Mission Impossible: Sizing up the cloud contenders

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Mea culpa.

In the initial version of a story about the estimated size of Microsoft’s cloud computing business I lumped all of Microsoft’s cloud business under the term “Azure.” I should have known better since Microsoft’s cloud includes a lot of stuff. And, it’s not like this is a new issue. Last year I raised the question when a company executive claimed that Azure would be a $1 billion a year business.

At the time, that $1 billion claim was hard to believe, and parsing what Curt Anderson, the then-CFO of Microsoft’s Server and Tools unit, told Bloomberg, was (and still is) interesting:

“Microsoft’s $1 billion sales figure includes Azure, as well as software provided to partners to create related Windows cloud services, Anderson said in an interview. Azure customers use the services to run corporate programs, websites and applications from Microsoft’s data centers, rather than spending on their own servers, storage machines and workers to maintain them.”

The emphasis was mine.

Cloud confusopoly (hat tip to Scott Adams)

So, let’s be clear about a very fuzzy topic. None — and I mean not one –of the cloud providers make it easy to suss out exactly how big their cloud businesses are. Amazon(s amzn) doesn’t break out Amazon Web Services separately, as we are all sick and tired of pointing out. You have to sort of divine AWS’s relative size by assessing Amazon’s “Net Sales, North America, Other” category. So much for transparency.

How much revenue does IBM(s ibm) or HP(s hpq) or Oracle(s orcl) derive from cloud as opposed to legacy hardware and software that is now somehow magically cloudy? Just over a year ago, the U.S. Securities & Exchange launched a probe into how IBM accounted for its cloud revenue, and two months ago decided not to pursue action.

Still, no one knows the answer. And that lack of insight won’t get better any time soon.

There’s a great Dilbert “Confusopoly” cartoon on this topic, as a Twitter correspondent pointed out last week. I don’t have rights to reproduce it here, but here is a link. As people in the IT business have long known, there is margin potential in confusion. So it’s not in any vendor’s best interest to make things clearer.

Structure Show: Examining the Hadoop hubbub

This week’s guest, Hortonworks CEO Rob Bearden, talked with Derrick Harris about why HP took a $50 million stake in his company on the Structure Show podcast. But leading into that we discuss the moving and shaking in public cloud with a three-way price-cut battle between Amazon, Google and Microsoft. Oh, and why Twitter(s twtr) bought Madbits.


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Rob Bearden, CEO, Hortonworks Structure Data 2014

Rob Bearden, CEO, Hortonworks Structure Data 2014

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3 Comments

sourcesforstories

This is equally as difficult to do in-house. How much of an infrastructure is outsourced? How much data resides in the cloud. It calls to mind the need for data and cloud governance. As with every infrastructure transformation there are growing pains. Eventually, we’ll have the answers to this question and our own!

–KB http://bit.ly/1iMdSE5

Marc Farley

Cloud accounting falls outside the bounds of normal accounting scrutiny and my guess is that the SEC decided it couldn’t afford the resources to complete its investigation of IBM. The desire to remain ambiguous about cloud finances has probably less to do with sales volumes than the expenses of establishing a leading cloud business. Profitability is not a realistic goal today – the goal is eventually reaching efficiencies of scale that competitors can’t reach. It is the biggest gamble in the history of the IT industry and none of the players want anyone to know how risky the whole thing is.

Marty Stockdale

I’d be interested to get your take on where Windstream falls relative to your consciousness of cloud providers.

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