Weekly Update

The Data Center Is the New Box. Are You Ready?

Joyent’s Jason Hoffman likes to talk about the data center being the new box. I suggested a similar idea in July, noting that Microsoft is turning the cloud business into the PC business. The analogy goes that, with more organizations hosting applications in the cloud and data volumes skyrocketing, the cloud data center takes the place of the on-premise server.  And if the data center is the server, the cloud computing management software, atop which applications run, must be the new operating system. Much like there was Wintel (Windows-Intel) in the client-server world, Hoffman thinks there can be Joytel (Joyent-Intel) in the cloud world. I think he’s onto something, but I don’t think he’s the only one with such aspirations.

As with most things cloud computing, exact numbers are hard to come by, but anecdotal evidence suggests that MSPs and data center operators are driving spending on cloud software. Hoffman has seen this first-hand: Joyent entered the Chinese market last year by striking a deal with a Chinese data center operator because it was literally the only way to launch a cloud service in mainland China. Joyent also has an OEM deal with Dell — Dell Cloud Solution for Web Applications — that makes Joyent a key component of Dell-based cloud deployments. On Friday, the two companies announced that Canadian ISP Uniserve Communications as customer. I have no idea Joyent’s annual revenues for its cloud-hosting platform, but Hoffman noted that data center deals can range from $25 million to $1 billion apiece (split among all the vendors involved, of course). Why target small sales when there’s money to made at scale?

Joyent is hardly alone in selling cloud software to service providers, though:

  • Recently, large Korean telco KT built a cloud atop Cloud.com’s CloudStack platform. Cloud.com’s other publicly known customers include CloudCentral, Tata Communications and ReliaCloud.
  • When I spoke with Morphlabs founder Winston Damarillo earlier this month, he indicated that his company is essentially giving away the EC2-hosted version of its mCloud product (1 cent per hour) because it is doing so well in other areas, including eight high-volume data center deals. Among those customers are web hosts GoGoTech and ZeroLag in the United States, and BroadBand Tower in Japan.
  • When CA Technologies bought 3Tera last year, it also acquired a large number of service providers offering cloud services atop 3Tera’s AppLogic software. During a call with CA in October, I got the impression service providers continue to drive AppLogic sales.
  • Enomaly, too, relies heavily on service providers, including CentriLogic, Orange, City Cloud and Hosts Unlimited. Enomaly recently launched its SpotCloud portal, where service providers (largely Enomaly customers) can take bids on excess capacity.
  • VMware’s vCloud Express and vCloud Datacenter programs have attracted partners like Terremark, Verizon and Singtel.
  • HPC software vendors like Platform Computing, Adaptive Computing and Univa UD all have cloud software, and all have told me that service providers, primarily telcos, are among their primary customers.

Hoffman’s assessment appears pretty accurate. Much like Microsoft made a fortune providing the OS for individual machines, cloud vendors will have to make their fortunes providing OSes for data centers. Perhaps that’s why Dell’s Data Center Solutions business is driving server sales: The customers of the future don’t want one box, they want a data center full of them.

If this is indeed the case, cloud software vendors had better have their technologies in order. Any organization that wants to fulfill the oft-cited desire to operate “like Google,” whether serving applications internally of offering virtual servers to customers, needs massive scale and software designed to handle it. If demand picks up like some predict (even if not within the next year), software built to operate at data center scale will flourish, while software built for boxes will fall along the wayside. Rackspace gets it. Dinged for scalability issues, it launched OpenStack to remedy its software situation. Are you ready for this brave new world?

Question of the week

Do you buy into the idea that the data center is the new box?