Business Tech

Amazon.com is opening up its Virtual Private Cloud to all users of its EC2 cloud-computing services as part of a public beta launched Monday.

The full beta of Virtual Private Cloud follows a limited public test that began in August. At the time of that launch, Amazon said virtual private clouds were the most popular feature request from enterprise customers.

VPC is an enterprise-oriented feature that allows users to connect to Amazon's cloud-computing services via an IPsec virtual private network (VPN) link. The feature builds on other Amazon enterprise-friendly cloud efforts introduced over the past two years, such as reserved EC2 instances, longer-term deals, and volume pricing. It also integrates service-level agreements and partnerships with big enterprise software vendors such as IBM, Oracle, BMC and Red Hat.

Read more of Amazon's virtual private cloud goes public at ZDNet UK.

Amazon on Monday rolled out spot pricing for cloud computing so customers can buy capacity at any price on the open market.

The concept is an interesting one since Amazon Web Services is making computing capacity available on the market just like any other commodity (see Amazon statement, Werner Vogels, and Amazon Web Services blog).

Dubbed Spot Instances, Amazon customers can bid on unused Elastic Compute Cloud (EC2) capacity and run those instances as long as their bid exceeds the spot price. The rub is that you can be outbid.

Read more of "Amazon creates cloud computing spot market at ZDNet's Between the Lines.

(Credit: IBM)

IBM is continuing its investment in cloud computing with a new lab in Hong Kong, expanding the presence of its IBM China Development Laboratory (CDL), the company's largest with more than 5,000 developers on staff.

The laboratory builds on the e-mail technology of Outblaze Limited, a Hong Kong-based company whose messaging assets were acquired by IBM earlier this year and incorporated into the Lotus brand. The new lab claims to be the first of its kind in Hong Kong and shows both the importance of global development teams and IBM's focus on growth in emerging markets, a user segment that is theoretically more adaptable to different methods of application consumption and likely well-acquainted with browser-based applications.

Overall, the fourth quarter of 2009 has seen several interesting cloud-related announcements from IBM, including the LotusLive service that launched in October and already claims more than 18 million active users. Big Blue also launched the Cloud Academy program designed to help educators and students pursue cloud-computing initiatives and better take advantage of collaboration technology in their studies.

IBM has taken a leading role in the development and adoption of cloud services while other large vendors such as SAP, HP, Oracle, Sun and Microsoft have all made cloud-oriented announcements with few proof points that their efforts will be successful. There is no certainty that IBM will be successful either, but the company has at least made consistent progress in both technology and user adoption.

IBM representatives told me that the company will continue to focus on delivering "the most reliable and secure cloud services" architected to meet the needs of consumers as well as their mainstay enterprise buying audience. Totally logical, and still surprising that the other big vendors haven't figured out how to attract their core user base to cloud platforms and services.

The cloud remains a bit of an anomaly in the tech world, dominated by Amazon, an e-commerce site, while stalwart IT vendors like Microsoft continue to take baby steps toward mainstreaming their efforts.

My blogging colleague, James Urquhart, wrote this week about Microsoft's new business unit that merges its cloud and on-premise server group into one development team, which makes sense, at least in theory.

Practically speaking, Microsoft is way behind the curve and has a lot of ground to make. I've written in the past that the opportunity is theirs to lose, and it's hard to see how they plan to win, even with this new structure.

The next time you feel tempted to laud the power of the open-source business model, take a look at Novell.

Novell has been struggling for over 10 years, yet it still manages to crank out nearly $1 billion in sales each year, most of which derives from the licensing of proprietary software.

Novell reported its fourth-quarter earnings on Thursday, along with results from its full fiscal year. They're not pretty, but they do suggest a path forward for the erstwhile software leader.

Novell saw its sales slump over 12 percent from its year-ago quarter to $216 million. For the full fiscal year, Novell stumbled to a $257 million net loss, versus a $5 million profit in 2008, on net revenue of $862 million and a net loss from operations of $206 million.

Perhaps not for long.

Much of that annual deficit came in the fourth quarter, which included a $279 million noncash impairment charge that sent Novell's quarter into the red by $259 million.

Not pretty.

Unless you look at Novell's Linux numbers. Linux remains Novell's most appealing business and was up 21 percent year over year to $149 million--and up 14 percent at $39 in in its fourth quarter over the year-ago period. While a far cry from Red Hat's booming Linux business, Novell's results suggest that there's life in its Linux business yet.

Life that Microsoft continues to seem content to grant.

Make no mistake, without Microsoft, Novell's Linux business would struggle, at least in the short term. Microsoft, after all, has been funding Novell's Linux business since 2006, when the two companies entered into an interoperability and Suse Linux subsidy pact.

And without its Linux business, all of the rest of Novell's business would be in jeopardy, as Suse Linux makes Novell's other products a palatable choice. Even so Novell's Identity and Security Management, Systems and Resource Management, and Workgroup businesses all dropped significantly (down 10 percent, 6 percent, and 13 percent, respectively).

Novell's needs
Clearly, Novell needs Linux. Equally clearly, it needs Microsoft to grow that Linux business. Microsoft has already plowed $247.5 million into Suse Linux Enterprise Server (SLES) subscription coupons, and Novell CEO Ron Hovsepian has indicated he's now dipping into the additional $100 million in coupons the companies negotiated.

But how can Novell accelerate its Linux business at a pace that will be comfortable for Microsoft, which has made no secret of its animus to Linux and desire to quash it? Microsoft partners with Novell to show a good interoperability face to its customers who use Linux and to prop up the No. 2 vendor against Red Hat, the dominant Linux vendor.

The day that Novell's Suse Linux business threatens Microsoft, and not merely undermines Red Hat, is the day Microsoft will pull its extensive financial support from Novell's Linux business. That same day Novell's Linux business will crumble, perhaps irreparably.

Unless.

Unless Novell can deliver a coherent strategy centered on Linux rather than merely friendly to Linux. For years Novell has packaged and repackaged a set of mostly stale offerings (e.g., Workgroup), pretending that they were part of a coherent strategy.

They weren't. The company was simply milking maintenance revenues as it sought to find a way forward. (I was in those meetings back in 2002 when the company discussed how to stanch the bleeding from maintenance declines. Those same conversations continue today, I'm sure.)

Then, as now, Novell's various product lines, and particularly Workgroup, offered little synergy, either in sales or engineering (i.e., the buyer of GroupWise is not the same as the buyer of Suse is generally not the same as the buyer of Identity Management).

Ongoing makeover
Novell is now entering a new phase of its repackaging makeover, but this one actually makes some sense. The company is calling it Intelligent Workload Management, arguing that a "new market [exists] for solutions that address the risks and challenges for computing securely across multiple environments."

Not surprisingly, Hovsepian argues that such an Intelligent Workload Management market "plays to the strengths of Novell--identity and security, systems and resource management, and our new Suse Appliance program."

Surprisingly, he may be right.

First of all, its wonderful to see Workgroup dropped from the discussion. Yes, it's Novell's biggest product by revenue, but no, it has almost no relevance for the rest of its business. Sell it off. Move on. The company has already offloaded much of its Workgroup development to India, anyway.

Second, Novell really does have a great deal of expertise in this area, with some assets that could go a long way toward helping it compete with the vendors that compete aggressively in the market: VMware, Microsoft, and increasingly Red Hat.

The key will be for Novell to really put Linux at the heart of its story, rather than simply using it as a conversation starter and loss-leader.

And yet, more is needed. Novell has the burden of a stale brand that it must shed. A few select acquisitions could help it to establish technology and brand leadership in the market. Companies like Reductive Labs (Puppet project for data center infrastructure management), VMOps or Eucalyptus (for building and managing private clouds), and/or Cloudera (for designing and analyzing large-scale data assets) could put Novell in the driver's seat on this market.

For the first time in years, the market seems to have moved in a direction that corresponds with Novell's rich technology assets. If Novell can make Linux the centerpiece of this campaign, bolstered by relevant, innovative technology, it will finally get its Linux business out of Microsoft's shadow and its overall business back on track.

The technology pieces are in place. It's now a question of brand and execution.

For those entrepreneurs looking to make a living from open-source software, Index Ventures general partner Bernard Dallé has some advice: get thee to a cloud strategy.

Bernard Dallé

(Credit: Index Ventures)

Why? At a time when enterprises may be less willing to spend on software, they're increasingly interested in spending on the operation of that software through cloud computing, an interest that can be bought...and sold.

The cloud isn't simply a clever way to provide social-networking services, either. As Dallé suggested in a phone interview on Wednesday, cloud computing may well be the best way to monetize enterprise-facing open-source software.

He should know. Index Ventures has been one of the most successful investors in the changing world of software, hitting home runs with MySQL, Skype, and more. So when Dallé says that as much as 70 percent of the investment opportunities they see now are cloud-related, and that this bodes well for open source, it's worth paying attention.

Given that the cloud renders software less visible to end users, I asked Dallé if cloud computing spells the end for open-source businesses. Far from it, he said:

I think it's good news. I don't think open source is going away. It's here to stay. The world is increasingly moving to a hybrid world: a combination of on-premises and cloud computing. We're not going to see a 100 percent cloud world.

If I look at our portfolio, even our "open-source companies" like Pentaho, OpenX, and DimDim are turning to the cloud to monetize their open-source software assets.

Open source provides a convenient on-ramp and off-ramp for customers, helping them evaluate the software at low to no cost and also gives a free (as in cost and as in freedom) exit in case things go wrong. Between that entrance and exit is a ripe opportunity to make a lot of money by delivering value to customers.

Dallé further explained that open source helps vendors reach customers through low-cost distribution, but cloud computing, importantly, makes the open-source software palatable to a class of customer that finds open source too risky, yet has no problem using it when hosted.

If this sounds like a potent mix, it's because it is. It's also a highly efficient, low-cost way to start and build a company. Dallé elaborates:

The other big trend, not related to open source, is cloud-on-cloud: cloud services running on other clouds. It used to be that everyone ran their own data center, but now an increasing number of companies are happily running their services on Amazon EC2 or other public clouds. This dramatically lowers the cost of starting a service, and starting a company around it.

This might raise the concern that we'll see too many open source/cloud companies, not too few. Dallé isn't worried: "The quality of an investment always comes down to the quality of the people involved and their execution."

If Dallé's correct, the right place to look for open-source businesses to flourish is at the nexus of on-premises open-source software and cloud computing. It could prove to be a potent mix. And while the cloud might not be the right delivery platform for some software, it probably does have a high degree of salience for many.

information technology is expected to play an important part in the global economic recovery, according to a new survey released Wednesday.

Some 72 percent of business and information technology executives say their "organizations place greater value on the IT function today than they did before the economic crisis" and that they "view IT as an important part of their economic recovery efforts," according to Accenture's Global Survey on IT Investments.

This is not an unfamiliar sentiment and is one we've heard from United States CIO Vivek Kundra as he's attempted to use IT to kick start a variety of programs on the federal level that will set the pace for innovative new uses of technology across the globe.

The results of the Accenture survey are similar to last week's Goldman Sachs cautiously optimistic survey results that suggested IT spending would trend upward in 2010 and normalize to pre-recession levels with the majority of countries represented planning to increase investment selectively next year.

2010 IT spending

(Credit: Accenture)

It's getting harder to focus on the vision of cloud computing these days. While there are still plenty of critical and complex problems to solve, and many, many implications of this disruptive operations model that have yet to be understood, the truth is that we've entered a new phase in the evolution of cloud adoption. Real work now exceeds theory when it comes to both new online content and work produced.

This kind of snuck up on me, but it shouldn't have. I myself witnessed many of the early events that greased the skids for real cloud success: the introduction of revolutionary products from Salesforce.com and Amazon Web Services; great blogs that discussed practical applications of early cloud environments, followed by books that explained step-by-step what should be considered in application architectures destined for the cloud.

The rapid adoption of "software as a service"-style offerings from the likes of Salesforce.com, Google, Zoho, and a wide variety of others in both the consumer and business markets belied new computing options delivered at Internet scale.

However, what really made me aware of the changing cloud buzz is what's happening in the software development space. I was shaken awake by Microsoft's brilliant launch of its Azure cloud service. I loved almost everything about how Ray Ozzie and crew positioned and discussed Azure's services to its target market: developers of the next generation of business applications.

The recent (re)unveiling at Microsoft's Professional Developers Conference in Los Angeles included an impressive array of services, customer testimonials, and partner announcements. If it had stopped at that, I would have assumed it was just "Mister Softy's" massive marketing machine in action.

However, I began following the "#azure" tag on Twitter from that day forward, and I've been blown away by the amount of content being generated by developers for developers. For example, this step-by-step guide to installing SQL Server on Azure. Or, how about this list of sessions from PDC from a variety of vendor and customer presenters, covering topics ranging from development basics to "making sense out of ambient data".

But it's not just Microsoft. Other cloud platform and infrastructure service vendors are building significant volume. Ruby on Rails platform service vendor Heroku reportedly hosts more than 40,000 applications now. At their Dreamforce conference in San Francisco, Salesforce.com mentioned they had approximately 135,000 applications running on their Force.com platform. (Of course, the number of these respective applications that are generating revenue or even used on a regular basis was not disclosed. Still, these numbers are impressive.)

Amazon Web Services has seen tens of billions of objects stored in its S3 environment (64 billion as of August 2009), and reportedly has several hundred thousand instances running at any given time. Google App Engine doesn't seem to do much marketing, but anecdotal evidence suggests there is a large body of Web application developers running on both the Java and Python instances.

Development and test services, such as SkyTap and Soasta, are thriving. The cloud model really works well for the dynamic resource usage model of software engineering. In fact, it works so well that IBM is putting some real muscle into the game.

There is other evidence that cloud is seeping into mainstream IT thought. This year's Gartner Data Center conference has a "virtual track" dedicated to cloud computing and its impact on the data center. Several vendor conferences leaned heavily on cloud computing in the last year. Professional associations are getting into the act by considering the impact of the cloud on their respective best practices and standards.

There is growing evidence that new and existing independent software vendors and consultancies are finding the cloud to be fertile ground. Of course, that could be a double-edged sword, as some firms will try to use the cloud as leverage to pry their way into otherwise closed doors. However, real projects do exist, and there are signs that that opportunity is growing.

If you are wondering if cloud computing is a fad, the evidence to the contrary is all around you. I heartily recommend that you really listen to what is being said, understand how the cloud is being used, and seriously evaluate how this disruptive model will change your projects, your organization, and even your career. Clearly, there are many technologists who already have.

Cloud computing is luring more businesses with its promise of minimal maintenance and low costs. But are companies putting their data at risk?

A new, free report released Friday by the European Network and Information Security Agency (ENISA) outlines the benefits and potential pitfalls of cloud computing. Based on an ongoing survey, the 123-page report, "Cloud Computing: Benefits, Risks and Recommendations for Information Security" (PDF), also offers recommendations to businesses on how to minimize the risks of entrusing their data to a cloud provider.

The benefits of cloud computing as described by ENISA are clear. Business content and services are always available. Companies can reduce costs by not overspending on the capacity of their own data centers. They can also scale up or down, depending on the services they use, and pay for those services only as needed. Internal IT is freed up by not having to implement or maintain certain hardware or software.

As more businesses hop onto the cloud, IDC expects worldwide spending on cloud services to hit $17.4 billion, revving up to $44.2 billion by 2013.

But cloud computing poses certain key risks.

"The picture we got back from the survey was clear," Giles Hogben, editor of the ENISA report, said in a statement. "The business case for cloud computing is obvious--it's computing on tap, available instantly, commitment-free and on-demand. But the number one issue holding many people back is security--how can I know if it's safe to trust the cloud provider with my data and in some cases my entire business infrastructure?"

Though cloud-service providers promise 24-by-7 availability, their data centers can go down. Security is out of the hands of the customer, who must place trust in the service provider. Customers become dependent on a single provider and may face challenges if data and services need to be migrated to a different provider. By entrusting data to the cloud, companies could face risks and challenges from regulatory audits. Further, some cloud providers may not fully and properly delete data even if a customer requests it.

In its report, ENISA outlines measures companies can take when dealing with cloud-service providers.

Companies must perform risk assessments, comparing the potential risks of storing data in the cloud with keeping files in an internal data center. Companies must also compare different cloud providers to narrow the list and then obtain service-level assurances from selected providers. Further, customers should clearly specify which services and tasks will be handled by internal IT and which by the cloud provider.

The report includes a checklist and detailed questions that customers can use when shopping for a cloud provider.

With the right provider, data can be safe and secure in the cloud. In fact, security with a cloud provider can be even more robust, flexible, and quicker to implement than when done internally. ENISA Executive Director Udo Helmbrecht noted in a statement: "The scale and flexibility of cloud computing gives the providers a security edge. For example, providers can instantly call on extra defensive resources like filtering and re-routing. They can also roll out new security patches more efficiently and keep more comprehensive evidence for diagnostics."

Cloud computing providers have a difficult marketing challenge, in my opinion. Think about it--no matter what service model or deployment model a provider is delivering, they must differentiate their service while meeting the "commodity" needs of as many customers as possible. It would seem these businesses are stuck between providing least common denominator service capabilities and being accused of intentional customer lock-in.

(Credit: Jake Shepherd/Flickr)

From a customer perspective, it is equally challenging when one is "looking for servers and storage" and must choose between a bunch of services that essentially run Linux or Windows and store your files. How does one choose? How do the cloud providers set themselves apart in the customers' eyes?

Unfortunately, I've been inundated of late by an increasing number of cloud service announcements that lack any sense of differentiation. Hosting providers are announcing "on-demand server capacity billed on a pay-as-you-go basis." Platform vendors are simply announcing what language they support, and how much they charge for services. Software-as-a-Service vendors have the easiest job to differentiate service, as they can do so based on functionality alone if they wish, but even there some vendors struggle to differentiate themselves by anything other than the fact they run as a cloud service.

This has to change. Forrester's James Staten is telling us that clients are getting "cloud weary." I believe a lot of this has to do with the ridiculousness of "cloudwashing" that we've seen for some products and services, and the relative monotony of pitches for things are arguably cloud services, especially in the IaaS space.

Below is a list of five key categories of competitive differentiation for cloud computing. It is not a complete list, nor do I think all vendors would look at this question in the same way. However, if you are looking to acquire cloud services, these are the elements I think you start with as you evaluate any service, be it SaaS, PaaS, or IaaS. If you are selling these services, consider this an outline for your next requirements document.

1. Ease of operations. Yeah, I could have kept things simple and just said "ease of use," but "use" in the cloud computing service sense is much more than how humans interact with the system. For instance, how does a company with hundreds of applications in the cloud strewn across a dozen or more vendors monitor and manage those applications to manageable service levels?

   And yes, phenomenal user interfaces will set some providers apart from others, but it will be the "behind the scenes" interfaces--such as APIs, publish and subscribe event streams, transparency and auditability systems, etc.--that will make the most significant differences between providers.

   Will many of the aspects of "ease of operations" be standardized? Sure. The Open Cloud Computing Interface (OCCI) is an example of an attempt to deal with a large part of this challenge. However, differentiation will still be possible through extensions, quality of features and--yes--some custom interfaces.

2. Configurability. One of the things about today's best-known cloud computing environments is that they are essentially infrastructure and software architecture frameworks that dictate a lot about the application architectures that can be built on them. For example, the Amazon Web Services Elastic Compute Cloud (EC2) allows each server to be on one widely shared network. No separation of management traffic from DMZ traffic here (at least not explicitly from the point of view of the OS).

   No, application architects are instead forced to consider how they would build and operate their application in the infrastructure architecture given them. Good books have been written with this in mind, but ultimately the complexity of the problems we wish to solve with information technology will dictate the amount of configurability we require from our infrastructure systems--even if they are delivered as a service by a third party.

   The low-hanging fruit here for IaaS vendors are things like network architectures, data storage options, server options and so on. Also useful here are services that enhance the infrastructure, like security systems, message queueing, and storage tiering.

3. Performance. One public relations contact I got recently was quite interesting. A hosting company sent me an email indicating that they have an increasing number of customers coming to them from AWS, and finding that their applications actually perform better in the former than the latter. I haven't confirmed the truth of that claim, but it is an interesting claim nonetheless.

   Processing speed, memory speed, storage access, read and write speeds, latency, bandwidth--these are all things that are tunable by the cloud provider, either through technology acquisition, or through superior engineering and operations expertise. And, as with servers and storage, the fastest speeds per dollar spent will generally win.

   I would not be surprised if we saw a cloud performance war, similar to the RDBMS benchmark wars, especially in the IaaS category (though it would make sense in the PaaS and SaaS categories as well).

4. Reliability and security. I debated combining these two elements, as they represent different aspects of the same concept. However, that core concept--risk mitigation--is at the heart of so much of the decision over whether public cloud services are better than private data centers, that I think they will often be viewed through the same lens.

   Companies will need time to demonstrate differentiation in both of these categories, but features can be introduced today to increase the transparency of both operations and security in any provider. Redundant distributed data stores, "early warning" DDoS detection events, auditability APIs; these are all features that would "open the kimono" in a controlled fashion and increase customer's ability to trust that their provider has made the protection and availability of their data and functionality a core competency.

5. Customer service. After I wrote my closing post for the "big rethink" series, Kevin Magee, COO of ZeroTouch IT, wrote a post in which he noted several additional predictions for the effect of cloud computing on IT. Most notably, he pointed out that cloud will change "[h]ow Vendor Relationship Management will become a key discipline in IT organizations." Amen, brother, and I completely agree.

   In a tongue-in-cheek post from early 2008, I noted that system administrators should "get good at waiting on hold for customer service representatives." In reality, there is truth to that, but the providers have a lot of room to craft that experience.

   One thing they can do is advance the technical leading edge in terms of customer self-service and operations transparency. (Hmm. Has anyone else noted how often 'transparancy' comes up in this discussion.) I noted some ideas about this in a previous post. Smart providers will find others.

Cloud computing is one of those truly disruptive market opportunities that makes or breaks companies. The winners will find ways to differntiate. Those that don't almost certainly can't win. So, please, no more press releases that fail to differentiate in any meaningful way.