Cloud Wars Are on the Horizon

The cloud computing meme continues to billow as Juniper (JNPR) and IBM announce a cloud management partnership and rumors swirl about heavy negotiations between VMware (VMW) and shareholder/partner Cisco (CSCO). A few months ago it seemed like every cloud discussion included Google (GOOG) and/or Amazon (AMZN); now it appears that “the network infrastructure issue” has finally reared its head and ushered in networking and management leaders into the cloud conversation.

More cloud watchers are discovering that cloud apps - at a minimum - will put more burdens on the network. As IT services decouple from hardware, the network becomes one of the key chokepoints to the realization of system and endpoint mobility. System automation will force network automation, or the evolution of Infrastructure 2.0.

Chokepoints will Drive Innovation

One aspect of the shift to cloud computing is the amount of network traffic (versus motherboard traffic) generated as applications are designed to leverage more resources from the cloud. This was discussed in The Three Horsemen as drivers of the next network revolution.

Netbooks are in essence traffic-rich network endpoints; if that market continues to accelerate it will put disproportionate pressure on the network. Yet netbooks aren’t the only chokepoint for today’s static networks maintained by manual laborers.

Those responsible for managing increasingly virtualized data centers will feel more pain. Most early production virtualization deployments are extensive arrays of hypervisor VLANs, or virtualization-lite.

Each VLAN is its own zone of servers and applications with unique user and/or security/storage requirements. Transforming these smaller containers of “specialized” processing power into vast, fluid cloudplexes enabled by VMotion will require numerous breakthroughs in network and application intelligence as well as storage.

These chokepoints between the status quo and the business case for The Intercloud will drive investment and growth in new innovation as they put new pressures on tired, manually-intensive status quos of network configuration clerks already busy trying to keep up with increasingly automated and mobile systems. They will force network and operations teams to work more closely together, from management to purchasing.

It’s Not Hype, It’s Survival

This new level of cohesion within IT combined with the proliferation of automation will drive new levels of vendor consolidation. This may be why many of the tech leaders have been increasingly aggressive in outlining a cloud computing vision/strategy despite the paucity of revenue. They want to be designed into the core solution that empowers the new economics of cloud computing.

The biggest risk to a network vendor today may indeed be irrelevance to cloud, even though cloud could be five years away from being relevant to the bottom line. If you’re wondering why so much commotion, that’s your answer. Cisco, F5 Networks (FFIV), Juniper, IBM and others understand the importance of cloud relevance to the architectural decisions being made today for the data centers of tomorrow.

This disproportionate preoccupation where IT is going is very understandable. It is perhaps the most significant evolution in IT since… the network.

Disclosure: I am a senior director at Infoblox.

Comments

[mac.barron:]

This is a great article. Cloud computing is really going to take off but, as always, picking the winners is the challenge. VMware has a great management team and has been able to grow even in the downturn. I'd be a buyer if i were betting on U.S. stocks at the moment (I'm not but that isn't VMware's fault). BTW the idea of a buyout by Cisco is all over the news.

Salesforce.com (CRM) isn't in this article but they are a player in the Cloud Computing. I've had to use their product and HATED it. Their management team just got shaken-up and their forward valuation looks absurd. Anyone out there working a short game?

[no position in either]

Feb 15 01:35 PM

[GNESS:]

Thanks Mac:

I could have named many more players but I think the head table of leaders will be at least MSFT, CSCO, F5, VMW, GOOG and AMZN. If VMW addresses the security with mobility issue they will become even more strategic to CSCO IMHO.

Greg

Feb 15 01:46 PM

[Rokjok777:]

Bill G famously said "things change less in two years than you think they will, and more in ten years than you think they will". I think cloud is one of those cases.
The idea is appealing and of course IT pros like it since they could shift all of their hardware-related issues to cloud companies. But the quality of the network, globally, is nowhere near being up to the task. I've just returned from Malaysia, a pretty advanced emerging market, and the idea of a major entreprise relying on cloud services is a bad joke.
The other skeleton in the closet is the complexity of rendering things just using a browser. We are used to real processing horsepower on desktop machines giving us very advanced user experiences. Substitute a browser-only approach: things get ugly, fast. Development gets really tricky; response times drive users crazy; and using ActiveX controls to run device drivers is a nightmare and a security problem waiting to happen.
So yes, cloud will happen. But it's way too early to make any financial bets on companies making money from it. Except possibly to short Salesforce...

Feb 15 05:12 PM

[GNESS:]

Rokjok:

Well stated. There are significant barriers to entry for the big cloud payoff.

Thanks,
Greg

Feb 15 07:44 PM

[Phil Dewey:]

Greg, who do you think will be the acquired in this process?

Feb 17 11:55 AM

[GNESS:]

Phil:

I think everything is up in the air at this point. Bootom line: I think the network needs an OS for cloud to take off and fullfill the promise. As Peter Raulerson mentioned a few weeks ago the network is in the same shape today with cloud looming as IBM was before the advent of the PC OS. Thanks for your question. Network vendors promise to live in interesting times if they continue to rely upon kludgenomics. More on that later.

Thanks,
Greg

Feb 17 10:59 PM

[Bruce Pile:]

You can say it's too early to make any financial bets on cloud, but if you peak at the financials of the player stocks (FFIV,GOOG,EMC,VMW,CTX... you see that their cash flows and revenues have all been ramping smoothly up to current all time highs despite the severe downturn. Is that just a coincidence?

George Gilder's world where the computer on our desk will be just a light switch and a window to the net may not be here for awhile, but the companies moving us in that direction are going to be rife with winners.

Feb 21 11:37 PM

[GNESS:]

Bruce:

I agree that there are tremendous opportunities for those who are "designed in" to the cloud. Yet I think some vendors will still have to reinvent their business models and make susbtantial changes to their cultures in order to thrive in hte more dynamic environment. Some advantages may become disadvantages; while some disadvantages may become advantages.

Some networking vendors are still figuring out what virtualization means...

Thanks,
Greg

Feb 22 10:40 PM