One of the more interesting things that happen this week is Equinix guided a tad lower for revenue, and you would have thought the investment community thought the world was ending.
More than a billion bucks wiped off their market cap. Big dives in VMW and related stocks. All sorts of commentary that the "cloud bubble has popped".
Not exactly what I think people meant when they were discussing "cloud bursting" :-)
Cloud-Washing Investors Is A Sword That Cuts Both Ways
I occasionally go to various investor conferences where I speak on EMC's perspective on industry trends. For the last few years, there's been increasing interest in All Things Cloud.
Investors can smell potential industry disruption in the air. They're right in that regard. They're highly motivated to place early bets on likely winners -- and stay away from the less fortunate.
As a result, there has been an undeniable tendency for tech companies to frame their strategies using the "cloud" term to the investment community. I don't blame the companies for doing this -- I blame the investors.
If 100 investors ask you "what are you doing about cloud?", you're undoubtedly highly motivated to frame up a logical and compelling answer -- aren't you? There's this strong temptation to tell people what they want to hear ...
The cycle feeds on itself over time. More and more companies frame their investor conversations around "cloud" (whatever that might mean to them), and -- all of the sudden -- a "cloud market segment" is formed out of, well, vapor.
Watching this herd instinct unfold over time can be a bit frightening.
Learning To Look For Value
I think there's a clear difference between "somewhat involved in the new world of cloud" and "leveraging the new value that cloud brings".
It's easy to make a very long list of companies that could -- potentially -- have something to do with cloud-iness. It takes a bit more work to identify those companies that have the insight, resources and positioning to extract a new value stream from these market shifts.
I need to restate definitions here: at it's simplest, cloud has three primary attributes.
First, it's built differently (dynamic pools of resources vs. static infrastructure silos). Second, it's operated differently (as a logical service vs. sum-of-parts). And third, it's consumed differently (convenient consumption, including variable models).
If it aint' built differently, operated differently and consumed differently, it ain't a cloud in my book. That's regardless of whether it's sitting in a data center or at an external service provider.
So, let's take a look at Equinix. Great outfit, focusing on carrier-grade data center infrastructure. Nothing wrong with what they're doing, but -- using my definition above -- very little to do with "cloud", or -- at best -- a supporting cast member in a broader play.
Not only was their revised guidance blown way out of proportion (in my humble opinion), but hardly a good barometer for the overall health of the nascent "cloud market".
Technology Plays and Consumption Plays
In my oversimplified world of "cloud", there are two lists to watch: technology players and consumption players.
The technology players are a rather obvious list: they are building the technological components that will be needed in this new world. Obvious names: Intel, VMware, Cisco, EMC et. al. They should be judged as to how well they're doing in this new market as it emerges, rather than the size of the market itself.
The consumption players are a different list: they're focusing on disrupting how people consume IT today -- using cloud-based offerings -- and usually behind a more traditional facade.
For example, I meet outsourcers who are using cloud delivery models to beat the competition in cost-to-serve, flexibility and variable consumption models. They're all about IT service delivery, and use cloud as a better way to do that.
I also meet vertical solution and application providers who convince businesses to use their external service rather than attempting to use their in-house IT organizations to do the work. They're all about solving a specific business problem, and use cloud as a better way to do that as well.
The list goes on -- the "cloud winners" in the consumption side of the ledger aren't really "cloud companies" in the obvious sense -- they've got a business model that works, and they're using cloud principles to do a better job at what they do -- and, occasionally, enter adjacent markets.
And that includes larger IT organizations that want to transform themselves into an internal IT service provider.
Defining The Boundaries Of The "Cloud Market"?
So much of this feels like the mid 1990s when people were struggling to define the "internet market". You may laugh now, but I can vividly remember when this was a hot topic of discussion on both the industry side and the investment side.
We all know now that it'd be pretty useless to try to define the "internet market" as well-bounded and finite -- it has ended up affecting just about everything we do to some extent.
And it's pretty clear than "cloud" will do the same.
Excellent point about cloud-washing and cloud-bursting being misleading terms. In spite of the momentary panic that "the cloud bubble has popped," most of the companies people refer to have very little to do with cloud, as I pointed out on this Barrons post: http://blogs.barrons.com/techtraderdaily/2010/10/06/pop-cloud-computing-bubble-bursts-storage-software-stocks-battered-on-warnings-from-equinix-autonomy/
Posted by: Standing Cloud | 10/11/2010 at 05:54 PM
Dicha corona con fondo azur se incorporó a la bandera por privilegio de Pedro IV de Aragón ( Pedro el Ceremonioso ) en 1377.
Posted by: futbol en directo | 01/13/2014 at 08:22 PM