Forecast: Certain Verticals Will Accelerate Public Cloud Growth

Expenditures for public cloud services will grow to nearly $30 billion over the next three years, according to a report released this week by market researcher IDC.

The latest forecast projects a compounded annual growth rate of 21.6 percent since 2009 when revenues were $11 billion. With a number of reports showing robust growth for cloud computing services, this one is noteworthy because it looks at public cloud service revenues from 18 vertical industries.

IDC found that professional services, communications, media and manufacturing markets would generate the most revenue for public cloud service providers. Professional services is especially high on the radar because of the number of midsized companies that are "information-dependent" that will use software-as-a-services, or SaaS.

The services and distribution sector, which includes retail, wholesale professional services, consumer and recreational services, and transportation, accounts for the largest share of revenue. That sector, now a $3 billion market, will nearly triple to $8.5 billion by 2014, according to IDC.

Other verticals that are regulated or have significant security and/or privacy concerns will limit their use of public cloud services to e-mail, messaging and collaboration. Those industries include government, banking and healthcare.

The latter will only account for 5 percent of public cloud revenue in 2014, yet it will post CAGR of 23 percent.

Posted by Jeffrey Schwartz on February 10, 2011 at 11:58 AM0 comments

Oracle Database Added to Amazon Web Services

Amazon Web Services plans to make the Oracle Database 11g R2 available on its Relational Database Service (RDS) next quarter.

RDS is a service designed to let customers install, run and scale relational databases in the cloud. Until now, only the MySQL database was an option on RDS, a service Amazon said is used by thousands of customers.

"As with today's MySQL offering, Amazon RDS running Oracle database will reduce administrative overhead and expense by maintaining database software, taking continuous backups for point-in-time recovering, and exposing key operational metrics via Amazon CloudWatch," said Amazon Web Services evangelist Jeff Barr, in a blog post. CloudWatch is a service that lets customers monitor their AWS cloud resources.

Customers can also scale compute and storage capacity using the AWS Management Console, Barr added.

Amazon is offering three licensing options. Customers can bring their own licenses and run them without additional licensing fees. The second option will be On-Demand Instances (DB-Instances), in which customers will pay by the hour for usage of an Oracle database. It doesn't require any setup fees nor long-term commitments and the hourly rate is based on the specific database edition and DB Instance size selected. The final option is Reserved DB Instances, which lets customers pay once for each DB Instance with the option of running it at a discount over the hourly usage charge. That will be available with one-year and three-year commitments.

Oracle will provide technical support for those who bring their own licenses, while Amazon will provide support for the On-Demand and Reserved DB Instances Options.

Posted by Jeffrey Schwartz on February 10, 2011 at 11:58 AM0 comments

Google Aims for E-Mail Dial Tone

In my Redmond magazine cover story this month, Clouds Collide in Strategic Microsoft vs. Google Battle,I reported how fiercely the two companies are going after each other in the hosted e-mail and Web productivity space.

Google is trying to eat into Microsoft's cash cows: Windows, Exchange, SharePoint and Office -- and the article explains how. While Microsoft likes to tout missing features in Google Apps, it's a moving target. Google frequently updates Google Apps.

One of the critiques of Google Apps was its approach to service level agreements. Specifically, downtime of less than 10 minutes wasn't included as part of the SLA. Google has amended its SLA so that even shorter amounts of downtime are now is included.

Moreover, Google has removed an SLA provision that permitted scheduled downtime. "Going forward, all downtime will be counted and applied towards the customer's SLA," wrote Matthew Glotzbach, Google's enterprise product management director, in a  blog post last month announcing the new policy.

Despite some outages, Glotzbach said that Gmail was available 99.984 percent of the time last year, covering both business users and consumers. "People expect e-mail to be as reliable as their phone's dial tone, and our goal is to deliver that kind of always-on availability with our applications," he noted.

As Google and Microsoft argue over whose service has features more conducive to how information is created and shared, availability and meeting service requirements will remain high on the requirements list. Providing E-mail dial tone must be a given. Google and Microsoft both appear to get that but the proof will be whether they can deliver.

Posted by Jeffrey Schwartz on February 10, 2011 at 11:58 AM0 comments

Cloud Startup Funds Itself

Startup NephoScale came out of stealth mode last week and says it is gunning to take on the likes of Amazon Web Services, Rackspace Hosting and GoGrid. Audacious as that might sound, the Silicon Valley startup is a self-funded infrastructure-as-a-service cloud provider that is touting its scalability, a planned global presence and an API designed to provide simplified provisioning and management.

NephoScale spawned from founder and CEO Bruce Templeton's Silicon Valley Web Hosting. Using the cash flow from those operations, Templeton last year launched NephoScale and teamed with CTO and co-founder Telemachus Luu, who once helped launch GoGrid.

About 100 customers just completed an 8-month beta and Templeton says NephoScale is now open for business. About half are paying customers, the rest are those testing the service in exchange for feedback, Templeton said. The company has three key offerings: cloud servers, on-demand dedicated servers and cloud storage.

The cloud servers provide on-demand compute accessible from the company's graphical user interface or programmatically via its API, called CloudScript. Users can choose from a variety of Windows and Linux server images.

For those that want dedicated server resources, the company offers on-demand servers. Customers can configure RAM, the amount of cores and the type of CPU, among other things. "They are for people who want a physical dedicated server and the want to know exactly what they are getting from a spec standpoint," Templeton said.

The third offering is object-based cloud storage, which the company boasts uptime of 99.999 percent. It can scale up to hundreds of petabytes. "Our storage is a lot like [Amazon Web Services] S3, we replicate it three times, it has self healing, check sum analysis of the packets," he said.

NephoScale is still a small operation, it only employs 12 people. And while Templeton said his new company may not offer the breadth of services that Amazon provides, he believes he can compete with them for customers who want a more simplified approach to using cloud services.

"They might have more services but we have a more elegant way the system works together," he insists. For example, he believes NephoScale has a better approach to letting customers manage their servers. "Not all of our competitors have a single pane view for provisioning and managing their entire infrastructure," he said. They'll jump over to the cloud view, then they have to jump over to the pane for the cloud servers, or dedicated servers. We developed one single pane view for all of that."

Templeton told me there are companies of all sizes using NephoScale's services from well known enterprises to small startups. While he declined to attach a dollar amount to the funding of the company, he insists it is cash-positive from Silicon Valley Web Hostings' operations.

Is that enough to give comfort to a customer that is betting its business on NephoScale? "We can stay around for sure," he said. "Whether we grow to our expectations is another issue, but staying around is a non-issue, we can do that easily."

While Templeton says he has relationships with the venture capital community, he is going it alone, at least for now. "We're not funded by VCs we could be if we wanted to but we are doing quite well on our own," he said. "I have the money from the company's operations."

For now, NephoScale's data centers are in Silicon Valley. Templeton is looking to role out a data center in Asia this summer and Europe by year's end.

Posted by Jeffrey Schwartz on January 25, 2011 at 11:58 AM0 comments

OpenStack Gains Ground

NASA and Rackspace Hosting last week commemorated the six-month anniversary of their open-source cloud effort by announcing it has more than 40 partners on board. One of those partners, Internap Network Services, said it is building a cloud storage platform based on OpenStack.

Rackspace chairman Graham Weston believes OpenStack will become a key factor in open-source cloud computing. The goal is to provide portability among cloud providers who build their infrastructures on OpenStack. "At Rackspace we think OpenStack is the next Linux," Weston said in a company-produced video posted on the OpenStack Web site.

OpenStack is a cloud operating system freely available under the Apache 2.0 license. Rackspace decided to open source the code behind two of its cloud services: CloudServers and CloudFiles, compute and storage offerings, respectively. Through the process of open sourcing those, Rackspace learned that NASA was working on some similar technology and was interested in open sourcing its effort. As a result, in July both combined efforts and launched OpenStack.

Currently OpenStack consists of two core efforts: OpenStack Compute and OpenStack Object Storage. OpenStack Compute is software designed to deploy and manage large clusters of virtual private servers, while OpenStack Object Storage is designed to scale terabytes and petabytes of data.

From the outset, the OpenStack consortium launched with 25 partners. Now it has more than 40 including Citrix, Dell, Intel, as well as smaller companies like Internap, CloudKick, Cloudscaling, Limelight Networks, RightScale and Gigaspaces.

"If they can spread this platform, it gives them a better way to compete," said Redmonk analyst Michael Cote. "There's been a huge amount of interest." Outside of NASA and Rackspace, Internap is the first cloud provider to implement it in a product.

For its part, Internap said it has released to beta Internap XIPCloud Storage, a public cloud storage service aimed at complimenting its managed hosting service. The company is building its elastic cloud storage service using OpenStack, said Scott Hrastar, senior vice president of technology at Internap.

While Hrastar admits OpenStack's availability was good timing, he told me "we're a big proponent of the open-source community aspect of the project and just saw it as a natural way for us to build on top of an interesting and differentiated solution."

A new version of OpenStack, code-named "Bexar," is slated for release early next month. Bexar represents a stabilization of the code base, said Jonathan Bryce, chairman of the OpenStack Project Oversight Committee and co-founder of the Rackspace Cloud.

"It's been a lot of fun to see it grow and see it really pick up momentum and see the software improving," he said.

Posted by Jeffrey Schwartz on January 25, 2011 at 11:58 AM0 comments

Did Google's Schmidt Lose Control?

Google's decision to name Larry Page to replace Eric Schmidt as CEO caught me and everyone else who follows the company off guard. After all, Google was showing quarter-over-quarter revenue and profit growth that most companies would kill for. But in retrospect, the handwriting was on the wall.

While there are rumors they weren't on the same page, Google insists there was no friction between Schmidt and the two co-founders, Page and Sergey Brin. Putting aside Schmidt's controversial comments on privacy and the decision last year to pull out of China, Schmidt had his own ideas for how the company should develop technology and bring products to the market.

One example involves the genesis of the Chrome browser and Chrome OS -- Google's vision for replacing typical PCs with computers that rely on the cloud for everything they do. The company last month launched a controlled beta of the Google Notebook, dubbed Cr-48. Schmidt pointed out he wanted no part of Google being in the browser or OS business. As CEO, Schmidt earlier on had put the kibosh on it.

At least so he thought. That's when the end run happened as Schmidt explained at last month's Chrome OS launch event:

"Larry and Sergey wanted to be in the browser and OS business and I absolutely was not interested in being in either, and I said no... They sneakily hired a number of people who were very clever, to work on Firefox browser which we helped fund through an advertising deal, and ultimately that core team was able to build this phenomenal browser called Chrome, which finally broke through the architectural frameworks that people had with respect to security and speed."         

While Schmidt was apparently trying to portray it as a beneficial rebuke of his authority, nevertheless, it raises questions as to how much control he had.

Whether Schmidt really is on board today with the decision to build Chrome and Chrome OS is a moot point. Page and Brin did it without him. And perhaps the two decided it was time to stop "sneaking "around and take control of their company's destiny -- for better or for worse.

Posted by Jeffrey Schwartz on January 25, 2011 at 11:58 AM1 comments

Midmarket Doesn't Get Cloud

A survey of mid-sized companies employing less than 1,000 people found that nearly half don't understand what the cloud is.

Fielded by cloud provider Vitacore Systems, the survey found 48 percent are confused about the cloud. Despite the fact that they use or Google Docs, 54 percent said they had no idea they were using a cloud service.

Vitacore surveyed 210 business and IT pros at mid-sized companies. Of those, roughly one-third said they were IT pros the rest came from the business side. Vitacore is a provider of cloud services to midmarket companies.

Posted by Jeffrey Schwartz on January 06, 2011 at 11:58 AM1 comments

Skytap Receives $10 Million in Funding

Skytap, a cloud provider that offers virtual data centers for application testing and deployment, this week said it has received a $10 million infusion.

The Series C round of funding came from Open View Venture Partners, putting the total venture investment in Skytap at $23.5 million. Skytap's existing investors include Madrona Venture Group, Ignition Partners, Bezos Expeditions and Washington Research Foundation.

I spoke with Skytap CEO Scott Roza this week who was naturally quite excited about the latest round of funding. "They don’t do B seed rounds or A rounds, they really are looking for companies that have built a product and they're beyond the technology risk stage of growth," Roza said.

While Skytap hasn't disclosed its revenues, Roza said they have doubled in the past year, as has the number of paying customers, which is up to 150. Among them are Ellie Mae, Nuance Communications, Apptio, Hargis Engineers, Sefas Innovation and Binary Tree.

Roza's goal is to double the number of customers over the next year. To achieve that, he said 70 percent of its new funding will be applied to expanding sales and marketing, while 30 percent will go toward adding new features to its cloud automation software, its key asset.

Skytap doesn't run its own datacenters; rather it has partnered with Savvis to offer virtual datacenters to customers through VMware-based virtual machines. Skytap has also licensed its software to Computer Sciences Corp., which offers its own service to large enterprise and government agencies. Roza said he is looking to do another such licensing deal this year.

As for its own service, Skytap started out in 2007 as a cloud-based service for developers and testers who required on-demand infrastructure to test their apps. Last year, Skytap added to its network automation capabilities to allow customers to migrate their business apps to the cloud.

The release supports full clustering and failover. Customers can create their own servers or clusters, failover configurations and shared services to enable applications to run in the cloud. Skytap accommodates both Microsoft .NET applications and open source LAMP-stack apps.

Skytap also lets customers create virtual private clouds by connecting the company's multi-network virtual datacenter configurations with existing premises-based enterprise networks.

Asked if an IPO is in the works, Roza said that's a few years out.

Posted by Jeffrey Schwartz on January 06, 2011 at 11:58 AM0 comments

Microsoft Readies New Cloud Data Center

Microsoft is getting ready to launch the newest datacenter for its cloud services. The new facility, in Quincy, Wash., will go live early this year, Microsoft announced this week.

It incorporates much of the principals of its Chicago and Dublin datacenters, notes Kevin Timmons, Microsoft's general manager of datacenter services.

Timmons points out that there are some nuances. The Dublin facility uses server PODs, which rely on outside air to reduce cooling costs. The Chicago datacenter, by comparison uses Microsoft's IT Pre-Assembled Components (ITPACs.). Quincy will use the ITPACs.

"An ITPAC is a pre-manufactured, fully-assembled module that can be built with a focus on sustainable materials such as steel and aluminum and can house as little as 400 servers and as many as 2,000 servers, significantly increasing flexibility and scalability," Timmons notes in a blog post.

"The expansion in Quincy takes these ideas a step further," he adds, "by extending the flexibility of PACs across the entire facility using modular 'building blocks' for electrical, mechanical, server and security subsystems.  This increase in flexibility enables us to even better support the needs of what can often be a very unpredictable online business and allows us to build datacenters incrementally as capacity grows.  Our modular design enables us to build a facility in significantly less time while reducing capital costs by an average of 50 to 60 percent over the lifetime of the project."

The new datacenter will be adjacent to Microsoft's existing 500,000 square foot facility, except this one will be in a structure that resembles tractor sheds, allowing Microsoft to pull in outside cool air, while providing protection from other elements.

Posted by Jeffrey Schwartz on January 06, 2011 at 11:58 AM0 comments

Amazon Achieves PCI Compliance

Amazon Web Services (AWS) seems to be getting its house in order when it comes to compliance certifications. The company said last week it has achieved Level 1 compliance with the Payment Card Industry, or PCI, Data Security Standard.

PCI is the standard for storing, processing and transmitting credit card data. AWS lack of PCI compliance was a key barrier to those companies looking to use the cloud provider's service to handle transactions.

"Merchants and services providers with a need to certify against PCI DSS and to maintain their own certification can now leverage the benefits of the AWS cloud and even simplify their own PCI compliance efforts by relying on AWS's status as a validated service provider," said AWS lead Web services evangelist Jeff Barr, in a blog post.

The PCI validation covers its core cloud offerings used by merchants, notably Amazon Elastic Compute Cloud (EC2), the Amazon Simple Storage Service (S3), Amazon Elastic Block Storage (EBS) and the Amazon Virtual Private Cloud (VPC), Barr noted.

"This is big news, especially for small businesses that want to use EC2 and haven't because Amazon has not gone through PCI," said Douglas Barbin, director of assurance and compliance services at SAS 70 Solutions, a consultancy that specializes in auditing and compliance.

Large hosting providers such as Savvis, Rackspace and AT&T are already PCI-compliant as is Google's payment gateway, Barbin added.

The news comes just weeks after Amazon announced it has achieved ISO 27001 compliance, a standard based in 133 security process controls such as physical plant security, operational policies and how malicious code is handled, to name a few.

Earlier in the year, Amazon received its SAS 70 certification but was criticized for lacking ISO 27001 certification, Barbin said. That's because SAS 70 allows the provider to determine their own controls, while ISO 27001 is based on standard controls. "They got a lot of flack because they wouldn't disclose what those controls were," Barbin said. "This is an important milestone for Amazon."

Posted by Jeffrey Schwartz on December 14, 2010 at 11:58 AM0 comments's Ambitious Cloud Push put its partners, customers and competitors on notice that it doesn't want to just be known as a cloud-based CRM provider. Chairman and CEO Marc Benioff wants his company to play in the platform-as-a-service (PaaS) space and he made a number of interesting moves to help achieve that goal.

Benioff gave two consecutive keynote addresses this week at's annual Dreamforce conference in San Francisco where more than 23,000 stakeholders were in attendance to hear an avalanche of announcements.

Among the highlights: On day one, Benioff announced, a hosted online database service that the company said will be a language independent repository, and Chatter Free, the company's Facebook-like social network interface that it is offering free of charge to all employees of customers.

On day two, Benioff announced the acquisition of Ruby cloud provider Heroku for $212 million in cash, a roadmap to expand its platform and a new IT service platform called RemedyForce (with help from Remedy supplier BMC Software).

All of these announcements and others were aimed at moving to what Benioff and company describe as Cloud Two. "As the world moves from cloud one to cloud two, how do we evolve, how do we help all of our customers get there faster," was the call to action by Benioff.

"What's obvious is they are going headlong into the platform space," said IDC analyst Al Hilwa, in an interview. "It's not enough for them to be an application-as-a-service they want to be a platform-as-a-service."


Database Entrée

Of all the announcements, the plan to offer at some point next year is aimed squarely at two companies Benioff likes least: Microsoft and his onetime employer Oracle. will compete with Microsoft's SQL Azure, while potentially throwing a wrench into Oracle's core database business.

"Now we can start using to provide a new level of information management of managing and sharing our information in the cloud," Benioff told attendees.

"The difficulty will run into is it doesn't natively speak SQL," said Jonathan Bruce, senior product manager for Progress Software. The ISV is offering a fix for that. The company released the beta of JDBC drivers that will enable developers to build connectivity to, he said, adding that ODBC drivers will come in the second quarter of next year.

"The standalone capabilities are being offered to respond to the changing way in which applications and databases are being architected in a more pluralistic fashion in the cloud," noted Thinkstrategies analyst Jeff Kaplan, in a blog post. "The goal of is to democratize database development, and give's customers and partners another reason to expand their use of its applications and PaaS."

Extending is's site for developer-built applications. Though is an outgrowth of that, adds more services and applications. In a key move, is opening to Ruby developers with the acquisition of Heroku, a leading cloud service for Ruby-based apps.

Founded in 2007, Heroku is among the most prevalent Ruby-based cloud providers, Hilwa said. "Heroku is a multi-tenant architecture," Hilwa said. "It's very much in line architecturally with the way Salesforce thinks." Benioff pointed out there are more than 105,000 Ruby apps running on Heroku, with 200 million Web requests per day and 3,000 new apps per week. Heroku customers include Best Buy, General Mills and ESPN.

"You can build apps faster and quicker and easier for the Web than ever before," Benioff said. "What Heroku and give when they come together, they're going to give Ruby developers a path to the enterprise, which is something that's been badly needed."

Kaplan pointed out that the addition of Heroku and, are focused on the new world of social and mobile apps. "They are also intended to offset Microsoft's aggressive efforts to gain customer and partner acceptance of its Azure PaaS, and undercut Oracle's 'false cloud' offerings which it calls 'Cloud-in-a-Box,'" Kaplan noted.

While has put a stake in the ground in supporting Ruby-based cloud apps, it also has a major play for Java developers, though that appears to be moving a bit sluggishly, Hilwa pointed out. announced the private beta of VMforce. The product of its partnership with VMware, VMforce uses that company's Spring Framework. VMforce will let Java developers run their apps natively on

Among other extensions to

  • Appforce: designed to let users build forms, custom reports and visually create business processes. It supports workgroup collaboration via the company's Chatter service.
  • Siteforce: A hosted content management system designed to let business users create and update sites.
  • ISVforce: An application platform for ISVs that enables trials, provisioning and automatic updates with a console that allows for monitoring of usage. It includes the company's AppExchange Marketplace, which now hosts 1,000 apps, the company said, adding that venture capital firms have invested more than $1 billion in companies on the marketplace.

A Remedy for Salesforce

Benioff, a big fan of BMC Software's Remedy IT services management platform, wanted to bring that to the cloud. The two companies inked a partnership and delivered ServiceDesk for earlier this year. But Benioff wanted more than just the IT helpdesk component of BMC's Remedy suite, which led to this week's launch of RemedyForce.

With RemedyForce, customers get a cloud version of BMC's Remedy, which includes core service desk capabilities that offer change management, knowledge management and problem resolution; service management including a configuration management database, support for Chatter and support for mobile devices.

BMC chairman and CEO Bob Beauchamp joined Benioff on stage where he said IT services management is conservatively a $15 billion market. "Traditionally the issue with it is that it's been something that all very large enterprises understand, they get it, they have to have it, but it's been expensive for other enterprises to implement," Beauchamp said. "We've taken our knowledge of how customers use the service management environment and we've ported that onto [] with new technology."

Bottom line, backed by Benioff's strong personality, made a strong statement that it wants to be a key player in the cloud. And the company wants a piece of Microsoft and Oracle's business beyond just CRM. has put a lot out there but it still has a lot to prove.

"I think the question is their credibility with developers, they've historically been known as lightweight," Hilwa said. "The application platform had a lot of controls and governance and limits because of this multi-tenancy. They were afraid certain applications might take too much resources and compromise the level of service for the others, but it looks like they are taking some of those limits away, driving them down, trying to really build credibility with developers."

Kaplan agrees: " has also been working hard to fend off competitive claims and developer concerns that its PaaS is too proprietary," he said, pointing to's teaming with VMware to create VMforce and the Heroku acquisition.

"The buzz and activity at Dreamforce 2010 is not only a clear indication of's growing success, but also an impressive illustration of the widening movement to the cloud."

What's your take on's moves? Do you see it as too lightweight compared to Microsoft and Oracle or is it a legitimate threat to the establishment? Post your comments or drop me a line at [email protected].

Posted by Jeffrey Schwartz on December 09, 2010 at 11:58 AM3 comments

Google Nabs Federal Cloud Deal

The General Services Administration yesterday said it will move to Google Apps, a huge win for the company because it's the first federal agency to use Google Apps. The GSA's five-year, $6.7 million deal will save the GSA 50 percent in IT costs over the span of the contract, the agency said.

The GSA will move 17,000 employees and contractors in 17 locations to Google Apps including Gmail during the coming year. Apparently helping Google and its lead contractor Unisys bag this deal was the fact that Google Apps is FISMA certified.

"Earlier this year, Google Apps became the first suite of cloud computing e-mail and collaboration applications to receive Federal Information Security Management Act (FISMA) certification, enabling agencies to compare the security features of Google Apps to that of existing systems," wrote Mike Bradshaw, director of Google's federal enterprise team, in a blog post announcing the deal.

It just so happened that Microsoft today announced that its cloud infrastructure has received FISMA approval. "Meeting the requirements of FISMA is an important security requirement for U.S. Federal agencies," wrote Mark Estberg, senior director of risk and compliance of Microsoft's Global Foundation Services unit, in a blog post.

Nevertheless Google's win comes after Microsoft charted some big wins, most recently the City of New York and the state contracts in California and Minnesota.

Microsoft officials have been aggressively questioning Google's ability to compete in the enterprise. Case in point was a recent blog post after winning the State of California deal. "Google can't meet the needs of the state," was the subhead in a TechNet blog posting announcing the California win.

I chatted with Tom Rizzo, Microsoft's senior director of online services yesterday and he ripped into Google's enterprise aspirations. "They're trying to shoehorn consumer products into the enterprise space," he said. "That's like us trying to take things like [Microsoft's] Hotmail and Skydrive and say "it is enterprise ready."

Google sees it differently. "Modern e-mail and collaboration tools will help make [GSA] employees more efficient and effective," Bradshaw noted. "Google Apps will bring GSA a continual stream of new and innovative features, helping the agency keep pace with advances in technology in the years ahead."

Posted by Jeffrey Schwartz on December 02, 2010 at 11:58 AM0 comments