Joyent today announced it has agreed to acquire Reasonably Smart, a fledgling cloud startup based on JavaScript and Git, for an undisclosed amount. While on the surface it might look like simple industry consolidation, Reasonably Smart’s technology will in fact help Joyent compete with emerging service-centric clouds while retaining an open model that makes developers comfortable.

You might think the deal is just cloud roll-up: Reasonably Smart was a very small startup. David Young, Joyent’s CEO, said the company–whose backers include PayPal co-founder Peter Thiel– is in “a strong financial position that supports making strategic acquisitions.” Dig a bit deeper, however, and the deal is more than just a roll-up. Joyent gets an open platform with which to attract developers while preparing the company for the looming threat of Google and Microsoft.

Joyent, along with other infrastructure-centric clouds like Amazon’s EC2 and Rackspace’s Mosso, let subscribers see their machines. Because they virtualize at the hardware level, these clouds support a wide range of development languages. Users aren’t locked in: They can take their applications out of the cloud and run them themselves. But this model also means customers have to worry about operating their virtual infrastructure, undermining the promised scalability of cloud computing.

By contrast, service-centric cloud models like Google’s App Engine, 10Gen and Microsoft’s Azure hide the infrastructure from developers. A subscriber doesn’t worry about scaling. Instead, they fret over lock-in — the inability to leave their cloud provider when things go wrong because they’re dependent on its proprietary features.

With Reasonably Smart, Joyent can strike a balance between infrastructure and service. Developers write applications in JavaScript, using extensions for things like I/O and storage. These applications can run on a developer’s desktop, in a private data center, or in a cloud. Of course, Joyent’s betting its operational expertise will convince people to run it in their cloud. It’s a service model, but one that subscribers can leave if they want to.

Joyent CTO Jason Hoffman remarked last year at our Structure conference that he wanted an open cloud model that could scale indefinitely, independent of infrastructure concerns. “We intend to keep this new Joyent offering completely open-source,” he said of today’s acquisition.

The move toward service-based clouds is part of a trend that will shape cloud computing in 2009. This year, Google and Microsoft will roll out production-grade clouds that have features like search, mapping, licensing, social graph and authentication baked right in.

To compete, infrastructure clouds need to round out their open offerings with built-in services while trying to retain the openness of their infrastructure heritage. Amazon, which has plenty of services, from SimpleDB to S3, continues to extend its offering with value-added services like CDNs, billing and management consoles — even at the expense of its ecosystem of existing vendors that have built similar tools atop EC2.

That makes Joyent’s acquisition look, well, reasonably smart.

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Posted by Alistair Croll on GigaOM  |  Permalink  |  12 Comments
Tags: 10Gen, Amazon, Azure, EC2, Git, google app engine, Javascript, Joyent, Microsoft, Rackspace, Reasonably Smart

GigaOM’s Structure 08 event offered a terrific opportunity to survey the changing landscape of computing infrastructure. But as with all technology shifts, innovation won’t just belong to the big established players like VMWare, Amazon, Google, Sun Microsystems, Salesforce.com and NetSuite. With that in mind, Found|READ asked a panel of conference participants to share their thoughts via email on some of the more compelling business opportunities for startups in the cloud computing space. Specifically, we asked them:

F|R: Let’s say you’re about to start, or fund, a new business. Considering the changing landscape for computing architecture, what emerging or ignored problem in cloud computing would you target? What business or service would you launch to try to address it?

Arnie Berman, Chief Technology Strategist, Cowen and Co.:

Since Structure 08, I’ve been mulling over the following conundrum: How to give those that sign up for cloud computing services a sense of just how big (or small) their bills will be. In the wireless handset world, the advent of “bucket pricing” greatly helped the cause of mobile adoption. With “per-minute” pricing plans, charges were unpredictable – and occasionally very painful for active callers. “Bucket pricing” removed the fear of getting stuck with a ridiculously large bill.

In enterprise software, the advent of monthly subscription pricing from SaaS vendors likewise disrupted the license and maintenance pricing model of conventional software. But now companies like Amazon are threatening to disrupt the monthly pricing model with a “by-the-drink” model, where users only pay for the computing or storage capacity they use. While the economics of a pay-as-you-go approach are extremely compelling for most users, the approach actually reintroduces an element of uncertainty, because it’s very hard to predict what your computing consumption, and therefore your spending, is going to be. In wireless handset terms, it’s like going backwards from the safe harbor of “bucket pricing” to risky “per-minute” plans again.

Here’s a graphic:

Users like saving money. But they also like predictability. This suggests that what the world needs now is a monitoring and provisioning tool: a service (or a ware) that allows users to forecast their likely usage of computing infrastructure resources that they’ll purchase “by the drink.” Such a tool would also help predict their likely savings, as compared to the traditional on-premises software or SaaS models. Think of this tool as a tech innovation to help measure, and manage, the business model innovation that is cloud computing.

Luke Lonergan, co-founder and CTO of Greenplum, a maker of database management software:

The hype of cloud computing is huge with promise, and there are a lot of companies trying to explore what they can do with it. It is creating a market for services around putting applications into Amazon EC2 (leased computing infrastructure) and S3 (online storage) quickly and easily. If I were a VC in the market for a cloud company right now I’d look for something that makes the path from “application” to “cloud application” much quicker — basically I’d sell shovels and alcohol to the gold miners.

As far as the characteristics required: It would be off-the-shelf service for quick experimentation, something like “put your code or job stream here, dial in the number of units, push button to run, back comes a monitor that watches over execution, when done you get stats about efficiency, etc.” I think the current Amazon interface is more about the rental of assets and less about the execution of the experiments themselves.

Ken Elefant, General Partner, Opus Capital:

The most successful startups will identify enterprise computing needs that are not core to their customer’s business, but are still required to support it. This means targeting companies where a business buyer is eager to bypass IT. And founders should be going after cyclical businesses with predictable spikes. These are the kinds of potential customers that can benefit the most from overflow IT provisioning offered by a cloud computing startup. For example, search companies would want their large amounts of data to be in the cloud (pictures, videos, etc.) but only if they have low latency, low cost and high availability.

But don’t be too narrow in your pursuit of suitable verticals. Small companies still need to prove they have broad market applicability — and, specifically — enterprise customers who are willing to pay. The verticals need to be large enough to warrant a venture investment. An example might be financial services, where the provisioned service or function that a cloud computing startup might offer would be risk calculations, where lots of data, low latency and high availability is essential. Financial services is also a good example of a vertical of willing buyers. I believe technology will continue to trend in favor of talented, visionary entrepreneurs, especially those who can move fast.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  5 Comments
Tags: Amazon, Cowen and Company, EC2, google, Greenplum, NetSuite, Opus Capital, S3, Salesforce.com, Structure'08, Sun Microsystems, VMWare

Virtualization holds lots of promise: Move your physical machines to virtual ones, and you’ll reclaim capacity at the same time that you make operations easier. But applications seldom run on one machine; instead they’re a combination of servers, switches and routers. 3Tera’s recently announced product road map may let companies provision whole data centers atop cloud grids like Amazon’s EC2. Call it a Virtual Data Center.

“Most large-scale systems, in order to move up the ladder and serve more customers, require more and more resources,” said Bert Armijo, 3Tera’s VP of product and marketing. “If you manage them as individual virtual machines, the problem is that the human load — the ability to actually remember what’s running where and to manipulate it all — becomes overwhelming. At some point, somebody makes a very small mistake that results in a very large outage.”

3Tera’s Applogic makes software that runs on a grid of hardware: A flat array of commodity servers, Gigabit Ethernet and direct-attached storage. The software turns this into a resource pool that can be provisioned to users. A graphical front-end, called an infrastructure editor, lets administrators drag and drop data center components like firewalls and load balancers.

3Tera sells to enterprises that want to run their own grids, as well as to roughly 20 managed service providers that want to offer on-demand data centers to their customers. Pricing starts at $500 a month for the smallest virtual data center, which is a single 8-core node, 8GB of RAM, 750 GB of storage and 2TB of transfer, though the company recommends a minimum of a three-server configuration. Within that, the manager can slice up the virtual resources into 100 individual servers in the VDC. In recent months, the firm is increasing utilization at roughly 15 percent per month.

3Tera was bootstrapped on its founders’ pocketbooks, but in April it took in a first financing of $3.7 million; the largest investor in the round was Japanese distribution partner Net One Systems. At the same time, the firm announced plans to open up its software to work with third-party components by unbundling its software into execution, catalog and control components. “We’ve proven out the ability to move applications between data centers and to abstract infrastructure definition from physical hardware,” said Armijo. “Now, somebody could write a connector between our control interface and the [Amazon] EC2 execution engine.”

3Tera has strong parallels to firms such as Elastra. While they look like competitors, Armijo says he thinks VDC companies need to cooperate. “It’s in our interest to show interoperability and the ability to run applications that span both systems. This is what will inspire users to put their applications into the cloud.”

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My Early Black Friday Deal Arrived — Panasonic HDC-SD10 jkOnTheRun – by Kevin C. Tofel "; 10 Things to Be Thankful For in Greentech Earth2Tech – by Josie Garthwaite "; NewTeeVee Re-Run: Paul McCartney Cooks Mashed Potatoes NewTeeVee – by Chris Albrecht "; Living by the Numbers: What Happens When You Quantify Everything? WebWorkerDaily – by Celine Roque ";

Posted by Alistair Croll on GigaOM  |  Permalink  |  3 Comments
Tags: 3Tera, EC2, Elastra, virtual data center

During our on-stage chat at Startup Camp, Sun Microsystems CEO Jonathan Schwartz hinted at some big news involving Amazon and its web services. Today, the company officially announced:

• Sun’s OpenSolaris OS will be available on the Amazon Elastic Compute Cloud (Amazon EC2) customers for free. It is in beta for now.
• Sun will provide premium technical support for MySQL database running on Linux and Amazon EC2.

These developments are meant to address the needs and complaints of the developer community. OpenSolaris, which comes with tools such as ZFS and Dynamic Tracing (D-Trace), will be offered for free, in contrast to some Linux offerings that cost money. For instance, if you sign up for EC2 and pick RedHat, it costs $19. ZFS allows instant rollback and continual check-summing capabilities, something developers have found lacking in the EC2 platform. This OpenSolaris on Amazon EC2 beta is currently available by invitation only. Some software vendors, including GigaSpaces, Rightscale, Thoughtworks and Zmanda, are already offering their solutions via Amazon Machine.

From OStatic: As Sun Microsystems’ JavaOne conference kicks off this week, the company has announced its free new OpenSolaris open source operating system. It’s available for download . The big question with OpenSolaris is how it may compete against Linux rivals, especially since it is a fully supported operating system. OStatic, our open source blog, has the details.

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My Early Black Friday Deal Arrived — Panasonic HDC-SD10 jkOnTheRun – by Kevin C. Tofel "; 10 Things to Be Thankful For in Greentech Earth2Tech – by Josie Garthwaite "; NewTeeVee Re-Run: Paul McCartney Cooks Mashed Potatoes NewTeeVee – by Chris Albrecht "; Living by the Numbers: What Happens When You Quantify Everything? WebWorkerDaily – by Celine Roque ";

Posted by Om Malik on GigaOM  |  Permalink  |  9 Comments
Tags: Amazon Web Services, AMZN, EC2, Jonathan Schwartz, Sun Microsystems, SUNW