrated hardware and software bundle that's meant to provide the infrastructure for private clouds, according to David Linthicum, chief technology officer and co-founder of cloud consultancy Blue Mountain Labs. What Oracle is really selling, or in this case renting, is preconfigured application servers for the data center.

"Now we know how Oracle is addressing this shift in the market: by renting its stuff and calling it a cloud," Linthicum says.

Oracle's Cloud Strategy

Oracle's cloud strategy has been challenged before. Charles Babcock, who has covered the cloud for years for IT trade magazine InformationWeek, named Oracle the number one "cloud washer" of 2011. That term refers to companies whose cloud products are mostly old technology with the word cloud added to the name.

At the time, Babcock took aim at the Oracle Exalogic Elastic Cloud, "a name that contains so many contradictions of the definition of cloud computing that it threatens to render the term meaningless."

"It's an old-fashioned appliance that's been renamed 'a cloud in a box,'" he wrote.

Oracle Can't Move Fast Enough

Multi-billion-dollar companies like Oracle can't simply turn a switch and re-architect their technology to meet customer demand for something so dramatically different as cloud computing. This is why Ellison refused to acknowledge the cloud even existed until Oracle OpenWorld in September 2010. With startups eating away at his software business, Ellison needed to do something fast. Confusing customers with verbiage was the quickest way to buy time.

Fast-forward two years to this year's Oracle's OpenWord conference in San Francisco, and cloud became Ellison's favorite word to essentially describe renting Oracle data center technology, and letting the company handle the maintenance. Instead of real cloud computing, Ellison introduced what was mostly a new way of buying last-generation technology.

What's In Store

This year should get really interesting. Oracle is expected to start feeling even more pressure from true public cloud providers, such as Amazon Web Services, Google, Microsoft and Rackspace, as well as private cloud providers like Eucalyptus. If history is an indicator, then Ellison is likely to release the attack dogs in his marketing department to try to discredit rivals and confuse customers, while the company plays catch up.

For example, Oracle responded last year to tough competition from IBM in the hardware business by releasing ads with unsubstantiated claims that Oracle servers were much better. Three times the National Advertising Division of the Better Business Bureau pressured Oracle into removing the ads that appeared as full-page spreads in The Wall Street Journal and other publications.

The last ad, pulled in November, claimed Oracle's Exadata server would run five times faster than IBM's Power Server "or you win $10,000,000." The NAD found that the ad did not provide "any speed performance tests, examples of comparative system speed superiority or any other data to substantiate the message."

Ellison is sure to use this kind of bare-knuckles competitiveness in battling cloud rivals. It's in his DNA. Let's not forget that in January, Oracle Team USA, the America's Cup champion team owned by Ellison, was fined more than $15,000 for spying on the Italian team.

So cloud watchers should sit back and get comfortable. Ellison is likely to provide quite a show and a lot more smoke and mirrors.

Photo by ShutterStock.

It was fashionable this year to dismiss CES as irrelevant and a waste of time. Some tech sites didn’t even send reporters. Others that did send staff mostly did so to promote their own brands, with big booths covered in their names and logos.

To be sure, there’s some truth to all the sneering. The show is too big, too crowded, too bloated, too filled with doofy booth shows like the one in the photo above, where Nikon had ballroom dancers performing ostensibly to demonstrate the stop-action performance of some new cameras.

Nevertheless, after four days in Las Vegas I came away feeling optimistic. I wasn’t struck by any one particular product, but by a sense of what all of them, together, represent.

Which is this: The Web, now about age 20, is hitting an inflection point. A new Internet is emerging. In fact it is already upon us. I don’t mean just the “Internet of Things.” That’s part of it, but the whole picture is bigger.

Think of it this way. The first Internet was a place you went to. You dialed up or logged in. It was over there, and you were here. The new Internet is just here. It’s all around us. It’s constant, ubiquitous and pervasive. We interact with it so naturally that there seems to be no user interface at all. The new Internet is in our phones and in our homes. It’s in our refrigerators and thermostats and cars. It’s on our bodies. We ourselves are actually part of the Internet. We’re woven into the very fabric of it.

Thus, in mobile, we see the drive toward devices that cost nothing, or at least so close to it that someday soon practically everyone on the planet will have one. I gave a few presentations last week and at each one I handed around two tablets from Datawind, the company that’s making the Aakash tablet to be sold in India this year at a price of $20. People were stunned. The Aakash isn’t cutting edge, but it has a decent processor and runs a recent version of Android, with all the usual Google apps. You hold one in your hand and it’s easy to imagine the next billion people coming online.

The Plus And Minus Of Mobile

So there’s mobile everywhere, which means computing everywhere, which means information everywhere, which means huge changes for every aspect of life on our planet. Politics, news, entertainment - everything.

Marketers should love this, but right now they hate it. They are incredibly frustrated by mobile. I heard this over and over in meetings I attended. They simply can’t figure out how to do anything compelling with tiny screens.

I get the frustration. These are people who make their living by pushing messages onto screens. Their industry has been doing this for half a century, first on televisions, where it was very effective, then on computers, where it was less so. Now the screens are tiny, the ads are ineffective and the dilemma facing marketers is huge.

But maybe they are looking at mobile the wrong way. Maybe the best use of smartphones will be not as vehicles for pushing ads but rather as devices with which to gather data. Marketers are hampered by an understandable bias. It’s natural for them to see every new screen as yet another miniature television.

Advertisers and marketers are also very good at talking, less good at listening. They’ve spent a half century running a one-way communications operation. But mobile maybe will force them to become better listeners. Maybe mobile devices will end up being more valuable to marketers by means of their ability to track and transmit behavioral data than because of any revolutionary new miniature advertisement that, by some magic, people won’t hate.

Cloud And Big Data

Which leads to cloud and big data, the tools by which all that random data will be aggregated and made sense of. Which leads in turn to Google, the company best positioned to gather massive amounts of mobile data (its Android operating system has 75% market share in smartphones, and now maybe you can see why Google is willing to “give Android away” and isn’t overly concerned when critics carp that Google “doesn’t make any money on Android”).

Not only is Google in position to gather data, but it is probably better equipped to do something useful with that data. After all, Google has spent more than a decade refining the art of data-driven advertising, while at the same time pushing ever closer to realizing the dream of true artificial intelligence.

Which leads to a (perhaps depressing) realization: When true AI finally does emerge, its first application will be to sell laundry detergent. I made this point in a presentation to a group of people who make their living selling, among other things, laundry detergent. They found it not depressing at all. Point taken.

New Interfaces

What else? New interfaces. This wasn’t front and center at CES, but if you looked and listened carefully you found it. Intel was talking about interfaces. Leap Motion and its revolutionary controller were at the show with Asus. Nuance is pushing voice into everything. Samsung was showing off new ways to control your TV.

There’s plenty to carp about. Nothing works as well as vendors say it will. Every vendor has its own solution and they don’t interoperate. But that’s always been the case, and we’ve always found our way forward. The same will happen here. Remember where we were ten years ago. Now picture ten years in the future.

We’ll get there, if only because we have to, because the way we deal with the Internet today - tapping away on keyboards or poking at virtual keyboards on tiny mobile touchscreens - is clumsy and primitive and stupid.

Wearables, Homes, Cars

Which leads to wearables. The show was full of them, and while some seem a bit nutty, this is where we’re headed. We already carry our smartphones with us 24–7, but now we’re about to clad ourselves in arrays of sensors. Here, as in mobile, marketers are already trying to dream up ways to jam advertising messages into these devices, and already anticipating frustration. As with mobile I think they are looking at this the wrong way. The game may be less about “What can I sell with these things?” and more about “What can I learn from these things?”

Same goes for home automation devices. Nest wasn’t at at the show with its incredible learning thermostat, but that product is probably the best example of what can be done in this space. Are marketers out there trying to dream up ways to push ads onto the Nest device? I cringe to think so, but I wouldn’t doubt it. But the real value of Nest and other devices is the data they will generate. At the most crass level, if I were a marketer trying to sell luxe or near-luxe products I would view the Nest an amazing proxy device. Think about it. Who buys a Nest thermostat? Someone who is tech-loving, app-savvy, and has enough disposable income to drop $249 on a thermostat. Who wouldn’t want to target that customer?

Finally, cars. I’ve never seen so many outside of a car show. I was eager to see what companies like Ford are getting up to with screens and computers and apps. I left a meeting with Paul Mascarenas, the CTO for Ford Research and Innovation, feeling blown away by what they’re doing. More on that in a future article.

A few years ago I stopped going to CES. I thought it was a waste of time, and more annoying than productive. I still find the show itself almost completely unbearable, while the stuff being shown there continues to amaze and inspire. It’s easy to laugh at the goofy products. But the relentless push forward, the urge to innovate and compete, to make the world a smarter, better, more exciting place - that is still there, as strong as ever, and I came away feeling that the world we inhabit a decade from now is going to be truly amazing.