Will Investors Press Sun to Make a Deal?

Sun Micrososystemの経営問題について、会社を分割して売却する可能性が高いとのコメントを出しているインベストメントバンカーが増えている。

 

Could investors force Sun Microsystems (JAVA) to seek an acquirer or sell off units? That's not a new speculation, but one that's examined at length in a Reuters story yesterday, in which investment bankers say that "the challenge of valuing Sun's intertwined software, hardware and services businesses could put off potential buyers" such as rivals HP, IBM and Dell.

The hook for the Reuters story notes is the news last month that investment firm Southeastern Asset Management has increased its stake in Sun to 21 percent and said in an SEC filing that it ""will have additional conversations with management and/or third parties, regarding opportunities to maximize the value of the company."

What's likely to happen? The Reuters analysis concludes that it might be easier to sell of a unit, such as StorageTek, than find an acquirer interested in buying all of Sun. But Reuters also acknowledges that some of its sources are investment bankers who might benefit from asset sales.

Cloud Economics: Microsoft, Google & Amazon | ITworld

Microsoft, GoogleとAmazon社のそれぞれの収益を面白い視点から比較している記事。

 

従業員あたりのGross Profitを比較すると、Amazon社が他2社と比較して著しく低い事がわかる。 これはAmazonのRetail事業がソフトウェア事業と比較して非常に小さい利幅でビジネスを行っている事に大きく依存する。 

 

 

Cloud Economics: Microsoft, Google & Amazon

Yesterday Microsoft launched its Azure cloud platform, so it is time for another spreadsheet. To properly compare Microsoft, Google and Amazon, I am using the gross profit (instead of revenue) and net profit numbers. Gross profit is, in some sense, the real revenue of a company after paying its outside suppliers; gross profit is what is available to pay its employees, pay the rent, and so on. For a software company, the cost of goods sold is close to zero, so most of the revenue is gross profit. But for a retailer, as much as 70-80% of revenue goes to its suppliers, so gross profit is the better measure of the economic productivity the company achieves. The numbers below use rough annualized estimates based on the most recent quarter.

Company	Annual Gross Profit in USD	Net Profit in Billions USD	Employee Count	Gross Profit/Employee in Thousands USD	Net Profit/Employee in Thousands USD
Microsoft	48	17.68	91000	527	194
Google	12	5	20123	596	248
Amazon	4	0.8	20500	195	39

Do you notice the dramatic difference? Google and Microsoft are in another planet altogether compared to Amazon. Google has practically the same headcount as Amazon, yet drives three times the gross profit. The numbers really illustrate Amazon's competitive strategy in cloud computing; to quote Nick Carr:

Bezos goes on to note that Amazon's retailing operation is "a low gross margin business" compared to software and technology businesses, which "tend to have very high margins." The relatively low profitability of the retailing business gave Amazon the incentive to create a highly efficient, highly automated computing system, which in turn could become the foundation for a set of cloud computing services that could be sold at low enough prices to attract a large clientele. It also made a low-margin utility business attractive to the firm in a way that it isn't for a lot of large tech companies who are averse to making big capital investments in new, low-margin businesses.

"On the surface, superficially, [cloud computing] appears to be very different [from our retailing business]," Bezos sums up. "But the fact is we've been running a web-scale application for a long time, and we needed to build this set of infrastructure web services just to be able to manage our own internal house."

Microsoft's announcement is interesting from a technology point of view, but it is hard to see how the economics would work for them against Amazon. It is very hard for companies to go down the value chain for growth, so I am skeptical Microsoft would easily accept Amazon-like margins. On the other hand, for Amazon, cloud services have to deliver only a little higher margin than retail to be well worth the investment. That is not a tough hurdle, because retail is one of the toughest businesses out there.

Information Technology -Rackspace, Persistent Systems Partner for 'Total Stack' SaaS Offerings

Persistent Systems社と呼ばれる上流コンサル、SIがRackspace社とパートナー提携を行い、さまざまな業務提携を行う事を発表した。

 

Persistent Systems社はインドのオフショアSIで、Intel Capitalの出資を受けたして、急成長している企業。  Rackspaceの提供するさまざまなホスティング事業にPersistent社のアプリケーション開発サービスを組み合わせて、統合された顧客業務の開発/運用サービスを提供することを狙いとしている。 

 

SIビジネスとのパートナーシップがホスティング業界の顧客開拓の一つの戦略になりそうな気配である。

 

 

Rackspace, Persistent Systems Partner for 'Total Stack' SaaS Offerings

Persistent Systems, a vendor of Outsourced Product Development services, and Rackspace Hosting, a vendor of hosted IT services, have entered into a partner agreement where both companies make available each other's product, "ultimately creating a total product stack for customers — from managed infrastructure to software development and enablement for Software-as-a-Service (SaaS (News - Alert)), Web applications, data migration and application support," Persistent officials said

 

Through this relationship, Rackspace officials said, the company can recommend Persistent's full array of software development services to customers, who can use them over the life of their applications and products. This product partner agreement comes on the heels of a successful outsourcing product development relationship between Rackspace and Persistent.

 

"Rackspace had never worked with an offshore vendor before," said Tony Campbell, director of the software development division at Rackspace Hosting, in a statement. "We engaged Persistent in order to see how the model would work."

 

Rackspace officials said they use Persistent's expertise on a variety of projects, and avail themselves of "the knowledge of Persistent's people… its data warehouse and Java competency centers."

 

Last year a customer survey conducted by Rackspace found that nearly 36 percent of responding SaaS customers do not know the uptime guarantees provided in the SaaS vendor Service Level Agreement although, the survey found, "security, application uptime and network connectivity are among their top technical concerns."

 

The survey also concluded that 49 percent of enterprise Software as a Service (SaaS) customers do not know where the infrastructure behind their SaaS application lies, whether it is hosted internally with the SaaS provider or through a third-party hosting provider.

 

John Engates, chief technology officer, Rackspace Managed Hosting, said at the time "SaaS providers need to clearly communicate their hosting and infrastructure details in the Service Level Agreement, drilling down to security promises, uptime guarantees, network connectivity, data backup processes and more. This way, customers are aware of their SaaS provider's service obligations, and they can rest assured their mission-critical applications such as e-mail or Customer Relationship Management software will perform as promised."

GE Will Use SaaS To Manage 500,000 Suppliers -- Software As A Service -- InformationWeek

SaaSがエンタプライズ業界で認識され始めている事例として、GEが自社のサプライチェーンの情報管理をSaaS化している案件を紹介している。 

 

このアプリケーション、50万件のサプライヤー情報をAravo社が提供するSaaSアプリケーションにアップロードして、運用/管理している。  この情報を30万人のGE従業員が6ヶ国語でアクセスをしており、かなりのコスト削減を実現できる、との事。

 

Aravo社はSan Fraciscoにある小さなベンダーであるが、必要十分の機能を提供できた事と、7ヶ月でシステムを運用にまでもっていった事が評価された、との事。 

 

SaaSアプリケーションのSIはきぼが小さくなるため、大規模ユーザに対して小さなベンダーがこのように食い込んで成功する可能性を秘めている、という点が興味深い。

 

 

 

 

GE Will Use SaaS To Manage 500,000 Suppliers

The electronic firm's partnership with Aravo's Web-based software service is the latest example of how even the largest of companies are getting comfortable with SaaS.

 

GE is using a small software-as-a-service company for an online repository of information on 500,000 global suppliers. It's an example of how even the very largest of companies are getting more comfortable with having their critical business data managed in a SaaS environment.

GE, with revenues last year of $172.7 billion, made Aravo Solution's supplier-information management service available to employees in mid-October. It's available in six languages to any of GE's 300,000 employees worldwide involved in the supply procurement process, including workers that order office supplies, managers that negotiate large commodity purchases, and legal staffers that ensure suppliers are in compliance with local laws and taxes. Features, functions, and information access vary depending on user roles.

The system is expected to bring GE "significant cost savings, while improving data accuracy, compliance and productivity," said GE CIO Gary Reiner in a statement issued Wednesday. GE established a data repository of supplier information more than 10 years ago, but it wasn't built for widespread access via the Web. The Aravo service will be used across GE, including GE Capital, NBC Universal, and numerous companies it runs in such areas as appliances, aviation, energy, and healthcare.

GE chose the small San Francisco company's software service because the application's features fit what it needed in a supplier information repository, and because it lets suppliers update their own information over the Web, said Thomas Hattier, an operations manager in GE's Corporate Initiatives Group, in an interview. That includes updating account contact information and completing online forms to prove that a supplier has complied with local laws. Aravo uses computer-hosting company Rackspace to run its system.

While the deal could be viewed as a win for cloud computing, GE didn't select Aravo out of a new great appreciation for the trend, Hattier said, adding that "cloud computing is getting cloudier" because of all the IT vendor hype.

"We certainly are large enough to host and mange Web-based solutions ourselves. We don't need to go outside to do that," he said.

But GE did appreciate that Aravo was fast to implement -- seven months from start to finish -- a function of its being a service rather than an onsite software deployment. The bulk of the work was transferring supplier information from GE's legacy repository into Aravo.

GE is working with Aravo to integrate the supplier information repository with its own requisition workflow processes, which are run by onsite software. Some but not all of the work is done: "We'll be doing workflow integration through the rest of year into a variety of different places," Hattier said.

Some suppliers still need to update their information in the system, he added. And while GE has found a handful of suppliers out of 100 countries that resist a Web-based approach to updating and validating their information, most are embracing it.

Big Day for Amazon EC2: Production, SLA, Windows, and 4 New Capabilities

Amazonが自社のサービスに関していくつかの発表を行った。 

 

特に大きい話題は、EC2のベータが終了し、本格運用を開始した、ということ。 

これは同社が正式かSLAを提供する事も意味し、AWS上で付加価値を提供していたCloud Computing企業にとっては大きな影響を与えることになる。 

 

また、Windows Server 2003／2007の環境や、SQLの環境なども初めて提供する事も発表され、ISV業界にとって大きな前進となる。 

 

今後のこのようにして既に広い市場を更に広げるための機能強化を続ける戦略をリテール業界にたとえてWalmartに非常に似ている、と評価しているアナリストもいる。

 

---

Big Day for Amazon EC2: Production, SLA, Windows, and 4 New Capabilities

My colleagues and I have spent the week building up anticipation for this post on Twitter. After you read this post I am sure that you will agree that the wait was worthwhile.

The hallways at Amazon have been buzzing with excitement of late. After working for years to build and to run our line of highly scalable infrastructure web services we are happy to see that developers large and small are putting them to good use.

Here's what's happening today:

• Amazon EC2 is now in full production. The beta label is gone.
• There's now an SLA (Service Level Agreement) for EC2.
• Microsoft Windows is now available in beta form on EC2.
• Microsoft SQL Server is now available in beta form on EC2.
• We plan to release an interactive AWS management console.
• We plan to release new load balancing, automatic scaling, and cloud monitoring services.

Let's take a look at each of these items in turn.

Production - After a two year beta period, Amazon EC2 is now ready for production. During the beta we heard and responded to an incredible amount of customer feedback, adding support for powerful features such as Availability Zones, Elastic Block Storage, Elastic IP Addresses, multiple instance types, support for the OpenSolaris and Windows operating systems, and (as of today) a Service Level Agreement. Regular EC2 accounts are allowed to run up to 20 simultaneous instances. Requests for hundreds and even thousands of additional instances are granted all the time and can be made here.

SLA - The new EC2 Service Level Agreement works at the Region level. Each EC2 Region (there's only one right now but there will be more in the future) is divided into a number of Availability Zones. The SLA specifies that each Region will be available at least 99.95% of the time. Per the SLA, a Region is unavailable if more than one of its Availability Zones does not have external connectivity.

Windows Support - Beta level support for Microsoft Windows is now available on EC2, in the form of 32 and 64 bit AMIs, with pricing starting at $0.125 per hour. Microsoft SQL Server is also available in 64 bit form. All of the powerful EC2 features listed above can be used with the new Windows instances and we'll be adding support for DevPay in the near future.

Once launched, the Windows instances can be accessed using the Windows Remote Desktop or the rdesktop client. I've spent some time using Windows on EC2 and it works really well. I used the EC2 command line tools to launch a 32 bit instance, opened up an additional port in the security group, and then logged in to it using Remote Desktop.

 

We'll be running Windows on EC2 at next week's PDC in Los Angeles, so be sure to stop by and to say hello if you are there. Rumor has it that we'll be giving out a really cool badge to the people who stop by our booth.

RightScale founder Thorsten von Eiken has written up a helpful post which outlines the differences between Windows and Linux with respect to launching, accessing, bundling, and using the Elastic Block Store. He also describes current and planned support for Windows in their products.

We've updated ElasticFox with a number of new features, including direct access to EBS and Elastic IP addresses from the main tab, one-click AMI bundling on Windows, better key and security group management, and the ability to directly launch Remote Desktop sessions. There's also a brand-new (and very helpful) ElasticFox Getting Started Guide.

We are looking forward to seeing how our customers will put Windows to work. We expect to see ASP.Net sites, media transcoding, HPC (High Performance Computing), and more. I've talked to a number of developers who will deploy hybrid web sites using a mix of Linux and Windows servers. This really underscores the open and flexible nature of EC2.

We are also planning to offer some new capabilities in 2009 to make managing cloud-based applications even easier. As usual, we'll start with a private beta and you can express your interest here.

Management Console - The management console will simplify the process of configuring and operating your applications in the AWS cloud. You'll be able to get a global picture of your cloud computing environment using a point-and-click web interface.

Load Balancing - The load balancing service will allow you to balance incoming requests and traffic across multiple EC2 instances.

Automatic Scaling - The auto-scaling service will allow you to grow and shrink your usage of EC2 capacity on demand based on application requirements.

Cloud Monitoring - The cloud monitoring service will provide real time, multi-dimensional monitoring of host resources across any number of EC2 instances, with the ability to aggregate operational metrics across instances, Availability Zones, and time slots.

Amazon CTO Werner Vogels has done a very nice job of explaining why services of this type are needed to build highly reliable and highly scalable applications. His blog is a must read for those interested in cloud computing. Werner has spent so much time talking about AWS of late that I've asked him to be an honorary member of my team of AWS evangelists!

I think it is important to note that load balancing, automatic scaling, and cloud monitoring will each be true web services, with complete APIs for provisioning, control, and status checking. We'll be working with a number of management tool vendors and developers to make sure that their products will support these new services on a timely basis.

So, there you go. What do you think?

-- Jeff;

Amazon Web Services Blog / Thu, 23 Oct 2008 12:52:49 GMT

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Amazon Cites Momentum as EC2 Exits Beta

いよいよAmazon Web ServiceのEC2(Elastic Computing Cloud)サービスがベータを終了し、本格的に事業として開始される。 これに伴って、SLAも正式なものが提供される模様で、アップタイムを９９．５％保証する、当為言った内容。

ベータ終了とSLAの登場で、エンタプライズの利用度が大きく上昇する、と想定されている。

Amazon's EC2 compute-on-demand service moved out of beta and into production today, with the key difference being that there's now a Service Level Agreement (SLA) ensuring customer credits should EC2's uptime fall below 99,95 percent. Amazon previously offered an SLA for its S3 storage service, but not EC2. Windows Server and Microsoft SQL Server are now available in beta for EC2, which is also adding a management console, load balancing and monitoring services.

These additions are the latest advances in Amazon Web Service's transition from a playground for developers into a cloud platform offering on-demand services suitable for startups and enterprises alike. While the definition of "beta" has become decidedly fuzzy (Google has half its products in beta, including Gmail), there's no question that beta status and the lack of an SLA are a barrier to adoption for many enterprises. EC2 has now eliminated those potential resistance points.

Will Microsoft Shake Up Cloud Computing SLAs? - Plug Into The Cloud

Microsoft社のSaaSアーキテクチャ ディレクターであるGianpaolo Carraro氏によると、同社のAzureの強みはSLAの内容の濃さで勝負する、とのこと。

通常のホスティング事業ですと大体SLAの核となるのはアップタイムの保証で、エンタプライズ事業にとってはそれだけでは足りないはず、と言及。

まず、自分のアプリケーションが稼動している環境についての情報を常にモニターするツールの整備、もっと詳細なアプリケーションレベルでの環境情報、例えば固有アプリのトランザクションの平均処理時間の保証、システム管理用のAPIの提供、データの動的なバックアップ、ロールバックなど、企業が内部基幹システムを管理する上で通常行うマネージメント業務をCloud Computing環境でも提供する事である。

具体的には、Azureはユーザに対して、アプリケーションがどこのサーバで稼動するのか指定できるオプションを提供する事を検討している、とのこと。

Will Microsoft Shake Up Cloud Computing SLAs?

Posted by J. Nicholas Hoover @ 01:06:PM | Oct,30, 2008

For Microsoft, which announced its cloud computing platform this week, it seems like service level agreements don't just mean uptime. That thinking could shake up the industry.

Though Microsoft isn't giving any firm details on its plans for service level agreements with Windows Azure and the Azure Services Platform, presentations and discussions with Azure's developers here have dropped plenty of hints.

In a presentation at the company's Professional Developers Conference today, Microsoft's Gianpaolo Carraro, director of SAAS architecture in the company's architecture strategy team, said that SLA's shouldn't just mean meeting uptime promises, though that's the common definition of cloud SLA's these days. Companies will typically offer something like a 99.5% uptime promise, and if that isn't met, customers get some sort of refund.

That just doesn't go far enough, Carraro said. Not only should these uptime promises be available, but instead of the cloud vendor measuring the uptime, customers should be able to have some sort of monitoring meter to understand what the uptime actually was for them, and then reconcile that with the cloud vendor's measure. That may be challenging, since it will be difficult to determine whether it was the cloud vendor, the network provider, or the customer who was actually at fault.

But that's just the start. He added that cloud SLA's might also include other optional features, such as promises that certain types of transactions will take a certain length of time, management APIs, programmatic access to the health model of a service, the choice to make applications use firewall friendly protocols, the ability to pause or stop an application or a piece of one from running on the fly, and the ability to do things like trigger back-up of data at certain points in time.

In addition, one of Azure's developers said in an interview, Microsoft is considering SLA's that would enable companies to do things like choose the geographic location where they want their applications to run, though that would likely be expensive.

These shifts could have profound implications for the services industry, since many vendors today resist setting up even uptime-based SLA's for cloud-based applications because many simply can't deliver on their promises. However, offering SLA's that don't hinge only on uptime should actually be more of a win for service providers, since they hedge problems with uptime with more controllable options. In the long run, offering a plethora of cloud SLA's should even entice hesitant companies to move to the cloud.

Microsoft's Cloud: Windows Azure

Microsoft社が先日のPDCで発表したAzure、という自社のCloud Computing環境。

まだコンセプトの段階で、既存のDynamicsやSharepointなどのSaaS事業をこのアーキテクチャに盛り込んだ以外はファイルのバックアップのサービスが始まった程度で、まだ全体的には時間のかかるもの、と解釈している。

業界の著名アナリストは意見が分かれており、大方がMicrosoftの戦略をAmazon Web Serviceへの対抗策だ、と言及する一方、Cloud Computing環境で.Net環境を最も最適化した形で提供できるのはMicrosoftしかいないだろう、という、既存の.Net開発環境に関して言えば、Microsoft絶対的有利のコメントをしている人も多い。

いづれにしても、これで大方のITベンダーがすべてCloud Computingに参入をした、ということになり、Cloud Computing元年はいよいよ次のステップに入りつつある、といえる。

Microsoft's new cloud development platform, Windows Azure, was unveiled today by Microsoft chief software architect Ray Ozzie at the Microsoft Professional Developer's Conference in Los Angeles. Windows Azure provides developers on-demand compute and storage to host web applications and services in Microsoft's data centers. Azure provides Microsoft with an online developer platform to compete with Amazon Web Services, Google App Engine and a growing number of smaller platforms.

Azure was released as a "community technology preview" and won't be available until next year. Few details were released about pricing, with Ozzie saying it would be "competitive" and based on resource consumption.

"Today marks a turning point for Microsoft and the development community," Ozzie said. "We have introduced a game-changing set of technologies that will bring new opportunities to Web developers and business developers alike. The Azure Services Platform, built from the ground up to be consistent with Microsoft's commitment to openness and interoperability, promises to transform the way businesses operate and how consumers access their information and experience the Web.

Roundup: Rackspace's Cloud Acquisitions

Rackspace社の昨今の買収に関して、業界からの反応。

Amazon Web Serviceに対する対抗策、という見方が強い中、これによって価格競争と品質（SLA）向上につながるだろう、という見方をしているものが多く、総じてPositiveである、といえる。

There was some interesting commentary around the blogosphere on Rackspace's acqusition of Jungledisk and Slicehost to accelerate the rollout of its cloud computing services. Here's some of the analysis:

• Stacey Higginbotham at GigaOm calls Rackspace's acquisitions "a move aimed at boosting its Mosso cloud offerings in order to step up competition with Amazon's Web Services. But whether or not Rackspace can successfully transition from being a hosting provider to a provider of a truly on-demand cloud offering remains to be seen."
• Does Rackspace want to transition? Not so long as customers are split between the two formats. "Rackspace has the opportunity to combine the best of both worlds, bringing cloud and traditional hosting together," CTO John Engates tells Information Week.
• Gartner analyst Lydia Leong says Rackspace's announcement "signals an intent to be much more aggressive in the cloud space than I think most people were expecting."
• Jason Kincaid at TechCrunch says the Rackspace expansion is good news for developers. "Amazon has been the dominant force in this space for some time, and competition will only decrease prices and (hopefully) lead to an arms race in features, stability, and performance," he writes.

Rackspace's deal with Limelight

Rackspace社、Cloud Computing事業への本格展開を図る中で、Limelight社とのパートナーシップが発表されている。

Limelight社はCDNサービスを提供するベンダーで、Rackspace社との協業で、Rackspace社のCloud Computing事業であるMosso上でCDNサービスを提供するすることになると想定されている。 これはAmazon Web Serviceが提供を開始したCDNサービスに対抗しよう、というもの。

CDNを提供すると、規模の大きいインタネット事業をサポートできるようになるため、事業規模の拡大に大きく寄与する、と考えられる。

Rackspace's deal with Limelight

Rackspace announced yesterday, as part of a general unveiling of its cloud strategy, a new partnership with Limelight Networks.

Under the new partnership, customers of Rackspace's Cloud Files (formerly CloudFS) service — essentially, a competitor to Amazon S3 — will be able to choose to publish and deliver their files via Limelight's CDN. Essentially, this will place Rackspace/Limelight in direct competition with Amazon's forthcoming S3 CDN.

CDN delivery won't cost Cloud Files customers any more than Rackspace's normal bandwidth costs for Cloud Files. Currently, that's $0.22/GB for the first 5 TB, scaling down to $0.15/GB for volumes above 50 TB. Amazon S3, by comparison, is $0.17/GB for the first 10 TB, down to $0.10/GB for volumes over 150 TB; we don't yet know what its CDN upcharge, if any, will be. As another reference point, Internap resold via SoftLayer is $0.20/GB, so we can probably take that as a reasonable benchmark for the base entry cost of CDN services sold without any commit.

It's a reasonably safe bet that Limelight's CDN is going to deliver better performance than Amazon's S3 CDN, given its broader footprint and peering relationships, so the usual question of, "What's the business value of performance?" will apply.

It's a smart move on Rackspace's part, and an easy way into a CDN upsell strategy for its regular base of hosting customers, too. And it's a good way for Limelight to pre-emptively compete against the Amazon S3 CDN.