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AWS and Microsoft reap most of the benefits of expanding cloud market

Posted by on Feb 1, 2019 in Amazon, AWS, Azure, canalys, Cloud, cloud marketshare, Microsoft, Synergy Research, TC | 0 comments

While it appears that overall economic activity could be slowing down, one area that continues to soar is the cloud business. Just this week, Amazon and Microsoft reported their cloud numbers as part of their overall earnings reports.

While Microsoft’s cloud growth was flat from the previous quarter, it still grew a healthy 76 percent to $9.4 billion, or a $37.6 billion run rate. Meanwhile AWS, Amazon’s cloud division, grew 46 percent to $7.4 billion, or a $29.6 billion run rate. That’s up from $5.11 billion a year ago. As always, it’s important to remember that it isn’t necessarily an apples to apples comparison, as each company counts what they call cloud revenue a little differently, but it gives you a sense of where this market is going.

Both businesses also face the law of large numbers in terms of growth; that is, the bigger you get, the harder it is to keep growing at a substantial rate. The two companies are doing quite well, though, considering how mature their offerings are.

Last year Synergy Research reported the overall cloud market worldwide grew 32 percent to $250 billion. In Synergy’s last report on cloud market share in October, it had Amazon well in the lead, with around 35 percent and Microsoft around 15 percent. A Canalys report from the same time period had AWS with 32 percent and Microsoft with 17 percent, so close you could call it a tie for statistical purposes.

Alibaba just reported earnings was up 84 percent, but only have a small worldwide market share. IBM, which bought Red Hat for $34 billion last year hoping to grab a bigger piece of the hybrid cloud market, reported cloud revenue was up only 12 percent for 2018 in its earnings report last week, which seems pretty paltry compared to the rest of the market. It’s worth noting that the Red Hat sale won’t close until later this year. Google will be reporting at the beginning of next week, but has not been breaking out cloud revenue recently. It will be interesting to see if that changes.

Most experts agree that we are just beginning to scratch the surface of cloud adoption and that the vast majority of workloads are still locked in private data centers around the world. That means even if there is a broader economic downturn in the future, the cloud could be somewhat insulated because companies are already in the process of moving parts of their businesses to the cloud.

As these companies grow, it requires increasing numbers of data centers to deal with all this new business, and a Canalys report found that Microsoft and Amazon have been busy in this regard. Amazon currently has 60 cloud locations worldwide, with another 12 under construction. Canalys reports that the company’s CapEx spending (which includes non-data center spend) reached $26 billion, up a modest 7 percent. Meanwhile Microsoft, which is chasing AWS, had much more aggressive infrastructure spending, with expenditures up 64 percent to $14 billion.

You can expect that unless something drastic happens, the market pie will continue to expand, but the numbers probably won’t change dramatically as these two market leaders have hardened their market positions and it will become increasingly difficult for competitors to catch them.


Source: The Tech Crunch

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Amazon reports better than expected Q4, but lowers Q1 guidance

Posted by on Jan 31, 2019 in Alexa, Amazon, AWS, Earnings, echo | 0 comments

Amazon had a heck of a holiday. The online retail giant posted Q4 earnings today, reporting $72.4 billion in revenue, topping last year’s $60.45 billion and besting the analysts’ forecast of $71.92 billion.

Extremely wealthy individual Jeff Bezos singled out Alexa’s record holiday season as a source of the robust quarter.

“Alexa was very busy during her holiday season. Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year,” the CEO said of the earnings. “The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear.”

Amazon Web Services also played a key role here, with a massive $2.2 billion operating income. AWS’s $7.43 billion sales beat the $7.29 billion analysts’ estimate and marked a healthy jump from last year’s $5.11 billion. 

The numbers look good, though; as CNBC notes, the 19.7 percent revenue growth for the quarter is the lowest since 2015. Wall Street reaction was further dampened by Amazon’s lowered guidance for Q1. Amazon put revenue for the upcoming quarter at between $56 billion and $60 billion, below analyst expectations of $60.99 billion.


Source: The Tech Crunch

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AWS launches a base station for satellites as a service

Posted by on Nov 27, 2018 in AWS, AWS re:Invent 2018, Cloud, data processing, Enterprise, Satellites, Space, TC | 0 comments

Today at AWS re:Invent in Las Vegas, AWS announced a new service for satellite providers with the launch of AWS Ground Station, the first fully managed ground station as a service.

With this new service, AWS will provide ground antennas through their existing network of worldwide availability zones, as well as data processing services to simplify the entire data retrieval and processing process for satellite companies, or for others who consume the satellite data.

Satellite operators need to get data down from the satellite, process it and then make it available for developers to use in applications. In that regard, it’s not that much different from any IoT device. It just so happens that these are flying around in space.

AWS CEO Andy Jassy pointed out that they hadn’t really considered a service like this until they had customers asking for it. “Customers said that we have so much data in space with so many applications that want to use that data. Why don’t you make it easier,” Jassy said. He said they thought about that and figured they could put their vast worldwide network to bear on the problem.

Prior to this service, companies had to build these base stations themselves to get the data down from the satellites as they passed over the base stations on earth wherever those base stations happened to be. It required that providers buy land and build the hardware, then deal with the data themselves. By offering this as a managed service, it greatly simplifies every aspect of the workflow.

Holger Mueller, an analyst at Constellation Research, says the service will help put the satellite data into the hands of developers faster. “To rule real-world application use cases you need to make maps and real-time spatial data available in an easy-to-consume, real-time and affordable way,” Mueller told TechCrunch. This is precisely the type of data you can get from satellites.

The value proposition of any cloud service has always been about reducing the resource allocation required by a company to achieve a goal. With AWS Ground Station, AWS handles every aspect of the satellite data retrieval and processing operation for the company, greatly reducing the cost and complexity associated with it.

AWS claims it can save up to 80 percent by using an on-demand model over ownership. They are starting with two ground stations today as they launch the service, but plan to expand it to 12 by the middle of next year.

Customers and partners involved in the Ground Station preview included Lockheed Martin, Open Cosmos, HawkEye360 and DigitalGlobe, among others.

more AWS re:Invent 2018 coverage


Source: The Tech Crunch

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AWS launches Arm-based servers for EC2

Posted by on Nov 27, 2018 in Amazon Web Services, amd, ARM, AWS, AWS re:Invent 2018, Cloud, cloud computing, Developer, linux, operating system, operating systems, TC, Ubuntu, web servers | 0 comments

At its re:Invent conference in Las Vegas, AWS today announced the launch of Arm-based servers for its EC2 cloud computing service. These aren’t run-of-the-mill Arm chips, though. AWS took the standard Arm cores and then customized them to fit its needs.The company says that its so-called AWS Graviton Processors have been optimized for performance and cost, with a focus on scale-out workloads that can be spread across a number of smaller instances (think containerized microservices, web servers, caching fleets, etc.).

The first set of instances, called A1, is now available in a number of AWS regions in the U.S. and Europe. They support all of AWS’s standard instance pricing models, including on-demand, reserved instance, spot instance, dedicated instance and dedicated host.

For now, you can only use Amazon Linux 2, RHEL and Ubuntu as operating systems for these machines, but AWS promises that additional operating system support will launch in the future.

Because these are ARM servers, you’ll obviously have to recompile any native code for them before you can run your applications on them. Virtually any application that is written in a scripting language, though, will probably run without any modifications.

Prices for these instances start at $0.0255/hour for an a1.medium machine with 1 CPU and 2 GiB of RAM and go up to $0.4080/hour for machines with 16 CPUs and 32 GiB of RAM. That’s maybe not as cheap as you would’ve expected given that an X86-based t3.nano server starts at $0.0052/hour, but you can always save quite a bit by using spot instances, of course. Until we see some benchmarks, though, it’s hard to compare these different machine types anyway.

As Amazon’s Jeff Barr notes in today’s announcement, the company’s move to its so-called Nitro System now allows it to launch new instance types at a faster clip. Nitro essentially provides the building blocks for creating new instance types that the team can then mix and match as needed.

It’s worth noting that AWS also launched support for AMD EPYC processors earlier this month.

more AWS re:Invent 2018 coverage


Source: The Tech Crunch

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AWS cuts in half the price of most of its Lightsail virtual private servers

Posted by on Aug 23, 2018 in Amazon, AWS, Cloud, cloud computing, Developer, digital ocean, linux, OVH, solid state drive, TC, Virtual private servers, vps | 0 comments

AWS Lightsail, which launched in 2016, is Amazon’s answer to the rise of Digital Ocean, OVH and other affordable virtual private server (VPS) players. Lightsail started as a pretty basic service, but over the course of the last two years, AWS added features like block storage, Windows support and additional regions.

Today, the company announced it is launching two new instance sizes and cutting in half the price of most Linux-based Lightsail instances. Windows instances are also getting cheaper, though the price cut there is closer to 30 percent for most instances.

The only Linux instance that isn’t getting a full 50 percent cut is the $5/month 512 MB instance, which will now cost $3.50. That’s not too bad, either. Depending on your needs, 512 MB can be enough to run a few projects, so if you don’t need a full 1 GB, you can save a few dollars by going with Lightsail over Digital Ocean’s smallest $5/month 1 GB instance. Indeed, it’s probably no surprise that Lightsail’s 1 GB instance now also costs $5/month.

All instance types come with attached SSD storage, SSH access, a static IP address and all of the other features you’d expect from a VPS hosting service.

As usual, Windows instances cost a bit more (those Windows licenses aren’t free, after all) and now start at $8 per month for a 512 MB instances. The more usable 1 GB instance will set you back $12 per month.

As for the new instance sizes, the new 16 GB instance will feature 4 vCPUs, 320 GB of storage and a generous 6 TB of data transfer. The 32 GB instance doubles the vCPU and storage numbers and offers 7 TB of data transfer.

 


Source: The Tech Crunch

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Walmart acquiring Shopify is no longer a laughable idea

Posted by on Jul 19, 2018 in Amazon, AWS, bigcommerce, Bonobos, Canada, Column, Demandware, DoorDash, eBay, eCommerce, Flipkart, IBM, India, modcloth, NetSuite, oracle, Postmates, prestashop, Shopify, TC, Tesla, U.S. Securities and Exchange Commission, Walmart | 0 comments

As competition between Walmart and Amazon intensifies, the acquisition of Shopify’s merchant marketplace may be the boost that the Walton family’s juggernaut needs to move ahead.

In May this year, Amazon published its small business impact report, in which it disclosed there are 20,000 small and medium-sized businesses that make a million dollars or more in sales on its platform.

Amazon boasts about 5 million third-party sellers on its marketplace today, with an estimated 100,000 sellers hopping on-board every month.

At 100,000 sellers a month over the next five years, there could be an estimated 11 million sellers on Amazon’s marketplace by 2023.

E-commerce intelligence firm Marketplace Pulse estimates Amazon’s gross merchandise volume, or GMV, for 2018 at $280 billion, set to triple over a five-year period, concluding that the marketplace contribution to Amazon’s GMV would surpass 70 percent by 2023.

Combined with Prime and FBA, this high-level picture sounds like Amazon can afford to not worry about its marketplace. But an uneasy trend seems to simmer within its 5 million cohort. Looking at Feedvisor’s survey of Amazon marketplace merchants from 2017 and 2018 and some interesting trends surface. 

Marketplace merchants are looking to keep their advertising costs low and are worried about rising fees on the Seattle-based company’s e-commerce platform. They’re also concerned about competition coming from Amazon as it continues to launch its own brands. Indeed, 60 percent of merchants told Feedvisor in 2017 that they planned to diversify to other channels. Walmart emerged as the most preferred channel, followed very closely by Shopify and eBay. 

About 10 percent of those surveyed in 2017 were making a million dollars or more in annual sales. A year on, this figure is up to 19 percent. One can tell where these first-time millionaires are heading when we see that Walmart today supports 9 percent more Amazon merchants than it did in 2017.

In its pursuit for parity with Amazon, Walmart has clearly overtaken eBay in merchant preference. The latter supports 12 percent fewer Amazon merchants today than it did in 2017, and is closely trailed by Shopify and Jet.com.

Shopify is one of Canada’s biggest tech success stories

Can Walmart afford to be conservative?

Walmart’s marketplace has 18,000 sellers, 36 percent of whom make at least $2 million in sales — all of whom sell on Amazon!

With its e-commerce business struggling to see gains since 2016, when it acquired Jet.com, Walmart has recently been making the waves with its string of partnerships and acquisitions. In May, it announced that it was partnering with Postmates and DoorDash for expanding its last-mile delivery of online groceries.

In what seemed to be a rebuttal to Amazon’s private label push, Walmart acquired Bonobos, Shoebuy, ModCloth and Moosejaw. It also announced in May that it was adding four fashion brands to its kitty.

While it continues to be hard-fisted about who sells on its marketplace, a trend seems to be emerging wherein Walmart is not just competing with Amazon but is also striving to bring reputed retail brands under its banner and is attempting to re-shape consumer perception of it being low-price and inexpensive.

Walmart may be second in line to Amazon, but it has its cons. Its process to qualify a third-party seller is more stringent. Sellers need to request an invitation to join and must fulfill certain quality requirements pertaining to product mix, price point and fulfillment.

Unable to differentiate among millions of sellers on Amazon and faced with rigorous screening from Walmart, the best bet for Amazon’s third-party sellers to diversify seems to be to set up their own store.

They can either create their own website or set up a store on an e-commerce platform like Magento or Shopify .

Shopify — the network is bigger than the software

Shopify, the e-commerce platform for small and medium-sized businesses, isn’t too far behind eBay and Walmart in merchant preference.

A seller can set up her own store on Shopify’s basic version for as little as $29 a month. It also has a premium version (for a $2,000 monthly fee) called Shopify Plus aimed at enterprise-level sellers and wholesalers. An estimated 3,600 merchants have already bought into Shopify Plus; among them are popular logos such as Tesla, Kylie Cosmetics and Budweiser.

Shopify has an estimated 600,000 merchants on its e-commerce platform and has seen its merchant base grow annually in excess of 100 percent since 2014.

What particularly makes Shopify attractive — and gives it an upper hand over marketplaces like Walmart — is its third-party network of developers, photographers, digital marketers and designers that merchants can leverage for their business. Shopify today is a more turnkey platform than Walmart! Of all digital commerce revenues in 2017 — totaling $2.3 trillion — Shopify sellers’ GMV was 1 percent, worth $26 billion, which shows just how important Shopify is next to Walmart.

Analysts are betting big for the next 10 years despite its recent volatility in stock price.

Around the same time, when Amazon published its small business impact report, Shopify announced that it would open a brick-and-mortar store in the U.S. by the end of summer this year to provide in-person advice and consulting services to its customers.

Such a showroom would also provide Shopify the opportunity to cross-sell its hardware products to merchants who are looking to go brick-and-mortar.

For these reasons, Shopify will continue to attract more merchants and will become more important in the days to come and, as it does, it will get noticed by the big players — Amazon and Walmart.

Shopify and Amazon share history

Shopify partnered with Amazon in 2015 as its preferred migration partner for webstore merchants. Many Shopify merchants already sell on Amazon; they have the option to use Amazon’s FBA and Payment gateway. And more than 50 percent of Shopify’s 3,600-odd “Plus” merchants sell on Amazon, as opposed to less than 1 percent who sell on Walmart.

Clearly, the preference for Walmart.com is abysmal among Shopify merchants.

At a market cap of $17 billion, Shopify can be acquired by Amazon without much hassle. While this may not be in Amazon’s cards considering the call it took four years ago to shut its webstore business and the ease with which it gets inbound interest from the long-tail e-commerce companies (which forms 90 percent of the independent e-commerce companies base), Walmart should start figuring Shopify into its strategic plans.

When your competition is Amazon, nothing is enough

In its SEC filings for the fiscal year ended January 2018, Walmart said that it is looking to increase investments in grocery and technology. Much of Walmart’s moves in these spaces continue to come across as reactive responses to Amazon:

  • Recently, in its overseas battle against Amazon, Walmart acquired a 77 percent stake in India’s Flipkart for $16 billion.
  • In what could be seen as a long overdue answer to AWS, it revealed its own cloud network.
  • It has also kickstarted efforts to take on Amazon Go. With FBA and Prime seeming invincible, Walmart will never be able to catch up to the giant. But, it can prove to be a serious rival if it decides to acquire Shopify.

(Photo by Joe Raedle/Getty Images)

Why Shopify?

The non-Amazon destination

Today, eBay has more Amazon merchants on its platform than Walmart does. However, Walmart is picking up pace and is evidently becoming more attractive.

Between 2017 and 2018, the percentage of Amazon sellers on eBay reduced from 65 percent to 52 percent. At the same time, Walmart and Jet.com combined saw an increase from 17 percent to 25 percent.

Given 2018’s stats, if Shopify were to become Walmart-owned, about 42 percent of Amazon’s sellers today, would be selling via either Walmart, Jet or Shopify. This would bring the difference between eBay and Walmart (Jet and Shopify included) down to 10 percent, in turn narrowing the competition gap between Walmart and Amazon.

Interestingly, there were rumors in 2017 that eBay was planning to acquire Shopify. The stocks reacted positively but there were no signs that eBay was interested in such an acquisition.

The perfect complement

The fundamental difference between Walmart and Shopify is that the former is a marketplace while the latter is an e-commerce platform.

It is hard for a seller with no distinct brand identity to differentiate herself on a marketplace unlike on a platform. As revenue channels, they are both necessary for a merchant’s omnichannel strategy.

While Amazon will rule the roost in the marketplace arena for a long time to come, merchants should start betting on Shopify. This acquisition will be an opportunity for Walmart to write its story in a market that Amazon tried and quit.

Shopify does not get you shoppers and Walmart does not get you the support services. As a combined entity, their value proposition becomes very compelling.

The apparent weakness is an actual strength

Shopify is not without faults. As with all e-commerce platforms, the majority of their e-commerce merchants are long-tail with little to no revenue. But critics, including Andrew Left of Citron Research, fail to understand that long-tail is sort of a deal pipeline to identify sellers who are likely to grow and contribute significantly to the revenue.

A study of Shopify’s marketplace will validate their claim that the merchants are there for the value of a “one-stop platform and extended services” and not just for Facebook data of their shoppers.

As Brian Stoffel put it in his article, “The moat is strong and growing, even as recent protests have tested the company.”

Shopify’s long-tail merchant base isn’t a weakness. It’s the pipeline that Walmart should value. It could be Walmart’s answer to Amazon’s merchant acquisition spree.

The neighborhood store is actually a Shopify Store

Shopify is an e-commerce platform provider but that’s no reason to dismiss it as a competitive threat to Walmart. Both target merchants are focused on making them sell online, albeit differently.

Walmart handpicks merchants. Shopify doesn’t.

Walmart is a legacy brand and has a perception problem in the market. Shopify is a born millennial, like Jet.

Walmart is competing with Amazon on multiple fronts. Amazon closed its webstore business and switched to an integration with Shopify!

Walmart has no equivalent to FBA. Shopify’s merchants can opt to have their merchandise fulfilled by Amazon.

Brett Andress of KeyBanc Capital Markets drives home the importance of Shopify — “Emerging brands on Shopify are getting larger, and more established brands are gravitating to Shopify to be more nimble.”

While Walmart continues to shop for private label brands in a bid to throw a new spin on its brand identity, it needs to look a few yards away. There are 600,000 of them. Either Walmart could hope for them to come list on its marketplace someday or make itself the very technology that powers their business.

Shopify is known for its ability to attract e-commerce merchants. Its tools — like the name generator, domain name generator, to name a few — are subtle retention hacks to get intending sellers hooked onto its platform. Should a seller decide to sell her business, Shopify has an exchange on which she can list her store for sale. On the partner front, developers, marketers and designers have helped create many success stories, while writing their own. Overall, it seems like the stickiness is here to stay.

With e-commerce still 12 percent of global retail trade and with an expected growth rate of 47 percent over the next three years, Shopify is well-positioned to capture a lot of the e-commerce upside. The neighborhood grocer is now more likely to open on Shopify or sell on Amazon than at the neighborhood. This is also why it makes sense for Walmart to acquire one of the two default portals of entry into e-commerce.

To compete with Amazon, it needs to make moves that shift the ground beneath the foot and a Shopify acquisition could be one of those bets still open.

Can Walmart afford it?

The retail analysts’ consensus is that Walmart needs to expand its e-commerce base, as the default for the younger demographic shopper is still Amazon. Walmart’s marketplace strategy, so far, hasn’t been about becoming that default.

Shopify is a credible option to expand its e-commerce base. Shopify was recently chided by activist investors like Andrew Left for being over-reliant on the top 10 percent of the merchant base.

There are about 4,500 e-commerce companies with $100 million-plus revenue out there and Shopify’s entry into the enterprise commerce market is a reactionary response to the inherent weakness in its own business model (of over-reliance on mid-market and long-tail e-commerce companies). The problem for Shopify and to an equal extent Magento, BigCommerce, WooCommerce and PrestaShop is that the enterprise e-commerce is the territory of Hybris, Demandware, NetSuite etc.

The tough phase for Shopify would be when its mid-market cash cow customers migrate to Hybris or WebSphere or Demandware. It has to backfill from its growing long tail unless it competes head-on with IBM, Adobe, Oracle NetSuite, Demandware or Hybris. This is one of the reasons Magento aligned with Adobe.

The problem for Walmart in making this acquisition though is Wall Street’s view that it’s a mature business with steady returns. Amazon, on the other hand, continues to treat e-commerce as a business which is in its Day 1.

You could observe the pressures Walmart has had in the past. It took Walmart over two years to finally pull the lever on the Flipkart deal, which is going to drain billions from its cash reserves (notwithstanding the revolving credit of $5 billion it has raised to fund the deal).

With the current market cap of $17 billion, Shopify isn’t pocket change. But for reasons mentioned above, Shopify’s growth will be tested. Expanding GMV of existing merchants is easier than conquering the enterprise market, especially if it aligns with Walmart.

Walmart’s cash reserves are less than $10 billion, making it a relatively expensive pursuit likely needing a leveraged buyout, and the market isn’t new to such deals. Amazon, on the other hand, has $265 billion to deploy, but it’s a buy that it doesn’t need. And that sums up Walmart’s predicament as a challenger to Amazon.


Source: The Tech Crunch

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After twenty years of Salesforce, what Marc Benioff got right and wrong about the cloud

Posted by on Jun 17, 2018 in Adobe, Amazon, Amazon Web Services, Atlassian, AWS, bigid, CIO, cloud applications, cloud computing, cloud-native computing, Column, computing, CRM, digitalocean, Dropbox, Edward Snowden, enterprise software, European Union, Facebook, Getty-Images, github enterprise, Google, hipchat, Infrastructure as a Service, iPhone, Marc Benioff, Microsoft, open source software, oracle, oracle corporation, Packet, RAM, SaaS, Salesforce, salesforce.com, slack, software as a service, software vendors, TC, United States, web services | 6 comments

As we enter the 20th year of Salesforce, there’s an interesting opportunity to reflect back on the change that Marc Benioff created with the software-as-a-service (SaaS) model for enterprise software with his launch of Salesforce.com.

This model has been validated by the annual revenue stream of SaaS companies, which is fast approaching $100 billion by most estimates, and it will likely continue to transform many slower-moving industries for years to come.

However, for the cornerstone market in IT — large enterprise-software deals — SaaS represents less than 25 percent of total revenue, according to most market estimates. This split is even evident in the most recent high profile “SaaS” acquisition of GitHub by Microsoft, with over 50 percent of GitHub’s revenue coming from the sale of their on-prem offering, GitHub Enterprise.  

Data privacy and security is also becoming a major issue, with Benioff himself even pushing for a U.S. privacy law on par with GDPR in the European Union. While consumer data is often the focus of such discussions, it’s worth remembering that SaaS providers store and process an incredible amount of personal data on behalf of their customers, and the content of that data goes well beyond email addresses for sales leads.

It’s time to reconsider the SaaS model in a modern context, integrating developments of the last nearly two decades so that enterprise software can reach its full potential. More specifically, we need to consider the impact of IaaS and “cloud-native computing” on enterprise software, and how they’re blurring the lines between SaaS and on-premises applications. As the world around enterprise software shifts and the tools for building it advance, do we really need such stark distinctions about what can run where?

Source: Getty Images/KTSDESIGN/SCIENCE PHOTO LIBRARY

The original cloud software thesis

In his book, Behind the Cloud, Benioff lays out four primary reasons for the introduction of the cloud-based SaaS model:

  1. Realigning vendor success with customer success by creating a subscription-based pricing model that grows with each customer’s usage (providing the opportunity to “land and expand”). Previously, software licenses often cost millions of dollars and were paid upfront, each year after which the customer was obligated to pay an additional 20 percent for support fees. This traditional pricing structure created significant financial barriers to adoption and made procurement painful and elongated.
  2. Putting software in the browser to kill the client-server enterprise software delivery experience. Benioff recognized that consumers were increasingly comfortable using websites to accomplish complex tasks. By utilizing the browser, Salesforce avoided the complex local client installation and allowed its software to be accessed anywhere, anytime and on any device.
  3. Sharing the cost of expensive compute resources across multiple customers by leveraging a multi-tenant architecture. This ensured that no individual customer needed to invest in expensive computing hardware required to run a given monolithic application. For context, in 1999 a gigabyte of RAM cost about $1,000 and a TB of disk storage was $30,000. Benioff cited a typical enterprise hardware purchase of $385,000 in order to run Siebel’s CRM product that might serve 200 end-users.
  4. Democratizing the availability of software by removing the installation, maintenance and upgrade challenges. Drawing from his background at Oracle, he cited experiences where it took 6-18 months to complete the installation process. Additionally, upgrades were notorious for their complexity and caused significant downtime for customers. Managing enterprise applications was a very manual process, generally with each IT org becoming the ops team executing a physical run-book for each application they purchased.

These arguments also happen to be, more or less, that same ones made by infrastructure-as-a-service (IaaS) providers such as Amazon Web Services during their early days in the mid-late ‘00s. However, IaaS adds value at a layer deeper than SaaS, providing the raw building blocks rather than the end product. The result of their success in renting cloud computing, storage and network capacity has been many more SaaS applications than ever would have been possible if everybody had to follow the model Salesforce did several years earlier.

Suddenly able to access computing resources by the hour—and free from large upfront capital investments or having to manage complex customer installations—startups forsook software for SaaS in the name of economics, simplicity and much faster user growth.

Source: Getty Images

It’s a different IT world in 2018

Fast-forward to today, and in some ways it’s clear just how prescient Benioff was in pushing the world toward SaaS. Of the four reasons laid out above, Benioff nailed the first two:

  • Subscription is the right pricing model: The subscription pricing model for software has proven to be the most effective way to create customer and vendor success. Years ago already, stalwart products like Microsoft Office and the Adobe Suite  successfully made the switch from the upfront model to thriving subscription businesses. Today, subscription pricing is the norm for many flavors of software and services.
  • Better user experience matters: Software accessed through the browser or thin, native mobile apps (leveraging the same APIs and delivered seamlessly through app stores) have long since become ubiquitous. The consumerization of IT was a real trend, and it has driven the habits from our personal lives into our business lives.

In other areas, however, things today look very different than they did back in 1999. In particular, Benioff’s other two primary reasons for embracing SaaS no longer seem so compelling. Ironically, IaaS economies of scale (especially once Google and Microsoft began competing with AWS in earnest) and software-development practices developed inside those “web scale” companies played major roles in spurring these changes:

  • Computing is now cheap: The cost of compute and storage have been driven down so dramatically that there are limited cost savings in shared resources. Today, a gigabyte of RAM is about $5 and a terabyte of disk storage is about $30 if you buy them directly. Cloud providers give away resources to small users and charge only pennies per hour for standard-sized instances. By comparison, at the same time that Salesforce was founded, Google was running on its first data center—with combined total compute and RAM comparable to that of a single iPhone X. That is not a joke.
  • Installing software is now much easier: The process of installing and upgrading modern software has become automated with the emergence of continuous integration and deployment (CI/CD) and configuration-management tools. With the rapid adoption of containers and microservices, cloud-native infrastructure has become the de facto standard for local development and is becoming the standard for far more reliable, resilient and scalable cloud deployment. Enterprise software packed as a set of Docker containers orchestrated by Kubernetes or Docker Swarm, for example, can be installed pretty much anywhere and be live in minutes.

Sourlce: Getty Images/ERHUI1979

What Benioff didn’t foresee

Several other factors have also emerged in the last few years that beg the question of whether the traditional definition of SaaS can really be the only one going forward. Here, too, there’s irony in the fact that many of the forces pushing software back toward self-hosting and management can be traced directly to the success of SaaS itself, and cloud computing in general:

  1. Cloud computing can now be “private”: Virtual private clouds (VPCs) in the IaaS world allow enterprises to maintain root control of the OS, while outsourcing the physical management of machines to providers like Google, DigitalOcean, Microsoft, Packet or AWS. This allows enterprises (like Capital One) to relinquish hardware management and the headache it often entails, but retain control over networks, software and data. It is also far easier for enterprises to get the necessary assurance for the security posture of Amazon, Microsoft and Google than it is to get the same level of assurance for each of the tens of thousands of possible SaaS vendors in the world.
  2. Regulations can penalize centralized services: One of the underappreciated consequences of Edward Snowden’s leaks, as well as an awakening to the sometimes questionable data-privacy practices of companies like Facebook, is an uptick in governments and enterprises trying to protect themselves and their citizens from prying eyes. Using applications hosted in another country or managed by a third party exposes enterprises to a litany of legal issues. The European Union’s GDPR law, for example, exposes SaaS companies to more potential liability with each piece of EU-citizen data they store, and puts enterprises on the hook for how their SaaS providers manage data.
  3. Data breach exposure is higher than ever: A corollary to the point above is the increased exposure to cybercrime that companies face as they build out their SaaS footprints. All it takes is one employee at a SaaS provider clicking on the wrong link or installing the wrong Chrome extension to expose that provider’s customers’ data to criminals. If the average large enterprise uses 1,000+ SaaS applications and each of those vendors averages 250 employees, that’s an additional 250,000 possible points of entry for an attacker.
  4. Applications are much more portable: The SaaS revolution has resulted in software vendors developing their applications to be cloud-first, but they’re now building those applications using technologies (such as containers) that can help replicate the deployment of those applications onto any infrastructure. This shift to what’s called cloud-native computing means that the same complex applications you can sign up to use in a multi-tenant cloud environment can also be deployed into a private data center or VPC much easier than previously possible. Companies like BigID, StackRox, Dashbase and others are taking a private cloud-native instance first approach to their application offerings. Meanwhile SaaS stalwarts like Atlassian, Box, Github and many others are transitioning over to Kubernetes driven, cloud-native architectures that provide this optionality in the future.  
  5. The script got flipped on CIOs: Individuals and small teams within large companies now drive software adoption by selecting the tools (e.g., GitHub, Slack, HipChat, Dropbox), often SaaS, that best meet their needs. Once they learn what’s being used and how it’s working, CIOs are faced with the decision to either restrict network access to shadow IT or pursue an enterprise license—or the nearest thing to one—for those services. This trend has been so impactful that it spawned an entirely new category called cloud access security brokers—another vendor that needs to be paid, an additional layer of complexity, and another avenue for potential problems. Managing local versions of these applications brings control back to the CIO and CISO.

Source: Getty Images/MIKIEKWOODS

The future of software is location agnostic

As the pace of technological disruption picks up, the previous generation of SaaS companies is facing a future similar to the legacy software providers they once displaced. From mainframes up through cloud-native (and even serverless) computing, the goal for CIOs has always been to strike the right balance between cost, capabilities, control and flexibility. Cloud-native computing, which encompasses a wide variety of IT facets and often emphasizes open source software, is poised to deliver on these benefits in a manner that can adapt to new trends as they emerge.

The problem for many of today’s largest SaaS vendors is that they were founded and scaled out during the pre-cloud-native era, meaning they’re burdened by some serious technical and cultural debt. If they fail to make the necessary transition, they’ll be disrupted by a new generation of SaaS companies (and possibly traditional software vendors) that are agnostic toward where their applications are deployed and who applies the pre-built automation that simplifies management. This next generation of vendors will more control in the hands of end customers (who crave control), while maintaining what vendors have come to love about cloud-native development and cloud-based resources.

So, yes, Marc Benioff and Salesforce were absolutely right to champion the “No Software” movement over the past two decades, because the model of enterprise software they targeted needed to be destroyed. In the process, however, Salesforce helped spur a cloud computing movement that would eventually rewrite the rules on enterprise IT and, now, SaaS itself.


Source: The Tech Crunch

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Google is launching a new digital store to sell cloud-based software

Posted by on Jan 30, 2018 in AWS, Cloud, Google, MobileIron, TC | 0 comments

 Google is launching a digital store that will offer cloud-based software to companies and other organizations. Bloomberg, which reported the news a bit earlier, notes the move is just the juggernaut’s latest effort to ensure that cloud leaders, and specifically Amazon Web Services, don’t leave the company in the dust. Read More
Source: The Tech Crunch

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Don’t expect AWS to launch a blockchain service anytime soon

Posted by on Nov 29, 2017 in AWS, AWS reinvent 2017, blockchain, blockchain-as-a-service, Cloud, TC | 0 comments

 Bitcoin may be reaching for new heights, but don’t expect AWS to launch a service that’s based on the underlying blockchain technology anytime soon. During a press conference at AWS’ annual re:Invent conference in Last Vegas, AWS CEO Andy Jassy took a question on his team’s plans for a blockchain service. Jassy seemed anything but enthused about the prospect. Read More
Source: The Tech Crunch

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AWS launches GuardDuty, its new intelligent threat detection service

Posted by on Nov 29, 2017 in AWS, AWS reinvent 2017, Cloud, guardduty, Security | 0 comments

Amazon’s AWS cloud computing division today announced a new threat detection service that aims to help the company’s users safe from potential security threats. The service applies machine learning to identify threats (think an EC2 instances that starts mining Bitcoin without your knowledge or an instance that launches in a region you’ve never used before) and then… Read More
Source: The Tech Crunch

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