Say, you’ve got a great Java application which you want to put on the internet and make it available to the world. Believe it or not, up until today, what sounds like a trivial task simply could not be done. You effectively had to choose between lack of scalability, necessity to manually set up and maintain the whole software stack, requirement to re-write your code to conform to a particular framework (and get locked into it thereafter), or a combination of the above.

Traditional hosting simply leased you a server and had you set it up including the web server and Java stack – effectively making you spend hours and hours doing pure operational work instead of producing next biggest and coolest services. And obviously getting you confined to whatever servers you rented – so when you need to scale up due to being mentioned on Slashdot you were out of luck.

First generation Infrastructure-as-a-Service clouds (IaaS) like Amazon or Rackspace made server provisioning a simple programmatic call. This made scalability a little easier (at least you did not have to wait days or weeks to get more or less servers). However, all they did was effectively give you a bunch of (often overpriced) virtual machines leaving it to you to set them up, configure them, patch them. To make things worse, scalability was not free either. For these providers, more resources meant more virtual machines. Which in turn meant, that your application had to be designed to be able to run on multiple machines in parallel, and most likely using storage and instance coordination mechanisms specific to this platform. Thus, you were almost getting the worst of both worlds: limited scalability, extra operations tasks, high fees, and vendor lock-in.

Early Platforms-as-a-Service (PaaS) solutions like Google App Engine, Force.com, Windows Azure, and VMware CloudFoundry offered a trade-off of taking away the operational tasks of setting up and managing the virtual machines by requiring you to write your applications specifically for the platform – thus putting you at the maximum lock-in ever.

Jelastic - a new start-up which just launched its beta at Jelastic.com is aiming to learn from predecessors and give you the best of all worlds:

• Easy to deploy and manage – like earlier PaaS systems, Jelastic automatically sets up, configures and maintains the software stack that you need (such as Tomcat server, MySQL database, load balancer, static content cache, and so on) – all you need is add your application on top.
• Runs any Java application – with Jelastic there are no requirements to specifically adapt your code, simply upload the package and if it runs, for example, on standard Tomcat server (or for that matter JBoss, GlassFish, or Jetty) with MySQL (MariaDB, PostgreSQL, MongoDB, CouchDB) – it will run in Jelastic as is. This means painless deployments, zero learning curve, and most importantly zero platform lock in.
• Automated scaling – most amazingly, Jelastic manages to scale your application up and down depending on the load it gets. As your application becomes popular and its use intensifies, Jelastic transparently gives it more memory and processing power.

See this quick video with Jelastic overview:

And a set of videos demonstrating the actual Java application deployment, autoscaling, and URL mapping.

Or even better, take your application and give it a try at Jelastic.com.

After all, limiting the scope to 100% cloud companies really skews the charts to “Salesforce.com and everyone else” leaving such cloud juggernauts as Amazon and Google out of the picture.

As Don notes, Salesforce.com is doing extremely well: in Q1 2011 the company demonstrated 34% year-over-year growth rate and made $504 million in revenue. Their 2010 revenue was about $1.66 billion.

Companies like Google and Amazon are indeed much harder to analyze. Neither of them discloses cloud-related revenue which sort of vanishes in the grand scheme of core business such as respectively online advertisement and retail.

In this blog post I decided to have a look at where these two cloud businesses stand.

Amazon

In August 2010, UBS Investment Research estimated that Amazon Web Services were on track to make $500 million in 2010 (up from $275 mln in 2009), and $750 mln in 2011 (out of total $44 bln revenue of Amazon as a whole). By 2014 they are expected to get to $2.5 billion.

Profits are estimated to be around $58.2 million in 2010, $100.7 million in 2011.

As a side note on the Infrastructure as a Service space, Rackspace is considered to be number 2 cloud provider and they are way behind Amazon with target revenue for 2011 set to $100 mln (for cloud services).

Google

Google Apps is Google’s core subscription cloud service, and again a small fraction of the total company’s revenue (and with Android’s success no longer the most cherished ‘secondary business’ either).

The latest interview with Google Enterprise (which includes Google Apps) boss – David Girouard does not say much:

3,000 business are moving to the suite each day, and over three million have moved since its debut in 2007. But it’s unclear how much revenue Google is generating from subscriptions. All we know is that it’s under $1bn a year, less than four per cent of the company’s overall revenue. The aim, however, is to create a multi-billion-dollar business – in the near term. “Not a decade from now,” Girouard said, “but within a few years.”

Obviously ‘under $1 billion’ is a huge range.

A year ago, in May 2010, Nikesh Arora, president of Google’s Global Sales Operations and Business Development provided more detailed information:

First of all, back then the number of customers was one-third lower: “There are 2 million small businesses that have signed up”.

And secondly he provided a date estimate for reaching the $1 billion mark: ”In perhaps three- or four years, I hope it will be more than a billion dollar revenue stream.”

With that kind of growth, to get to a billion dollars in 3 years, Google Apps need to be making  $300 million in revenue a year at the moment. On the other hand, when Google Apps were claiming 1 million users in early 2009, their revenue target for the year was $40 million. So with 3 times more users today, they might very well be at the 3 times the revenue – $120 million a year for Google Apps. My guess, is that the broad range ($120-$300 mln) might be related to them including or excluding advertisement revenue coming from free Google Apps accounts.

Anyone else?

I am actually quite impressed with how revenue of Salesforce.com compare to cloud businesses of Amazon and Google.

For now I would probably just limit the analysis to these 2 vendors. Microsoft is trying hard to get into this business with their Office 365 and Windows Azure launches. However, to be fair to the company I would probably wait another year before discussing their financial performance.

And that’s just for the software vendors. IBM‘s CFO Mark Loughridge claims that cloud services will generate $7 billion in revenue for his company by 2015, and I am pretty sure that hardware vendors are not losing money on shipping servers to all the new cloud datacenter either.

Have I missed any of the big players you would have expected to see in this analysis? Let me know.

So far most of the cloud tradeshows have either been heavily developer- and investor-/analyst-oriented, or simply cloud tracks and sessions on vendor events. The Experts Conference (TEC) is different with its heavy focus on IT professionals.

Full disclosure: I have been involved helping the conference organizers set up the cloud track – and I am pretty proud of the line-up of speakers and sessions we managed to come up with.

TEC is actually a very established technology conference. They started 10 years ago as a very technical (level 400+) and practical Directory conference by the experts for the experts. I believe that with all the marketing hype about the cloud which we are getting these days, its about right time for the event to expand to the cloud. After all, IT professionals who want to be on the cutting edge today actually need to know how to set up federation, deploy Office 365, Google Apps, Amazon or Salesforce.com, what is the state of private cloud technology, what SAML, OAuth and OpenID are and how to use them, and much more.

And to give you that information we got folks from product teams, system integrators, and just practitioners with vast experience in all these technologies!

You can find the full agenda of the Cloud and Virtualization Track here. Below are just some of the highlights:

Joey Snow will be talking about Windows Azure (Microsoft’s platform as a service) from IT pro perspective – this will be quite unique considering that Microsoft’s official Azure message is very much developer-oriented!

There will be multiple sessions about Exchange Online, SharePoint Online and other components of the BPOS/Office 365 suite from Microsoft: ranging from real-world experience on when these work and when on-premise options are still superior, how to handle the migration, how to integrate your on-premise directory with the cloud system, what is their state of security and even how they stack up against Google Apps. These are getting delivered by superstars including: Jerry Camel, Mike Kostersitz, Jarrod Roark, Dave Chennault, Einar Mykletun, Bill Baer, Dmitri Gavrilov and David Smith.

There will be great discussions on the major authentication and authorization protocols including OpenID and OAuth, ADFS, REST, SAML from industry experts Brian Puhl, Eve Maler, Pat Patterson, Laura E. Hunter, Femi Aladesulu, Nikita Ryumin, Carol Wapshere,  Dave Jones,  Mark Wahl.

Finally, we have great representation from industry experts and team members from Microsoft teams (Office 365, Windows Intune, ADFS), Salesforce.com, Rackspace, Riverbed: Steve Riley, Pat Patterson, John Engates, Joseph Dadzie.

So expect a lot of highly practical content and social interaction with the folks who are using cloud in real life today!

The conference is April 17-20, 2011 in Las Vegas. Learn more and sign-up for the event here.

Here’s my uneducated guess based on the assumption that given a new task humans tend to use the same approaches which worked well for them last time, and that Satya definitely got this post as a recognition for successfully rolling out Bing and transforming Microsoft’s search business from nothing to a competitor really frustrating Google.

Here’s what I think Satya will bring to Microsoft’s Server and Tools Business:

• More focus on online (Azure) than on Windows Server: Bob Muglia made Windows Server business a success, this was his kid, while Windows Azure (one could argue) was kind of a step-child, imposed on him and added to his business during a re-org. Satya will likely feel much different: for last few years he has been “living in the cloud” leading Bing, and Steve Ballmer very explicitly made lack of cloud focus the reason for changing the business unit leadership.
• Compete against the market leader: Bing clearly was developed to compete against Google. I guess this means that now Azure development will become aggressively anti-Amazon.
• Acquisitions and partnerships: so far Azure has really been a ground-up effort by Microsoft engineers, Bing team tried to buy Yahoo, and when this did not work hired a lot of top talent from Yahoo and finally essentially acquired its search and ad business. Satya was directly involved in these efforts. So who is a runner up in IaaS business who Microsoft could acquire to get more visible in that space? Rackspace? Savvis? Although, one could argue that search share was more relevant in search advertising business in which the big get bigger (why even bother advertising with small players?) and this advantage of scale is not as relevant in hosting, so acquisitions might not be as effective. We will see…
• Not sure if Azure appliance emphasis will persist: Azure appliance made a lot of sense under old leadership. Server and Tools Business knows how to sell to enterprises, so let’s turn Azure into an appliance which we can sell to our existing biggest partners and customers. Will Satya feel the same? I don’t think Bing folks were paying much attention to Microsoft’s search appliance strategy leaving this all to SharePoint/FAST and concentrating on pure cloud play…

There were speculations after Ray Ozzie left that Azure might get de-emphasized – after all Azure was one of Ray’s pet projects. With Satya’s appointment, I would say that we should expect Azure to only gain priority at Microsoft. We’ll see how applicable will Bing experience be for making Windows Azure a top player in the cloud platform space.

Here’s a quick excerpt:

IT professionals seem to be the most conservative crowd when it comes to the cloud. While we all have been uploading our pictures to Flickr and communicating via Facebook, and our sales reps have been utilizing Salesforce.com and doing Web demos, system administrators have stayed cautious, preferring to keep IT under their control.

Now that software as a service (SaaS) has become more widespread and commonly accepted — and C-level executives are falling under the charm of the cloud — something’s got to give. That’s definitely the expectation of the systems management vendors quickly ramping up their acquisition and development cycles to have SaaS for IT management products ready.

Read the full text here.

I would actually go as far as posit that you can now get a server in a public datacenter at price comparable to your electricity bill alone!

If you don’t believe me – let’s do a quick math.

Mark Kolich noticed in his blog that the server he had running at his home was consuming 220 W, which at the consumer electricity costs of 12-cents per kWh means:

0.220 kWh * 12 cents = 2.64 cents per hour

Almost 3 cents/hour for electricity alone not taking into account: labor, server hardware amortization, data-storage costs (replacing a failed disk), cooling costs, ISP costs, security costs (routers, firewalls, etc.), power backup costs (a UPS) and so on. Mark notes that he could have probably bought a newer more energy efficient server – but the required investment would not justify the savings.

The shocking part is that the recent price competition of cloud infrastructure (IaaS) and platform (PaaS) vendors took the current cloud servers costs to roughly the same order of costs. Here’s a quick survey of a few major cloud players:

• Microsoft is rolling out their 5 cent/hour option (with additional further discounts if you pre-pay for reserved use – e.g. say you have a bunch of instances which you have running all the time and you are willing to pre-pay for the next few months).
• Same thing with Amazon: minimal price (although for a slightly more limited version) is already in 2 cent for Linux / 3 cent for Windows instance area, with reserved/pre-paid option getting as low as 0.7 cents/Linux & 1.3 cents/Windows.
• Rackspace pricing starts at 1.5 cents/hour for Linux, and 8 cents/hour for Windows.

My take on these numbers is that you need to have a really good reason to go into hosting when there is so much price competition in that space and the margins are going down so fast.

The only good reason I can think of is hosting being your competitive advantage in some way. For example, being a local hosting company in a country which legislation is making it hard to use foreign datacenters. Or offering some level of compliance which public hosters cannot provide. And as a matter of fact both of these differentiators are gradually going away with the vendors quickly getting all the possible certifications and compliance stamps you can think of, as well as opening datacenters around the globe.

Cloud is cheaper than your own hosting regardless on how you calculate the costs. Get used to it.

Dmitry

Google’s targeting of Chrome OS is interesting. Rather than trying to attract consumers, who have demonstrated that they’re not interested in “Net PC”-like browser-only hardware, Google is positioning Chrome OS hardware as inexpensive, low-IT-overhead alternatives for businesses to deploy instead of desk computers.

In last week’s Talk Show, John Gruber and Dan Benjamin discussed why it may finally be a good time for this: a lot of computers today in businesses exist solely to run a web browser. John’s example is almost every computer in a typical bank branch, on which the agents usually just type your information into a series of web-browser forms in order to do their jobs.

…

Google’s just not in the business of providing long-term support for an unsuccessful product line. It’s part of what allows them to keep releasing new things all the time while geeks declare Microsoft a boring old dinosaur. But IT departments need their platform vendors to behave much more like Microsoft.

I doubt many corporate IT execs are going to take the risk that Chrome OS will be a stable enough long-term platform to deploy to their companies’ workforces. As the saying goes, nobody ever got fired…

Interesting enough, I actually agree with the second part of the argument but not with the initial premise.

Yes, getting businesses to commission big desktop refreshes to Google is going to be a challenge and require good field execution to get the early adopters buy into the value proposition (and then serve as a case study to persuade the others). And I think existing Google Apps adoption and progress demonstrates that Google’s execution when pitching to the enterprise is underwhelming. Just think on how much earlier on the market they got compared to Microsoft’s BPOS/Office 365 and how they almost missed this advantage.

However, obviously, even if not that many enterprises adopt Google Apps and Chrome OS – the reality is that these will create a headache for Microsoft because they will be used as a threat buy Microsoft’s enterprise customers when negotiating a better deal on their Microsoft contracts…

The real success of the OS though is likely going to depend on the consumer adoption (iPad was never pitched as an enterprise tool – but companies are increasingly looking to using it as such). So let’s look at the possible consumer play of the technology.

And here, I do not agree that ‘consumers … have demonstrated that they’re not interested in “Net PC”-like browser-only hardware’. Consumers are not interested when you give them a crappy netbook with an impossible to use Linux. There is little doubt about that. However, this does not mean that consumers are attached to Windows fat apps either. Success of iPads is a clear demonstration that consumers can live with total breakage of compatibility with old apps as long as the device is great and the new apps ecosystem is good.

If the application marketplace which Google is launching for Chrome OS is good – it will be just fine with consumers. Especially with supported offline mode and printing. I am using TweetDeck Chrome app in my Chrome browser today and it is just a great application. Much better, faster and easier to maintain than the AIR version I used before. If apps, hardware and pricepoints are there – consumers will come.

And yes, Ray Ozzie is right: applications on any devices are these days becoming a local representation and cache of something server or cloud-side. This is already true for a lot of iPhone and Android applications – so web-based application framework with good access to local resources is fine. Which then makes it a question of whether Google can make the Chrome OS the device operating platform of choice for the range of devices and longer term replacement of Android. And this is a question of competing for the hearts and minds of consumers and developers – and not really a question of a “Net PC” being something that resonates with consumers.

And I have no idea whether or not Chrome OS devices require cheaper hardware than Android devices. I am not sure I see why they would – consumers would probably still want solid-state drives, nice-looking form-factor, touch screens, cameras and other things which make the devices more expensive – so what’s the difference?

The future is in the cloud. Whether this “cloud” means Chrome OS remains to be seen.

These are just some of the questions which are probably going to be discussed at The Experts Conference 2011 in Las Vegas, April 17-20 2011.

If these questions are relevant to you – register today and get the early bird discounts.

If you are an industry expert willing to present at the event on one of the topics I listed above or a related cloud topic - you still have a few days to submit a session proposal here. You can also contact me for more information or assistance in submitting your session proposal.

(Full disclosure: I work for Quest Software and participate in our Quest OnDemand efforts.)

What’s best is that this is a cloud service – so no local deployment or additional infrastructure is required. You can just go to the website, sign-up for a free trial, download a small agent, and start getting alerts for the events you care about!

Cloud is good for you! Sign-up for a free trial now and have the cloud help you keep your environment secure.

US Department of Health and Human Services (HHS) has just published data on past year data breaches in the medical industry. These only include breaches affecting 500 or more individuals and reaching the “harm” threshold defined by the current rules. Yet, there 166 of those affecting the total of 4,905,768 patients.

PHIPrivacy.net does a good job analyzing the breach data, and you can see that even in the industry which is highly regulated and paranoid about data security and privacy – data being stored locally is getting stolen or lost all the time.

Compare that to a cloud provider (pick any cloud service which you like: Salesforce.com, Microsoft BPOS, Amazon, Google Apps, Quest OnDemand) – have you heard of 166 breaches for any of those? There are good reasons why you have not:

• High security standards of the datacenters: a lot of these are compliant with SAS 70 Type I and Type II and ISO/IEC 27001:2005 – does your datacenter get formally certified that high?
• Clear segregation of duties: people running the datacenter are not your employees, they have no idea what kind of data is getting stored by who and no vested interest in seeing that data,
• Needle in a haystack effect: public clouds have multiple customers, so even if a squad of ninjas attack the datacenter and manage to steel a harddrive it will just have some bits from data from various customers in format specific to a particular application and probably encrypted – making the whole exersize completely meaningless,
• No local device data: your local laptops or mobile devices only work with remote cloud data – so if the device gets lost or stolen you loose the device, not the data.
• Security is in the cloud business model: for any credible SaaS vendor security is number one concern (see for example Quest OnDemand security FAQ). They implement specific security measures such as data isolation, audit trails, and so on.

It is just incredibly hard and costly to set all these measures and maintain them, and I find it hard to see how (apart from really select few companies) these days will have the resources to provide that level of protection and security for on-premise systems. Cloud makes things more secure. Cloud is good for you.