Most entrepreneurs are lucky to sell one start-up. A chosen few manage to repeat the feat, building and selling two or more businesses. The folks at Zimbra have outdone them all, selling the same company...twice.
As Kara Swisher of All Things Digital reports, VMware is expected to soon announce the acquisition of open-source messaging company Zimbra from Yahoo. My own sources at VMware confirm the deal.
While Swisher's report gets the Zimbra ownership change correct, its indication of a distressed asset sale misses the mark.
It's true that Yahoo has never known what to do with Zimbra, leading it to shop the Zimbra business to various potential buyers, including Red Hat and Cisco Systems. But this is a reflection of Yahoo figuring out that it doesn't have a future in the enterprise, a place that Zimbra is increasingly calling home, after early success with Internet service providers such as Comcast.
You do the math.
(Credit: Matt Asay)Zimbra has delivered 100 percent subscriber growth, along with roughly 100 percent sales growth, according to sources close to Zimbra, through the worst economic meltdown since the Great Depression, much of that growth driven by sales to marquee enterprise customers such as Bechtel.
In other words, Zimbra is a growth asset, though the price paid by VMware is almost certainly lower than the $350 million paid by Yahoo in 2006. That's just the nature of valuing an asset carve-out versus a standalone company pre-recession.
Even so, Zimbra can be a highly strategic asset for VMware. It's not surprising that the virtualization specialist would be interested in Zimbra, especially as it seeks to differentiate its cloud offerings.
Last week, I wrote that an "application war is brewing in the cloud," a war that VMware, more than any other company, is set to launch with its acquisition of Zimbra. Infrastructure isn't enough of a competitive differentiator, especially since most applications aren't designed to run well in the cloud.
Customers, and particularly hosting and service providers, are therefore looking to their infrastructure vendors like VMware to sort out applications for them, or at least give them a head start.
This is where Zimbra comes in. The company's technology was designed from the start as a cloud application, and it should give VMware a viable contender to Microsoft Exchange to offer hosting and service providers, rather than having to peddle applications from cloud competitors like Microsoft and IBM.
With SpringSource, Hyperic, and its adoption of Linux, VMware was already increasingly the open alternative to the closed cloud offerings from Microsoft, IBM, and others. Now, with Zimbra, it is adding its ability to compete at the application level, while retaining its open-source approach.
It's a smart, bold approach. Ironically, it's also an indication that the first shot fired in cloud computing's infrastructure war looks an awful lot like an application.
IBM's software business contributes $20 billion of IBM's revenue and 40 percent of its profits. Suffice to say, it's an important part of Big Blue's market strategy to ensure that the software division performs at or above expectations every year.
Steve Mills, senior vice president and group executive, joined IBM in 1974 and has helped shape the software business as its grown to more than 50,000 employees, including 25,000 software developers and 15,000 sales and technical support personnel in more than 150 countries. That total includes the products and personnel from the more than 50 companies IBM has acquired since 2000.
Steve Mills, SVP IBM software.
In 2009 alone, IBM acquired no fewer than five companies: Lombardi, a privately held provider of business process management (BPM) software, data discovery software firm Exeros, database security firm Guardium, security provider Ounce Labs, and analytics provider SPSS.
The company also launched a number of cloud-oriented products and services in 2009, including a new lab in Hong Kong, a Cloud Academy program designed to help educators and students pursue cloud-computing initiatives and better take advantage of collaboration technology in their studies; and a number of additions to the LotusLive hosted collaboration service.
In an exclusive interview with CNET News, Mills shared how the company is looking at the technology landscape in 2010 and beyond.
Question: Software strategy is obviously an important part of IBM's business model. How long of a time-to-market horizon does IBM look for with new software products?
Mills: We tend to look at product groupings and product families--customers don't use a single product. Enterprises are looking for complete solutions even if they don't buy them all at one time. That means that we're looking for leverage in software we create or acquire--how do the products complement each other and how can plan ahead for what customers need.
As you probably know, IBM is big on process (laughs). The software business is no different, and we have a method to how we develop markets: customer, volume, revenue, and profit. You have to set the baseline to figure out how the product fits into the marketplace, you learn this from talking to customers. Time to market and rapid iteration are important aspects that come into play in relation to the other components but you always learn more in the market from customers than in the lab.
When we look at how well a piece of software is doing, as well as its potential, we look at volume of customers, industries, installed base, etc., and what's the trajectory of the installation. Growth objectives are unique to each product, and you rise on a series of plateaus. You have to fill the gaps that inhibit the growth. And it's not always obvious. We pay a lot of attention to our customers and also the trends in the market.
How does cloud computing play into your technology focus areas?
Mills: Cloud computing is a transformative part of the Darwinian IT phenomenon. Many companies are not interested in operating their own infrastructure as they don't see it as a competitive advantage. In which case they want to get the job done at a lower cost. Businesses realize they can grow because of IT and they want to continue to use IT to keep things growing, but that doesn't mean they need to own and manage every piece of their infrastructure.
Companies like American Express, Salesforce.com, and ADP are great examples. We see those types of system designs and customer interactivity as common models. IBM has long offered managed business process services and supported other big enterprise services.
These offerings make logical sense, but they don't always solve every problem. The hybrid public/private model is very appealing to our customers and not dramatically different than using a hosting provider.
Not everyone will be comfortable with the cloud model--it's all part of a continuum. There will be Salesforce.com on one hand, and on the other customers that run everything behind the firewall. Success doesn't mean that corporations will push everything into the cloud but the inherent cost-benefits are there and more companies are interested. That's part of the evolution.
How do you look at open-source projects/products/companies?
Mills: The hybrid companies like Red Hat have interesting models for open source. They take all the code and put it together for you, but we tend to look at open source as building blocks for larger solutions. IBM ingests a lot of open-source code and we provide a huge amount of development and engineering expertise to the various projects that we support--like Linux and the Apache server.
We focus a lot of our energy on open standards and platforms. And if there are open source projects that we believe in we'll invest resources to support them.
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A few weeks ago I completed a series of posts describing the ways that cloud computing will change the way we utilize virtual machines and operating systems. The very heart and soul of software systems design is being challenged by the decoupling of infrastructure architectures from the software architectures that run on them.
(Credit:
Flickr/Ross Berteig)
Over the last few weeks, I've been slowly trying to get a grip on what the state of the union is with respect to software "packaging" architectures in cloud computing environments. Specifically, I've been focusing on infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) offerings, and the enabling infrastructure that will handle application deployment to these services in the future. How will they evolve to make deployment and operations as simple as possible?
My search started innocently enough. After writing the "big rethink" series, I formed a theory that there are really only two interface points that IaaS and PaaS services needed to standardize:
The management interfaces that enable a wide variety of tools to monitor and manipulate the resources and services being offered
The "unit of delivery" that includes the software to be hosted and any required supporting data, configuration, and policy required to allow that software to work.
The former interface is well covered, with a large number of interfaces attempting to either be the sole vehicle for cloud management, or to map heterogeneous options to a single interface.
The "unit of delivery" interface, however, is actually far behind its management brethren when it comes to concerted efforts to provide a standard. There is OVF, which the Distributed Management Task Force, a standards body, is developing in part as a server-centric packaging for IaaS applications. However, OVF still requires developers and administrators to build an image from the ground up (or to build on top of an image provided by others), including configuring the operating system, any management and security utilities, and the virtual machines themselves.
The more I explore this question, in light of the "big rethink," the more I think there is an opportunity to simplify cloud computing through changing the focus from infrastructure to applications. Specifically, I think there are some advantages to a uniform description of an application, its configuration, and its operational requirements, that can be used to describe any software deliverable to the cloud, whether meant for IaaS or PaaS.
The diagram below describes my vision in a nutshell:
(Credit:
James Urquhart)
The package could be an archive file of some kind, or it could be some other association of files (such as a source control file system). The four elements displayed above are:
Metadata describing the manifest of the package itself, and any other metadata required for processing the package such as the spec version, application classification, etc. The manifest should describe enough that the receiving cloud infrastructure could decide if it was an acceptable package or not.
The bits that make up the software and data being delivered. This can be in just about any applicable format, I think, including an OVF file, a VHD, a TAR file or whatever else works. Remember, the manifest would describe the format the bits are delivered in--e.g. "vApp" or "RoR app" or "AMI" or "OVF," or whatever--and the cloud environment could decide if it could handle that format or not.
An appropriate deployment and/or configuration description, or pointers to the appropriate descriptions. I've always thought of this as a Puppet configuration, a Chef recipe, or something similar, but it could simply be a pointer to a JEE deployment descriptor in a WAR file provided in the "bits" section.
The deployment/configuration section must contain the information required to successfully get the application up and running in the target cloud environment, beyond what is contained in the bits themselves. This could potentially include a lot of information, such as required server and storage configurations, required network connections to services the app depends on, and potentially things like acceptable pricing and/or billing terms.
The information could be proprietary to a single vendor, but in the interest of some level of portability, I would hope we would see some more generalized standards for each application classification.
Orchestration and service level policies required to handle the automated run-time operation of the application bits. Again, I would hope to see some standards appear in this space, but this section should allow for a variety of ways to declare the required information.
Examples of what I would expect to find in this section are spot pricing limits (if needed), service level metrics and limits, information or code describing how the system should respond to increases or decreases in load, etc.
I don't expect the specific contents of the package to be uniform, just the overall structure and the manifest itself. Because of this, it is important to point out that this application packaging is not about portability, but rather about packaging, inventory, and interpretation. You would use these files to consistently store all types of cloud deliverables in a format interpretable by a standardized inventory system, digitally "ship" the deliverables to any arbitrary cloud service that supports the packaging standard, and to allow the cloud vendor to decide if and how it can support the needs of the application.
All of which leads to a simple question: why would anyone want or need this form of application packaging? Here are my thoughts on that:
It lets customers build an inventory of all cloud (and, in reality, non-cloud) application components in a format that makes automated deployment to a wider variety of cloud vendors theoretically possible, and packages all deployment and runtime automation parameters with the application code for change management purposes.
It would allow cloud vendors to begin to accept applications from competing environments using the same core platform or infrastructure without giving up the ability to add differentiated services, configuration, or orchestration features. This would be extremely beneficial in the PaaS market, where common use of open-source platforms means that there is some level of code portability, and where the service offerings of each vendor is what differentiates the offering.
It would greatly aid the open-source community in creating a simple, consistent way to describe complex applications to folks looking for software alternatives. Without this approach, the open-source provider is required to either build a virtual appliance with their code, or to require the end user to do all of the "heavy lifting" of application installation into an IaaS environment.
Clearly this is an outline of a vision, not a standard that is under way or a "running code and loose consensus" demonstration of that vision. Why not keep this to myself and build a business around it? Because such a packaging format would have to be open and standard, and I'm hoping some of you will get inspired to explore the idea further.
What do you think? What works, doesn't work, or is missing for you?
A special thanks to Heroku's Oren Teich and the Clouderati on Twitter for their contributions and challenges to this idea.
IBM decided to close 2009 with a bang by acquiring Lombardi, a privately held provider of business process management (BPM) software. Big Blue racked up a number of acquisitions this year including: data discovery software firm Exeros, database security firm Guardium, security provider Ounce Labs, and analytics provider SPSS.
Lombardi marks IBM's 90th acquisition since 2003. That's a lot of companies to digest.
With Lombardi, IBM strengthens its presence in BPM by effectively capturing the customers it doesn't already have. IBM currently has more than 5,000 BPM customers in about 30 countries and growing.
According to Lombardi CEO Rod Favaron, the company has about 300 enterprise-level customers with a high percentage shared with IBM. Lombardi has a shockingly impressive customer list, including Allianz Group, Aflac, Barlays Global Investors, Dell, FETAC, Ford Motor, Hasbro, ING Direct, Intel, Maritz Travel, National, Bank of Canada, National Institute of Health, Safety-Kleen, T-Mobile, UCLH, and several governmental agencies.
It's generally been a quiet year for technology merger and acquisition deals with the 2009 value total for tech M&A activity reaching $142 billion, according to recent data from technology investment research firm The 451 Group. To provide context, the second quarter of 2008 alone saw $173 billion in tech M&A deals. The median deal size in 2009 was $40 million, contrasted with a median of $43 million in 2008 and $100 million in 2007.
From January to November 2009 there were only 31 technology transactions valued at $1 billion or more, and The 451 Group reports that all of the high-multiple deals took place in the second half of 2009, resulting in M&A spending running 50 percent higher than in the first two quarters. Notable deals include Dell's purchase of Perot Systems and Cisco Systems' pair of $3 billion acquisitions in October.
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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.
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.
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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."
