We stand at the beginning of a Cambrian explosion of new business models, driven by the colliding disruptions of cloud computing and mobile ecosystems.
A conversation last week between Randy Bias and mobile analyst/Asymco founder Horace Dediu maps out how this diversity of new business models will evolve. Hosted at 5by5, Randy and Horace discuss the emergence of the “super platform” that is making it all possible. The first 20 minutes or so sets the table, with a discussion of how cloud computing and mobile ecosystems fit the definition of disruption theory. Then, Randy and Horace dig in:
- Enterprise hardware vendors are facing big challenges because their legacy computing model is at odds with the way web-scale clouds are being built to support emerging mobile ecosystems.
- Web-scale solutions are simple, and simplicity – in the hardware, architecture, stacks, networking – is critical to designing large systems that can be cost-effectively supported.
- Google operates as many as 10,000 physical servers with one employee. You can’t do that without a radical new approach to data center architecture.
- Apple, Android and other mobile device platforms are defining the post-PC era because of their ability to collect user-level data and take it to a cloud-based backend where it is aggregated and analyzed. Then, data can be fed into a wealth of new application concepts that offer previously impossible benefits at very low cost to users.
- A look at how we’ve shifted from a hardware-centric view of the world (hardware availability) to a platform-centric view (ecosystems) to a super-platform-centric view (ecosystems enabled by cloud). Examples include iOS, Silk browser, Siri, Facebook, and Android. Users extract new value from trading personal data for aggregate knowledge.
- Net-centric business models take advantage of aggregated data from users to provide them with new and very compelling ways to understand the world they live in and interact with it. The Quantitative Self Movement and other crowdsource apps are examples of powerful concepts that were not possible before powerful edge devices connected to web-scale cloud.
- This, coupled with voice, location-based services, augmented reality and situational awareness, puts us on the front end of an explosion of new app and business model possibilities.
- What do mobile network operators bring to the table that’s more valuable than AWS? A global footprint. Ownership of the IP backbone. Ownership of mobile network. OSS/BSS (billing system) integration. Low latency.
Randy and Horace conclude with a discussion of the utility business model and how IT organizations are adapting their thinking to embrace it.
Listen in on their conversation and check out Horace’s post, then tell us how you see the “twin disruptions” unfolding.
On November 30, Randy Bias is headed to Redwood City to talk about the future of cloud at VentureBeat’s CloudBeat 2011. Joining him are folks like Allan Leinwand of Zynga, Amit Singh of Google, Thomas Kelly of Best Buy, Adam Selipsky of AWS, and Lew Moorman of Rackspace. There are others. It’s a solid program.
Randy will participate in two sessions. First up, Randy will moderate a fireside chat with Adrian Cockcroft of Netflix. The conversation will focus on how Netflix is expanding its engagement with AWS globally. Adrian will offer his thoughts regarding whether or not anyone can close the lead AWS has opened up in public cloud. He’ll also give his candid opinion of OpenStack.
Next up, Lew Tucker of Cisco will join Randy in a conversation about how the opportunities in cloud look very different today than they did two years ago. And if you take a thoughtful look at how the industry has evolved, several useful patterns begin to reveal themselves. Understanding this mosaic can lead to better deployment strategies, better business models and smarter cloud startup investments. They’ll talk big data, web-scale cloud, open systems and more.
If you’re in the Bay Area, come join us. There’s a discount if you follow this link.
I’ve made the argument on numerous occasions that Amazon Web Services (AWS) is essentially the quintessential cloud computing offering, particular for infrastructure. To boil down my argument again, it’s essentially:
- Cloud computing is an entirely new model for IT
- This model displaces ‘enterprise computing’ (or ‘client/server’) just as that model displaced ‘mainframe computing’
- “Enterprise clouds” are therefor just ‘virtualization 2.0′ or ‘false clouds’ as some would call them
- AWS growth is largely driven by next generation applications that CANNOT be serviced by enterprise clouds: big data, mobile applications, SaaS, and others with very elastic and scale-hungry workloads
- Next generation apps are designed for the AWS-style cloud (aka ‘web scale’) where typical enterprise concerns (e.g. “I need my VM to *never* fail”) are immaterial
For the sake of argument, let’s assume this is all correct. Trust me, there are plenty of people who would argue I’m wrong, but let’s just say that the above argument is correct.
In this world, what more can AWS do to help web-scale applications succeed? They already provide infinite, or near infinite, computing capacity, storage, and networking on-demand. They also provide a bevy of higher order services from queuing to relational databases and PaaS.
AWS is very effectively removing the need for typical IT infrastructure staff by delivering developer centric offerings.
Assuming this continues, what more can they do to enable next generation web-scale applications and the developers who are building them? I am extremely interested in your thoughts.
For further background, please see my answer to the Quora question: “In what ways is AWS better than most of it’s competitors.”
Randy Bias gave an on-camera interview to Steve Levine of TheCloudist TV at Cloud Expo in Santa Clara last week. Known for calling it like he sees it, Randy covers a lot of ground in just a few minutes:
- “Cloud management” is a term that confuses the market. Smart cloud architects must figure what vendors using this term really mean: virtual server management, application management, infrastructure management, governance management, or some other function in a particular layer of the stack?
- PaaS has huge potential, but it’s struggling because people think they understand SaaS and IaaS better and hence focus their efforts there first.
- OpenStack’s rapid rise underscores how big the demand is for an open cloud environment that scales. The desire, however, is ahead of the technology, and there’s more smoke than fire in OpenStack at the moment. That’s changing fast, as companies like CloudScaling, Piston, and Nebula put OpenStack clouds into production.
- Cloud.com’s CloudStack is not truly OpenStack. Speculating that Citrix’s purchase of the company was largely defensive, Randy suggests that the bidding war to win Cloud.com might have led Citrix to look for ways to monetize its investment. Wrapping CloudStack in the OpenStack banner would be one way to get there.
Watch the video, and tell us what you think.
I had meant to put more content together around these numbers, but due to time constraints I won’t be able to. Regardless, the picture speaks for itself. Here’s my AMZN ‘Other’ revenue numbers with the blue bar representing my estimates of AWS revenue with the green bar representing the rest of AMZN’s ‘Other’ line.
The estimates of AWS revenue come from my 2009 blog posting estimate (~250M), UBS numbers and estimates for 2010/2011, and extrapolating the predicted roughly 100% compound annual growth rate (CAGR) that AWS seems to be on. Note that some data we have show much faster growth such as AWS’ published numbers for S3 which show >150% CAGR for that service.
Another data point is that if you look at the 10-Q numbers for AMZN Other you will notice that the ‘Other’ line is now AMZN’s fasting growing line of business at >80% CAGR for their entire top line with electronics, their second fastest growing line of business down from 75% CAGR in 2010 to ~50% CAGR in 2011.
In other words, the ‘Other’ is now Amazon’s fastest growing business, it’s accelerated over the past several years, *and* we are in a recession. Oh, and if that weren’t enough, according to my research, AMZN sees a huge quarter-over-quarter bump in Q4 every year (~40%).
Bottom line is that AMZN Other will be at 1.3B ending this year with roughly ~1B in AWS alone.
I also ran the numbers out to 2013 using the previous 5 years of growth to see what happens and you can see for yourself. AWS could be 4B in 2013. 4B in 7 years. These numbers and trajectory also reinforce my previous predictions about total AWS size in 2016.
