Preparing for the Shift to Club Cloud Computing

A few weeks ago I talked about the coming cloud computing war by discussing the formation of multi-vendor cloud-driven alliances and their implications for the IT industry. Now that Cisco (CSCO) has announced its unified computing initiative which includes Nehalem blade servers and IBM is now in discussions with Sun Microsystems (JAVA), I think it's time to take a step back and explore the implications of these alliances for enterprise IT pros.

The idea of club cloud, or the delivery of a complete IT solution decoupled from proprietary hardware and personnel, is an interesting one. The last several decades of computing have been marked by a series of feudalistic battles over standards, lock-in and footprint, especially in the enterprise space. The rising tide of complexity and out of control management costs drove many firms to either outsource IT or hire legions of consultants and technology partners.

Standards has always been a dream for many areas of IT, as they often did little for incumbents with commanding market share while adding extra (at least initial) costs to development. Then along came virtualization, the first strategic decouple that hastened the shift to commodity blade servers and unleashed the power of consolidation.

Yet virtualization’s most significant impact on IT may not come from the proliferation of VLANs (virtualization-lite) but rather its ability to make cloud computing and private inter-clouds a reality. I think it is that reality that has the large incumbents moving quickly to form cloud clubs, or pre-cast containers of solutions that can be deployed like virtually like honeycombs; and can set the stage for the unprecedented mobility of processing power.

That mobility is the cloud grand slam, game changer that can drive costs out of IT, from energy to the human capital required to keep networks up-to-date with changes. I discussed three of the gating network technology issues at "Bringing Cloud Computing down to Earth".

Club Cloud Implications

I expect to see broad alliances form between the incumbents, perhaps into 2-3 major camps. Cisco and VMware (VMW) will lead one such alliance; IBM and Juniper may lead another; and there could be an open source virtualization alliance driven by Citrix (CTRX)/Zen and select service providers who want to build their own cloud club. In addition, there will be a range of service providers who will shift from hosting to cloud, and we could see some transformational surprises come from these camps as well.

I think both Amazon (AMZN) and Google (GOOG) will be limited to serving small and medium-sized cloud offerings, despite the buzz and the success of their core businesses (books and advertising). Let me add an Apple (AAPL) (iTunes-like) cloud driven by iPhones in a new netbook form factor as my wild idea for the month, along with a Cisco OEM netbook.

Think of these clubs as all-inclusive services free from the burden of tactical vendor decisions with enterprise scale, security, availability and management requirements delivered like a cruise ship or resort. OK… I’ve now made three wild suggestions. Here’s a fourth: imagine large networking vendors branding services the same way that Intel (INTC) branded its processors inside PCs.

We are about to see a fundamental shift in IT that could drive costs out of systems and networks and enable vast new potentials. Those who continue to manually manage their networks and systems will be victims of The CIO Shell Game.

Disclosure: Long CSCO. I am a senior director at Infoblox.

Comments

[cherf:]

Do you honestly think major corporations are going to outsource spreadsheet software to a third party just to reduce licensing and hardware costs? Are you insane?

Mar 30 09:37 AM

[winindthedust:]

With cellular & high speed wireless data becoming available everywhere, I can see an Apple hand held product being used for virtually everything on the go for business users. However, it will only rely on the cloud for unified business applications. These hand held products, though small, are now powerful enough to run local user applications without the need for the cloud.

The cloud isn't going to be used just because it's there... it has to make productivity sense or produce mass cost savings. Productivity: entering any data, whether input by hand, scanned, etc, then having it automatically sync with cloud software or to ones one servers... this will be big. Having the ability to run dynamic and automatically updated databases will be huge. Virtual databases will be the next big service for businesses on the go and even cash & carry. Sales force personnel will have instant & dynamic updates to inventory, schedules, sales, etc. all liked to each other and the business. Business management will be able to make changes on the fly and in the field.

I think of soo many applications across soo many businesses... down to even the guy cutting my lawn or delivering my pizza. But it will not be stand alone cloud computing, but rather a convergence.

Mar 30 10:56 AM

[GNESS:]

Zen:
No where have I claimed to be sane. I do suggest that cloud can be very compelling for the enterprise, although they may never adopt public cloud over private cloud (where they own the service but it is delivered decoupled from specific facilities/hardware). Some large corporations have outsourced their sales lead management systems and their revenue forecasting etc to SaaS...

Thanks for the comment and the sanity check.

G

Mar 30 12:42 PM

[GNESS:]

Dust:

You've made some excellent points. However, I might add that AAPL had been a company of incredible vision and breakthrough thinking. What they have done with iTunes and the iPhone reminds me that anything is possible; and if they're still interested in the business customer their strength in interface, form factors and user experience might come in handy. Maybe they just need a partner or another killer innovation...

Thanks,
Greg

Mar 30 12:46 PM

[AndrewBaker:]

Cloud computing, thin client; whatever the name, it's going to hit hard when it arrives in the mass market - so don't get carried away just yet! - and there will be some companies whose sp will rival Microsoft, Google et al as regards the multiplication factor: 100x will not be too small.

As well as not needing to buy a new computer every year or two, and not needing to buy software updates. being able to do your computing with just a screen, keyboard and mouse that can travel around with you whilst having access to all your data whevever you are, and being able to send, update and manipulate it at will, will revolutionalise IT and everything related to it. Just think it through - then find the companies whose stock will make you rich if you get in soon enough.

Mar 30 02:22 PM

[jack dee:]

When the net showed up everyone declared the client dead. It seems a good 15 years later people are back saying the cloud will replace the OS the Cloud break the upgrade cycle the cloud will free IT.

This is simply not true, the "Cloud" and "web 2.0" are little more than buzz words to push existing concepts to the forefront of the Corp and public minds.

Yes more is going to be served, but it will be a mixed bag , some online some off.

Mar 30 02:46 PM

[brewer:]

I think Apple will have not just a new iPhone this year, but a real netbook killer. A total KO, something with full time net access via 3G. If they can package it correctly, it could replace cable internet in the home in a heartbeat, by doing it for less than, for example, comcast charges for cable internet. If you don't think AT&T wants to do that, but is looking for the right vehicle/time, then you are delusional. Only you will be able to 'take it with you' via AT&T service contract. I think they will sell it for a very low price (for the device, like iPhone) and subsidize it with the service contract. If I can drive my network at home with that, I would definitely be onboard.

It would double as a cell phone. (think Zune phone, without the snickering)... I look for this to have the forward facing or screen imbedded camera (so that when you look at the person on the screen, their image of you is actually looking directly AT them and not off screen into a camera.) Then (or at the same release date) they will build this into the iPhone (next generation). Finally a video phone, this has to be the next step for the iPhone.

More exciting right now is that a Skype client is due out for iPhone/iPod touch tomorrow.

Mar 30 04:31 PM

[GNESS:]

Jack:

With enterprise cloud we are certainly talking about something 3-5 years out that will most likely be adopted privately moreso than publicly. This is important today because it represents a massive shift in how IT services are delivered and it will influence all of IT, both those who use it and those who must compete with it- in the same way the proliferation of the browser drove the webification of once LAN-bound enterprise apps. It wasn't necessaily a clean migration by everyone at once, but when it began its influence was unquestionable.

Thanks for hte comment.

Greg

Mar 30 07:15 PM

[GNESS:]

Brewer:

That would be very interesting. And I think the question would be just how far behind will enterprises alllow their IT services to be as consumers and SMBs see an increasing pace of breakthrough innovations. I htink Cisco gets this, hence the Unified Computing initiative.

Thanks for the comment
Greg

Mar 30 07:17 PM

[Alain Yap, ...:]

Speaking of alliances, you haven't even touched the 'Open Cloud Manifesto' yet which sort of laid out a demarcation line on 'authority' more than the set of principles that it espouses.

Alain Yap
twitter.com/friarminor

Mar 31 12:05 AM

[GNESS:]

Alain:

I've been following it a bit, but thats a fair point. When I get a chance to dig in and ask around I may include it in future columns.

Thanks for the astute comment.

Greg

Mar 31 12:24 PM