A friend of mine in the research industry used to give out little post-it-notes to trainee analysts that said “be wrong boldly.” Her reasoning – if you are bold and right, you will be hailed as a prophet. If you’re wrong, most likely the crowd will have moved on by the time your prediction fizzles. But accountability for our past advice is a core value here at RampRate, so we have to see how we did on our 2011 predictions – and see just how well our crystal ball was working. By our count, we have 4 hits, 2 partial hits, 1 miss, and 3 TBDs that won’t be known until later. What do you think?

1. Everything that’s old will be new again – we predicted that the main technology splashes 2011 will be retreads. The year was a bit short on new fads compared to 2010, with most of the top tech gifts like new tablet PCs and phones being evolutionary rather than revolutionary developments. The one true innovation that we got to participate in — the purely electric car — is, however, a classic reprise. The first electric carsheld speed records and went head to head with internal combustion (and steam) in early days of the industry only to be trounced by cheap gas. With several major manufacturers mass-producing all electric cars, the old electric car new again, making this prediction a hit. 
2. Markets will stay irrational longer than companies stay solvent – although the year was a busy one for data center and telecom M&A activity, most of the acquisitions were hardly fire sales. And while there were 9 telecom bankruptcies for the year, the only ones that made it into the top 20 were in satellite communications. That said, bets on rapidly rising data center prices have continued to not pay off as RampRate customers typically saw material per-kilowatt cost decreases in their renewals and greenfield projects, leaving the prospect of further shakeout down the road and a partial hit for the prediction.
3. A large firm will overpay to jump on a bandwagon - while most of this prediction covers 2012-2013, there are several examples of cloud / data center acquisitions that start off on the hype path, such as Verizon’s purchase of Terremark at 5.4x annual revenue and a 35% premium vs. market and CenturyLink’s Savvis purchase at 3.2x revenue and an 11% premium vs. market prices (which would have been a 53% premium had it been bought at the same time as Terremark). Time Warner’s purchase of NaviSite (albeit at a smaller 1.9x revenue multiplier) completes the trio. We wish these folks all the best, but the prediction still stands as TBD.
4. More CDNs will be built and fail – Dan Rayburn’s list of current and former CDNs keeps growing. However, 2 of the main exits of 2011 and the first week of 2012 – Cotendo and Voxel – could be considered successes, and Tata’s pickup of BitGravity at least a salvaging of a mediocre situation. So this one will be a miss… for now. Some catastrophes like Amazon web Services failed it customers, but not financially for Amazon.
5. More peering disputes will be recast as net neutrality - As predicted, Netflix CEO Reed Hastings elevated this issue to headline levels by publicly lobbying Congress for a better deal for its provider. Others such as Global Crossing and Voxel followed suit, leaving a harried AT&T and a cable providers’ industry group pleading with the FCC to decide on the issue. Regardless of the outcome, the prediction is a hit.
6. The media industry will step into another content rights PR nightmare – Ah, where to start? Should it be the inability to sell Hulu – the one digital property that the media industry nurtured to prominence due to content rights issues? My favorite suitor was Amazon. Or with getting half the internet to mobilize against the SOPA and PIPA legislation? Or yet another single-player game rendered inoperable by remote server failure – but only for legitimate users? A clear hit.
7. A top exec or politician will demonstrate technology cluelessness matched only by his / her influence on the industry. This year’s Ted Stevens memorial award goes to the many sponsors of SOPA and PIPA, with special mention for Mel Watt (D – NC) and Maxine Waters (D – CA).
8. Security restrictions will cripple productivity without actually improving security. Without another scandal to stir the pot, the pace of silly security measure adoption has been slow. With the UK government actually moving to more, rather than less sanity on allowing open source software, we were about to label the prediction a big miss. But between proposals to build a whole separate secure internet and contributing to LA’s inability to migrate to Google apps, the FBI salvaged a partial hit for us on crippling government productivity for the sake of security aspirations destined to fail due to simple social engineering.
9. Analysts will invent a new acronym destined to melt away by 2013. It’s altogether too easy to say that an acronym or buzzword will fade away. A bit harder to say which one will. Will “gamification” join “protail” (forecast to be a $1.5B industry by 2012 as of 2008 and nonexistent by 2011) in the dustbin? Or will it be underperformance of a hyped segment like PaaS joining data loss prevention’s failure to deliver ($2B in 2012 as forecast in 2008; $832M in 2015 as forecast more recently)? We’ll rate this one as incomplete for now. I  certainly hope this stuid world cloud gets contained or it will be the greenwash term of the decade.
10. Something big will be lost in waves of hype. This one won’t be final until 2018, but Gartner has some guesses. Then again, most of their guesses from 2009 either stayed in the same place on the curve or disappeared, as predicted by number 9. Incomplete.

So, all told, we didn’t do badly, certainly not compared with other prognosticators of more wobbly consistency and clarity. Only one outright miss, and three others that will take a while more to fully determine. That leaves us batting, more or less, .600 with prospects for further improvement. That’s enough to get into the Pundit Hall of Fame, presuming of course than any other pundit actually bothered to look back at what they used to predict would happen before things actually did happen.

Up next, predictions for 2012.

2011 was a very busy year for us at RampRate. I’ve spent nearly 20 years, on many sides, of the technology business and I enjoy reflecting across large swaths of time to see if there are patterns, lessons, and advice, so let’s see what we get from 2011.

Cloud Computing Won’t Whisk Us Away to Oz

In all my years of global technology, I’ve never seen anything with such marketing hype, vapor, and semantic nonsense as “the cloud.” I find it very simple to define and work with public or private shared hosting, but the industry at large seems to have an insatiable need to stamp “cloud” on everything from hardware to web based email services. The marketing noise does not translate into dollars however. The amount of total industry revenue for what I define as “cloud”, which consists solely of public access shared hosting with self managed provisioning and automated scaling, was somewhere around $750M in 2011 (http://cloud-computing-today.com/2011/06/30/quantifying-cloud-computing-market-share-2/). This is a good number, but as global technology markets go, not that impressive. It is lower than the total sales of a single company like Akamai or Equinix. The “analysts” predict a future market size as high as hundreds of billions of dollars. Are these the same ones that predicted this for the dot.coms in 1999? I remember you analysts! And although I use a public cloud platform every day, and I do find it compelling, I don’t see public cloud infrastructure, as is, becoming the type of global market devouring force that the analysts love to write about. Why? Because public access services will have a hard time keeping up in terms of performance, service levels, and customer service with dedicated private hardware, especially in a complex network environment. Shared computing has been around for decades- if it was going to be the mainstream leader, it would have been so back when SSH was still considered novel. I do feel that public cloud computing will grow as a market- just not eat the entire market. Colocation and managed hosting will be around for a long time to come.

Lesson learned? Don’t believe the hype. Again.

New Jersey Is The Future

I love the sound of it. And I don’t mean that Chris Christie is guaranteed to win a national election. New Jersey is the future because, strangely enough, it has become one of the hottest datacenter markets in the world. I used to live in Santa Clara, California, the epicenter of the datacenter industry where the likes of Exodus (now CenturyLink) got their start. I moved to northern New Jersey a few years ago and the datacenter trend followed me. IO Datacenters (http://www.iodatacenters.com/) bought the New York Times printing factory with 100MW of power and is turning it into a location for their container based datacenters. Wipro (http://www.wipro.com/) and HCL (http://www.hcl.com), two of the largest managed hosting and IT outsourcing providers, have established their major US bases here in central NJ. Telx (http://www.telx.com) is building a huge datacenter and office building in Clifton, NJ. Digital Realty Trust (http://www.digitalrealtytrust.com) is in Weehawken near the Lincoln Tunnel and just opened 10,000 square feet. And the list goes on. This means that IT jobs, leadership, international trade, R&D, and many other great economic indicators may well follow.  NJ’s native son, Thomas Edison, would be proud. I just hope one of the datacenter companies hires Jersey Shore’s Snooki as a spokesperson like Godaddy (http://www.godaddy.com) uses racing pro Danica Patrick.

Lesson learned? Where there are ports, international airports, lots of people, economic centers, and seismic stability, there will be datacenters. Follow the population density and international proximity. Not everyone will build datacenters in rural areas.

Content Delivery Networking, Again

I would be remiss if I didn’t reflect on my alma mater, the CDN industry. I was very proud to hear that Ronni Zehavi’s Cotendo (http://www.cotendo.com), and its Speedera and Akamai expats, got swept up by Akamai just like my old company Speedera did in 2005. A few years back, Ronni Zehavi and I sat down in the Empire State Building’s Heartland Brewery for lunch. He asked me

“How do I succeed in the CDN market?”

“Focus on performance,” I replied.

“But I have a great business model involving selling really cheap bandwidth,” he said, in that hardened determined Israeli way I have grown to know and love since my days at early Israeli startup VDOnet.

“There is an infinite supply of bandwidth,” I said, repeating the same thing I have repeated since 1997, “and infinite supply means a continuous collapse in marginal cost and price. The secret is to sell services that enhance performance and reliability. These are products that will garner a premium, and by definition are I short supply, since if you can deliver performance, you are setting yourself apart from the market. This is what worked at Speedera and Netli, and will work for you.”

Ronni listened (I’m sure to many who said the same thing as I did) and lo and behold, succeeded both in customer count and now exit strategy. Congrats Ronni, Michel, Walter, and all of your team…

The CDN market continues to grow. All CDNs vendors that deliver performance and customer service continue to grow. Without CDNs, the internet will shut down. The telcos and other “logical” players continue to attempt their single network strategies that haven’t yet competed on a successful scale with the pure play CDNs. History keeps repeating.

Lesson learned? As my old boss Carlos de Andrade, legendary music producer and studio owner in Brazil once said,

“I like to sell expensiveness.”

We Have Been Instructed Not To Negotiate With You

2012 will mark six years that I’ve been at RampRate Sourcing Advisors. If you search for “sourcing advisor” on Google, RampRate is the 5^th link that comes up. This tells me we represent an abstract enough concept that, with no fancy search optimization, we wind up listed on the first page.

For the curious, a Sourcing Advisor is an expert buyer that one hires to help negotiate, renegotiate, or secure a new contract. They exist for cars, real estate (buyers agents), and in our case, for IT infrastructure contracts. RampRate has been around for 11 years. We’ve seen the size, complexity, and scope of our projects grow every year, and we feel we’ve barely tapped the potential in the market because there is just so much of it. Markets are inefficient. Contracts are hard to deal with. Most companies won’t employ dedicated staff to occupy seats to negotiate contracts that only come up every few years- hence they call us. We analyze and advise on best practices for these contracts every day. However once in a while, we get a vendor who tries to make it hard for us (and therefore the vendor’s client who employs us). One would think that a vendor would be excited to work with a focused professional who knows exactly where pricing, terms, and service levels should be, and work with a team whose sole job is to help them get a contract closed rather than having to schedule time with a busy client. But every so often we see stalling tactics, crazy pricing, attempts to circumvent our process, and other odd behavior. Why do they do this? They know we know the contract’s outcome. They know we are hired by the client. Is it ego? Frustration with confronting market reality? Whatever the reason, it takes extra energy for us- our execs have to do more face to face meetings, our analyst and client teams have to put in more time, all to get the vendor back on track and get the contract closed. After all these years in the industry, one would think that all sides would know the game, get it done, and move on to the next opportunity. But even after all this time it doesn’t work that way.

Vendors should be happy to work with sourcing advisors because we:

• Have incentives to close deals quickly
• Reduce closing time because we already have data on what is possible in terms of prices, SLAs, and terms
• Aren’t distracted by any internal projects like clients may be- we don’t have any fires to put out- we solely are focused on working with vendors
• Have experience working on thousands of deals around the world so long sales cycles are not needed
• Are hired to represent the clients- which is a sure sign that the client is ready to make a decision
• Can help retain clients that may be leaving- we make sure that the contract that is signed won’t be a future risk of going bad and that the client will be happy
• Can bring new deals

We are far more efficient to work with than clients are. We don’t need to be wined, dined, or sold. We want to get the contract done so the vendor can move on to more sales. Work with us! Don’t try to go around us- we will help you get the deal closed!

Lesson learned? People are still the essence of business. No amount of numbers, technology, or process can replace the effort required by a dedicated team to produce a result.

Wrap Up and Forecast

2011 wasn’t a radical year in RampRate’s part of the technology industry. The evolution of mobile devices is fast moving, but datacenters and giant server farms are monolithic slow moving organisms that have long lifespans. “The Cloud” has to live in a datacenter too- the more energy that goes into it, the more the datacenter contracts will have to happen, and this will continue to keep us busy helping vendors and clients establish the best possible relationships.

For 2012 I predict strong growth outside of the USA for the datacenter industry. There are billions of people coming online, not with 300baud modems like we had in 1982, but with high resolution smartphones that have broadband. These people will want data, media, and transactions- and lots of them, and serving them is harder outside of North America due to cost of capital, regulations, and business climates. I look forward to helping clients around the world build and serve a population that will hopefully have access to information, and to the rest of the world.

by Alex Veytsel, Steve Lerner and Tony Greenberg
As published by Microsoft TechNet 

In the 10+ years that RampRate has advised buyers of IT infrastructure services, few technology options have been as polarizing as “the cloud.”  In some organizations, a public cloud deployment is viewed as an immature technology if not a passing fad, with any cloud outage eliciting a chorus of “I told you so.” In others, it is a panacea that appears at the end of every strategic roadmap for every application.

The true position is at neither extreme. Public cloud computing is a tool for a job, which fits some buyers and projects today, and will fit more of them as both cloud technologies and application development practices continue to mature. It is the heir to many technologies that were initially viewed with an equal measure of skepticism and enthusiasm in the past – from co-location to content delivery networks to virtualization technologies rebranded by some vendors as “private clouds”.

The key question is not whether it is a great technology or a flawed one – it’s both, particularly flawed when misapplied – but what cloud service is the right fit for your specific jobs, whether today or in a few years, and what you should do to prepare.

Public Cloud in the Big Picture

Public cloud infrastructure is a trendy label that has been applied (and misapplied) to many services along the spectrum of managed hosting. For the purposes of this article, the cloud services we are addressing are:

• Infrastructure as a Service (IaaS) – open architecture public cloud platforms such as Amazon EC2
• Platform as a Service (PaaS) – development platforms such as Microsoft Azure
• Software as a Service (SaaS) – application delivery such as salesforce.com

At a minimum, the Public Cloud solution must exhibit the following features:

• Most key design decisions belong to the vendor
• Automatic provisioning
• On-demand scaling or elasticity, often with charge-back reflecting per-hour rather than per-month charges

Figure 1 Hosting Spectrum for Cloud and Non-Cloud Deployments. Source: RampRate

Public Cloud Buyer Profile

As part of getting buyers towards an optimal decision, we use a scorecard mechanism to weight priorities vs. solution strengths. Historically, public cloud buyers — whether starting new projects or attempting to migrate legacy applications — have shown the following attributes compared to their colleagues that opt for other forms of managed hosting:

• Higher risk tolerance. Moving into the cloud does entail some early adopter operational risk. It is a market where several of the top providers have a history of outages, and customer service standards are not always enterprise class. public cloud buyers are all too aware of the risk and seek to hedge it in other ways – whether through application resiliency or provider diversity.
• More emphasis on price. The TCO on a public cloud platform may not always be lower, but the sticker price usually is, and it does attract the cost-conscious buyer.
• More emphasis on scale up than out. Buyers of public cloud services want one thing — on-demand compute capacity/storage — done at scale, rather than a broad portfolio of infrastructure and telecommunications offerings.

Figure 2 Priorities of cloud buyers

Heir to Multiple Legacies

The profile of the cloud infrastructure buyer bears many similarities to early adopters of other infrastructure approaches as well. However, crucial differences remain, based largely on alternatives to each technology available at the time of its initial uptake:

Co-location

• Similar to public cloud, early fears with regards to outsourced shared data centers often focused on security concerns that were largely, though not always, overblown
• However, unlike public cloud, the adoption of early data centers was less about scale and price than about operational health (i.e. uptime) – to be precise, a specific mix of resiliency and cost that found a sweet spot in the market. Yet it was still not a solution for all buyers. A closet with an air conditioner served for the buyer with minimal uptime concerns, while true Tier IV data centers for the maximalist were (and remain) rare and expensive, and are still built as often as rented.

Content Delivery Network (CDN)

• CDN adoption was similar to today’s public cloud infrastructure in the role of scale. Steep and unexpected demand on the infrastructure is a key driver for both services. CDN was also similar in offering usage-based billing in place of capacity-based charges of alternatives – supplanting the traditional per-Mbps charge model with a cost per gigabyte transferred.
• However, unlike public cloud, CDN adoption during its early days was less often a price driven decision, and more often a question of technical fit and performance. Questions like “Does the CDN support a specific streaming media format?” “Does the increased price for bandwidth increase my revenue from my website?” “Can it generate unique URLs to keep my content secure?” “Is it faster than my own servers?”, and even more mundane concerns like “Will the caching mechanism blow up if my file size is too big?” were more top of mind than, say, support for a specific OS version is on a public cloud infrastructure.

Implications for the Public Cloud Buyer

For both co-location and CDN – now mainstream and mature services – the same growing pains of unexpected outages, indifferent customer service from market leaders, and the prospect of smaller providers winking out of existence kept the initial risk profile high. Yet, when the dust cleared, the key attributes of choosing each one — operational health for data centers and technology fit / performance for CDNs — remained as key guides to the core value.

Similarly, buyers who put scale and price first will eventually drift to the public cloud. Risk tolerance only determines where in the technology maturity cycle they will make the leap.  If on-demand growth at a low cost is your primary goal, then the public cloud should be somewhere on your roadmap now. If your top of mind concern is ability to control and fine-tune the performance profile or retain backwards compatibility with retained legacy components, it may be best to proceed more cautiously, building private cloud competencies that can be extended to public cloud services in the future.

Most legacy applications have implicit assumptions about operating systems, hardware, geography, latency, throughput, scalability, governance, access rights, monitoring and other aspects that must be carefully addressed before deploying to the public cloud.

by Alex Veytsel, Steve Lerner and Tony Greenberg
as published by Microsoft TechNet 

When faced with the many opportunities afforded by a cloud infrastructure—on-demand scale, potential cost reductions, elimination of complex maintenance processes, etc.—the decision to build a new application in a public cloud is often a no-brainer, especially for the buyer with the mindset of prioritizing agility and speed-to-market over customization and the perceived security/reliability advantages of internal infrastructure.

Migrating an existing application, however, is a different beast. Most legacy applications have implicit assumptions about operating systems, hardware, geography, latency, throughput, scalability, governance, access rights, monitoring and other aspects that must be carefully addressed before deploying to the public cloud. Some of these have been addressed through the experiences of adapting these applications to function correctly in a private cloud, but the provisioning of shared resources in a public cloud remains a more difficult leap.

Migration Decisions

When deciding whether or not to migrate existing functionality to the cloud, the decision criteria are more complex than for new builds. Key questions in “cloud planning” include:

• Should I migrate to a public cloud (and if so, which one), or a private cloud within my existing data center?
• How can I tell if my application can be moved to the public cloud at all? Should I engage in an application remediation strategy to accommodate such a move or rebuild from scratch?
• Should I hybridize my application to move some part of functionality to the public cloud while keeping other components on an internal private cloud?
• When should I consider public cloud SaaS solutions for my end-users, and how should I approach the build? If so, is portability across multiple heterogeneous clouds important for my application and how can it be achieved?

For those enterprises that are just beginning their journey and not yet ready to tackle the full depth of analysis needed for migration, we offer a few rules of thumb for the first few questions above. However, it should be noted that this is only the first step. For organizations with large application portfolios, it is important to go beyond these rough guidelines and establish a consistent scoring and evaluation across disciplines and departments, so that they can effectively prioritize those best suited for cloud migration. More thorny issues of formalizing these rules as well as dealing with governance issues of regulatory constraints, security restrictions, access rights, and SLA commitments often wind up being solved with another technology layer of planning and governance software.

Public Cloud vs. Private Cloud

Many of the advantages of the public cloud can be achieved with a private cloud capability as well — by deploying similar mechanisms used in a public cloud, but within the existing data center and implementing an on-demand, API-driven orchestration layer. Key criteria that would lead buyers to choose this approach instead of public cloud include:

• Predictable Demand — if you know what amount of compute capacity and storage you will need a year from now, you can provision virtual or even dedicated servers to meet the demand. If every month brings new surprises, private cloud deployments can prevent overprovisioning waste or under-provisioning congestion, not to mention the stress of hitting tight deployment windows.
• Consistent Demand — for services that have the same amount of volume each hour, day of the week, and each month, a private cloud deployment may make sense. The same goes for those whose divisions have that peaks are asynchronous enough to benefit from optimizing utilization among disparate user groups.  When considering projects in industries like retail (with a Black Friday spike and a broader December plateau) or online games, where winter weekends spike demand, the public cloud becomes more attractive.
• Tight Coupling Between Apps and Devices — if an application is tightly integrated with other applications or hardware (such as network attached storage devices) that you are not yet ready to move to the cloud, it may encounter latency issues or other problems when moved by itself. A private cloud deployment will help mitigate this issue.
• Specific Network Access — if applications are required to access specific networks for connection to clients, offices, or other network dependent entities, private cloud may be the only choice due to the ability to deploy hardware on a specific network or mix of networks.

How to Diagnose Moving Difficulty

In our experience, the customers that could benefit the most from moving to the public cloud were often the ones least able to do it due to core assumptions in the design of their applications. Some of the ones we have seen in the past include:

• Hard-coded Geography and Network Topology — applications may have implicit assumptions as to where they are on the network and in the world. Hard-coded IP addresses are the easiest example, but other decisions may assume geographic or network hop proximity to resources that the cloud instance will no longer have nearby.
• Tight / Undocumented Latency Needs — in designing data center deployments, we have worked with buyers whose SAN needed to be no further than 20 feet away from their servers because their applications would time out otherwise. In a cloud environment, even if your storage is in the same location (not always guaranteed), it may be a mile away in the same data center campus.
• Extreme Throughput — many cloud storage providers shy away from high performance database storage altogether because of an inability to hit IOPS targets. Even services ostensibly designed to support databases don’t always offer the consistent high throughput of dedicated hardware.[1] Applications built on high-performance throughput assumptions may not be able to adapt to the more variable – if not outright lower – performance of their cloud instance.

If your application faces multiple constraints such as the one above, it may be worth it to look to the next generation and build for the cloud in the next major release rather than try and adapt existing functionality built on the assumptions of certain latency, throughput, and location.

Hybridizing Apps

Another interim step is “hybridizing” an application to run some instances or functionality in the public cloud while retaining the core on an internal private cloud. Key decision criteria that would make this approach desirable include:

• Limitations in Existing Infrastructure — a hybrid approach is often useful to overcome specific gaps in the original design. For example, if a company has a single data center on the West Coast of the U.S., a public cloud extension or instance can better serve customers on the East Coast or in Europe while retaining centralization / synchronization to the master database.
• Low Cost Added Availability — a Tier IV data center can cost up to 50% more than a Tier III data center while offering only 1.2 more hours of uptime annually. So when your app must be available 24x7x365, a light version of an app hosted in a public cloud that can hold down the fort during datacenter outages or maintenance can be a life saver at a fraction of the cost of extra redundancy.
• Event-Based Demand Spikes — if your spike demand (say due to a promotion or media coverage) is different from your regular demand profile, it may be possible to build functionality just for that extraordinary bulge in the public cloud, trading in some performance for extra flexibility. The interface or functionality or response time might be a bit off, but your one-time spike users will never notice.

The Final Step: Migrating Apps to SaaS

The last key migration question is when to make a more wholesale change from a client application to software as a service (SaaS), and if so, how much to rely on pre-built functionality of a PaaS or SaaS vendor rather than developing in house. Rather than a classic migration dilemma, this is more of an architectural decision, and is made at a more strategic level based on the following questions:

• What’s Less Predictable: Configuration or Access? — the bane of the desktop application is the plurality of desktop hardware and software configurations and the possible conflicts this engenders. If the desktop is not locked down, client-side apps are harder to build and support than browser-based apps. Conversely, if access to the internet is more inconsistent, then SaaS often runs into problems absent client-side workarounds, while local apps work better.
• Can I Support Constant Releases? — a major advantage of SaaS approaches is the constant addition of incremental functionality. If developing significant functionality in-house but without tight QA controls, this advantage can turn into a liability quickly, as bugs are introduced along with new features on a weekly or monthly basis. The discipline of the development process becomes key.
• How Much Lock-In Is Acceptable? — IaaS approaches, while not perfectly interchangeable, can be switched with relatively little pain. PaaS and SaaS platforms are much easier to get started on but may be much harder to leave. If Microsoft or salesforce.com is a strategic vendor that you trust implicitly, the tradeoff is worth it. If you envision changing platforms down the road, a more generic approach may be better.

Conclusion

The decision to choose public or private cloud-based solution is not trivial even for new builds — a stigma of risk still hovers over the industry given outages at some public cloud vendors. When migrating existing applications, the risk threshold is even higher and buyers still often choose to only dip their toes by virtualizing within existing data centers or building extensions in the cloud while keeping the core as it was.

As public cloud technology matures, the aspect of risk will start to fade away. What will remain is the tradeoff between easy / rapid scale on one hand and customization / control to accommodate application-specific environments on the other. And as connectivity becomes more ubiquitous, and development discipline reduces the need for fine-tuning hardware, all three flavors of public cloud: IaaS, PaaS, and SaaS, will become increasingly viable targets, not just for new apps, but for migration of legacy functionality.

Last week Google formally launched its Page Speed Service, the latest in a long line of Content Delivery Network (CDN) services from dozens of vendors from big and small to hit the market over the last 15 years. In the case of Google though, I see a few novel changes that could not only materially affect but outright wreck the marketplace for CDN.

Google has offered free CDN services for video, via YouTube and Google Video, for many years now. Although we take YouTube for granted these days, it wasn’t too long ago that posting video on the internet required a lot of time, focus, and money. Life was very complicated before one could shoot a video on a smartphone and automatically upload it to YouTube. A videographer with a high quality camera would have to be hired, the resulting tape would have to be digitized, edited, and encoded (and potentially transcoded into one or more specific proprietary formats), and a streaming video hosting company would have to be found, negotiated with, and a lawyer engaged to review a contract. YouTube and smart phones have cleaned up that mess and made a single elegant process- but it only applies to video.

Improving all around performance of a web page is far more difficult than improving it for video. Web pages have become complex multi-lingual beasts with applications, scripts, server side code, client side code, ad networks, database apps, and a myriad of dynamic elements. Accelerating the performance of a web page requires not only a global multi-network deployment of servers, but very advanced server applications to manage and load balance this vast heap of complexity. With servers comes monitoring, network operations, and hardware maintenance- all of which makes for a big and focused operation.

In truth, CDNs have always come in two flavors: those who built on a core of services for optimizing performance, and those built on a core of large bit-moving services for optimization of cost. The history of both types has been well documented. Akamai founded the industry, and was designed from the start for optimizing performance. Akamai acquired every CDN that also showed proven technical ability to increase performance. Speedera, Netli, and a few other companies all are now part of Akamai’s core stack of intellectual property and talent. Alongside of Akamai were many companies that were designed to move large files (video and software) but sold on the premise of cost reduction and general outsourcing of content delivery, rather than selling on web page performance optimization. The vast bulk of these CDNs did not succeed, and the industry is littered with the corpses of failed companies and irrationally exuberant venture investment. I call this the “CDN Graveyard” and it contains tombstones with names like Adero, Microcast, Ibeam, Soniccity, Intel Media Services, Axient, and CDN divisions of many telcos.  In most cases, their doom was inherent in the very business model, which offered little more than a race to the bottom of a commodity market.

The impact of Google’s Page Speed service on the market should be materially more interesting to watch. Google’s Page Speed Service is focused on web page performance optimization. It entices users with a free page speed test very similar to the one we had at Speedera Networks. The various components of the page are analyzed in a ‘before and after’ style comparison. Once the test is run, one can see the entire documentation set, posted publicly, and it shows a very deep CDN offering even at this early stage of product development. URL rewriters, CDN via DNS cname, and cache management are present and instructions are public. Pricing is not yet anounced, but my bet is that it will most likely be a credit card payment system just like Google ads.

So how does this wreck the CDN market?

Web page CDN services have always been shrouded in mystery. To sign up with most vendors, one needs a lawyer to negotiate a contract, talented engineers to sift through the myriad of features and integration possibilities, and analysts to comb through bills to check accuracy. This was, as far as I’m concerned, intentional on the part of vendors. If they made the service “too easy” it would lower the perception of value, and hurt margins. Now here comes Google with a massive global network of servers already optimized for performance, a CDN service that is most likely a public version of a system they use themselves (so is probably well tested), a credit card signup, public documentation, and a large capital base for which to expand the services.

Amazon has already done this for large object services on CloudFront and I’m sure it will expand its offerings more deeply into web page services, but Google’s entry completely removes the mystery and difficulty of getting involved in complex web page CDN – thereby taking away a large portion of the protection that CDNs have had to date. The web page portion of the CDN world now has another credible vendor- a vendor perfectly able to compete in a market dominated by very few who are used to having nearly complete control. That control is now gone. Pricing for web page acceleration services will most likely now meet the same fate as the long-perfectly competitive market for large object downloads, vendors are going to have to engage in a renewed fight to prove why their performance is the ‘best’, and entire new stacks of intellectual property will probably now become fodder for argument. Akamai and Level3 have many patents in CDN, but I’m sure Google will be no slouch in terms of IP protection, and an ability (with a deep pocket) to battle litigation.

We at RampRate think this is a great thing. Web page performance acceleration is the backbone of the internet these days, and the differences between vendors pricing, contract terms, and service levels need to be measured and flushed out on a per client basis in order to find the right vendor fit. Without a strong competitive threat, which Google is poised to provide, existing providers get complacent and neglect or overcharge customer segments that are locked in. Now is a great time for these former captive audiences to renegotiate mid-contract using the leverage of a real competitive threat. Having established an extensive practice of mid-contract adjustment in other markets like data center, bandwidth, and large object CDN, we’re ready to help the newly liberated web acceleration buyers get a fair deal.

As pondered by Tony Greenberg and Alex Veytsel

1. Everything that’s old will be new again. Last year brought us the return of 3D from the 1950s, cloud (a.k.a. the new and improved mainframe), thin client (the dumb terminals for said mainframe), and iPad, the new and improved tablet PC. This year will bring us another batch of rebranded, repackaged technology sold as revolutionary. Which is ok because none of us are ready for true innovation (see #10)

2. Markets will stay irrational longer than companies stay solvent. For example, data center companies will continue to take losses, go out of business, or get acquired on unfavorable terms even as all indications point to extreme shortages in data center space by 2013.

3. A large firm will overpay to jump on a bandwagon that has long left reality. For example, a cloud computing company with no hope of success will get acquired for silly dot-com economics money by a provider with more money than R&D success. The new division will be trumpeted as the key to the company’s future through most of 2011, with division heads appearing in every press release and photo op. It will lose separate branding by beginning of 2012, its management will depart shortly thereafter, and all operations will be dissolved by 2013. Everyone who furiously cheered on the acquisition in 2011 will say it was obvious in hindsight.

4. Someone will found another content delivery company citing the explosion of online video, with bonus points for becoming a specialist in 3D video streaming or some other hyped innovation affecting <1% of the market. This company will fail without garnering much notice.

5. More and more routine peering disputes will be recast as net neutrality debates. The word “peering” will not actually be mentioned or explained anywhere in mainstream press. Genuine net neutrality infractions will get lost in the din of network and content providers crying “wolf.”

6. The media and entertainment industry will step in another PR morass related to content protection and hoarding, most likely by crippling a legitimate outlet for content like Hulu or iTunes. Rootkits, requirement of continuous Internet connections to access purchased content, and more lawsuits against widows and orphans also offer good odds. Renewed wringing of hands over mythical billions lost to piracy to ensue shortly thereafter.

7. A top media exec or senior government official will expose an understanding of technology on par with a cargo cult shaman on a Pacific island. This person will inevitably be put in charge of the committee on using or regulating the very technology he or she fails to grasp.

8. In the wake of Wikileaks, bans on USB thumb drives and CD burners will be followed by bans on all peripherals with output across most governments, their contractors, and businesses that think security theater is reality. Thousands of hours will be lost on the most routine business and government tasks as highly qualified specialists transcribe info they cannot get digitally with a pen and paper. The volume of information leaked / lost to corporate espionage will remain unchanged or increase as workers have to override all security restrictions, including reasonable ones, just to do their job.

9. An analyst firm will publish a series of papers on a new market with a 3-5 letter acronym. Its competitors will follow suit creating their own acronymic or catchy name. Several hockey stick projections of billions of dollars in revenue will be created. None will be correct within an order of magnitude, and no papers will be written on this hot new market by 2013.

10. The pendulum will quietly begin swinging in some way that will change technology markets radically, but not until 2018. The first PR-fueled mainstream story on it (and a dozen other inventions) will hit by the end of the year and it will be the hot new trend for the next 5 years. No actual large-scale impact will occur during those 5 years, and by the time one of the 2010 vintage inventions does go mainstream, the media’s attention will be on the next shiny bauble. Candidates include:

• Storage densities that make local replication cheaper/faster/better than on-demand streaming for non time-sensitive content. In other words, “all media that ever was” in a box. Thus continues the pendulum swing that started with mainframe (centralized), client-server (decentralized), peer-to-peer (very decentralized), and cloud (centralized again).
• Fundamental physical limitations in one of the innumerable “progress laws” (Moore’s law being the founding and best-known of the bunch) that make some computing component the new weak link, and associated workaround. As a past precedent, caching in memory and processor is the best-known workaround discipline for the I/O bottleneck that has been the weak link for the last few decades.
• Practical prototypes of some technology that was impracticably ahead of its time during a previous wave of enthusiasm (e.g. quantum computing or holographic storage).

Who’s in the buggy whip business in technology these days? By that, I mean, what companies are about to become obsolete thanks to major shifts in media delivery and consumption caused by the rise, the serious rise, of streaming?

More than a dozen years after the launch of the Streaming Media conference, which is now filled with dozens of content-management systems and practically no CDNs (content distribution networks), the show is creeping back to success showing its best growth numbers in years. Meanwhile, the CDN business is still a rug-dealer’s market, facing a death spiral toward $0 bandwidth, with individual vendors providing widely varying price, quality and value. “We’ve seen this all before,” observes Steve Lerner, RampRate’s Media Technology Specialist, “by 2003 there were over 25 dead CDNs all who followed the same pattern of selling ‘cheaper’ rather than selling ‘better’. It is hard to make a living marking up bandwidth that has a continuously collapsing marginal cost.” Thankfully, there’s still a market, as my firm, RampRate, mediates deals in this space).

Somehow, the CDNs continue to develop new tech to stay in business, but I have to think they’ll eventually bow to Google and Microsoft, the only firms with enough scale to survive in the long term. That said, there’s more happening in streaming than in a long time, with more mainstream content and more kinds of devices that can access it.

My partner David Bloom has just published a piece in TheWrap.com, listing some of his top candidates for Industries Soon To Be No Longer Needed. He writes: “What’s it all mean? To start, I’d sell off that optical-disc duping factory if I were you. And you may want to get out of the hard-drive and home networked-storage businesses, too. They’re on the way to buggy-whip status and fast.”

Just to top it off, he throws in the makers of shelving for all the DVDs, CDs, books and more that we soon won’t be collecting to show visitors how cool our tastes are. Now we’ll have to do that by sharing our culture preferences online with friends through programs such as GetGlue and Apple’s Ping (well, maybe).

Why are all these industries suddenly endangered? David rightly says it’ll be a while before things completely shake out, of course, but a series of recent announcements and developments are accelerating the long-bubbling transition to streaming for much of content that we consume.

“The resulting shifts likely will change the kinds of entertainment we consume (it will be a while before that shakes out, I think), but those shifts definitely are already beginning to change the way we consume them. “
Big companies such as Apple, Google and consumer electronics makers have made a series of recent announcements that will make it easier than ever to get brand-name content for a cheap price, stream it smoothly and at high quality on all kinds of devices and platforms, and not worry about keeping it on hand on some vast hard drive forever after.

Mark Suster of GRP Ventures smartly asserts Hulu is the OPEC of the Online Industry (though I wonder if they soon become yesterday’s fish wrapper as Skype becomes en vogue as their founders return to shake it up). Reversal of Fortune?

There are some caveats:

For instance, at least some people will need local hard drives and optical drives for the stuff they already have, like the CDs and DVDs they already own and the personal stuff they’re now creating by the boatloads.

Will big content creators actually free up their good programming enough to avoid what I’ll call Chronic Consumer Frustration, a condition that drives tech-savvy audiences back to the latest illegal tools to access all that locked-away content.

As an example: Look at the broadcast networks’ ban of their content from the much-ballyhooed Google TV service. That uniform opposition means Google TV users will only see some basic cable networks among the online offerings of the service. It doesn’t mean users won’t get that programming somewhere else (and Google TV’s Internet access and search capabilities may make it easy to find).

Over at iTunes, only Disney/ABC and Fox are selling their TV shows at 99 cents a pop. That doesn’t mean people aren’t watching shows from CBS and NBC, et al. They’re just going to get it in other ways.

But I digress. For tech companies, the string of recent announcements and developments show that cloud computing is rapidly becoming mainstream, undergirding the business plans and major new offerings of some of the biggest companies in media and entertainment. As David says, “It’s kinda already here:”

“…we’re seeing significant changes in distribution through mainstream devices, for mainstream audiences, involving low-cost content that people won’t own, and won’t store on their own machines, but can access nearly anywhere, on a wide variety of devices, from cell phones to TVs to computers.”

The only question for you to consider is whether you’re suddenly in the buggy whip business, or transforming your company to leverage the opportunities that are quickly presenting themselves. So, are you moving forward, or looking back?

CIOs and CFOs that took the next step in working with us on an outsourcing or benchmark project know that there’s a second half of the equation churning behind the scenes – the previously nameless RampRate process and workflow that accomplishes much of the heavy lifting in a deal:

• Getting internal consensus on true needs
• Getting vendor quotes into an apples-to-apples format
• Balancing vendor strengths and weaknesses into an evaluation of optimal fit

This other half of the RampRate secret sauce allowed us to succeed in places where SPY Index transactional knowledge was not yet built up and analyst coverage was scarce — areas such as payment processing, highly custom applications for music and publishing industries, and exotic geographies all over the world.

Over time, this process half of the equation became as valuable to our clients as the more visible and flashy data portion, and we’ve invested heavily in automating and standardizing it to become a true project. Today, IT infrastructure buyers work with us through an online project management system and follow a standardized workflow across all practices of the organization

• Network and Bandwidth
• Data Center
• Managed Hosting and RIM
• CDN / Streaming
• Cloud Computing and Storage

So with a real repeatable process and automation in place, it was time to give this half of RampRate’s infrastructure a name and a brand. We’re calling it the Deal Acceleration and Transparency Engine or DATE for short. In the first release, changes to buyer and provider practices will be minor, with most of the functionality still working behind the scenes.  Over time, as quote forms, bid status, and clarifications move online, it will become a true portal for our transaction enablement. So if you’ve worked with us before and want to influence how we change the process half of the equation, now’s a good time to speak up either in the comments below or by contacting us.

Part 2 in a series on conflicts between environmental and economical impulses in all of us, and how we resolve them. Entire article here

“How to be green? Many people have asked us this important question. It’s really very simple and requires no expert knowledge or complex skills. Here’s the answer: Consume less. Share more. Enjoy life.”  – Derek Wall

I was at a friend’s home recently when I noticed he had no paper napkins, towels or tissues, because, he said, he wanted to reduce impact on the planet. Meanwhile, his SubZero dishwasher was running full bore. Tug of War. Economics or Ethics?

And it got me thinking: In our pious zeal to feel better about the mess we’re collectively making of the planet, many of us have settled on personal steps to green things up a bit. But are those steps really worthwhile, or just sops to make us feel less guilty? What’s the real return on investment of these options compared to some alternative?

At CGI Clinton Global Initiative, RampRate and I  studied  how data center emissions could be chopped 60%. And cost would tumble too. But that often isn’t enough to overcome the hurdles of corporate decisions. Green doesn’t always pay. The grass isn’t always greener on the other side of green.

“We won’t have a society if we destroy the environment.” – Margaret Mead

The results have led us into some messy and annoying compromises, or left us to look for easy, lazy solutions to complex questions. Take the question of paper versus permanent at my friend’s place.

Long time buddy Richard Titus, co-producer of Who Killed the Electric Car proclaims “Sustainability is not about asceticism, it does not require one to forgo life’s pleasures – instead it is about developing and living a lifestyle, which can endure, conceivably forever.  The Opposite of sustainability is not consumerism, it’s Nihilism.” And he asserts “Sustainability is about moving the point of consumption to align with one of oversupply.

Fired by my paper pique, I went looking for self-important but ineffectual green “solutions”. I was sure, for instance, that paper towels or plates don’t create any more planetary problems than using all that water and energy on the dishwasher.

But nailing down the true cost/benefit on these “eco-pieties” proved a challenge, starting with the dishes vs. paper debate. Web research turned up highly ranked, and highly useless, sites like this one, where readers are asked what they thought was likely to be the best approach. No one bothered to actually figure it out, they just asked for opinions. Mush-headed stuff like this drives me crazy.

“Ecology is rather like sex – every new generation likes to think they were the first to discover it.”  – Michael Allaby

More tricks, even for older machines: Use the water-saver settings, if any, and save energy by opening the dishwasher before that last dry cycle. Do you do either?

“It’s a morbid observation, but if everyone on earth just stopped breathing for an hour, the greenhouse effect would no longer be a problem.” – Jerry Adler

I’m guessing you could similarly make a case for either side in the paper vs. dishwashing argument, depending on the variables. Me, I’m still leaning toward paper in the short term, depending on whether water or landfill space is scarce near you, and what you do with the plate. I can turn off the water, but a boycott of paper plates seems a mountain too high to climb. Today.

To help us figure this out, I asked my colleagues at RampRate to build a little calculator to do the math for this conversation. This and other tools will be posted over the coming weeks. They do this sort of thing all the time for our clients, but in a very different space, figuring out the best prices for services like cloud computing, data centers, telecom and outsourcing. Trade offs between strategic and price conscious, price or performance and power versus availability are current Tugs of War that we live with daily.  But it’s the same process at heart: figuring out what matters to you, and then connecting to the solution that works best for your particular sliding scale between emotion, economy and environment.

It’s a useful exercise in thinking through this particular eco-piety, and the ways it is affected by the many choices we make. That’s the kind of conscious living we need more of, so we aren’t blindly following anyone’s lead on matters that matter.

“Green, how I want you green. Green wind. Green branches.”– Federico Garcia Lorca