The other day I visited Colt’s London HQ and saw how the telco is revamping its approach to developing more customer-centric and Agile solutions (Colt consciously avoids the “cloud” terminology). By now, most telcos managed to jump onto the cloud bandwagon by launching cloud-based services. The challenge, from an end user perspective, is that these solutions all seem very similar. Customers can get storage, server capacity, unified communications, etc., from most telcos. All telcos underline the value-added nature of end-to-end network QoS and security that they can ensure (check out our report, "Telcos As Cloud Rainmakers"). Indeed, telcos have some right to feel that they have achieved some progress regarding their cloud offerings — although it took Amazon to show them the opportunity.
But most telco cloud offerings suffer from the fact that telcos develop cloud solutions in the traditional sense through their traditional product factories. This approach tends to follow rather than slow product innovation cycles. Moreover, it produces products that, once developed, are pushed to the customer as a standard offering. All customisation costs extra.
The reality of cloud demand is that each customer is different. Most customers want some form of customisation. Most customers want some form of hybrid cloud, a private part for core apps, as well as access to the open Internet to, for instance, exchange views and information with end customers via Twitter or for crowd sourcing with suppliers. Similarly, most customers want a mix of fixed and virtual assets and a blend of self-service and managed service solutions as the chart indicates.
I said last year that this would happen sometime in the first half of this year, but for some reason my colleagues and clients have kept asking me exactly when we would see a real ARM server running a real OS. How about now?
To copy from Calxeda’s most recent blog post:
“This week, Calxeda is showing a live Calxeda cluster running Ubuntu 12.04 LTS on real EnergyCore hardware at the Ubuntu Developer and Cloud Summit events in Oakland, CA. … This is the real deal; quad-core, w/ 4MB cache, secure management engine, and Calxeda’s fabric all up and running.”
This is a significant milestone for many reasons. It proves that Calxeda can indeed deliver a working server based on its scalable fabric architecture, although having HP signing up as a partner meant that this was essentially a non-issue, but still, proof is good. It also establishes that at least one Linux distribution provider, in this case Ubuntu, is willing to provide a real supported distribution. My guess is that Red Hat and Centos will jump on the bus fairly soon as well.
Most importantly, we can get on with the important work of characterizing real benchmarks on real systems with real OS support. HP’s discovery centers will certainly play a part in this process as well, and I am willing to bet that by the end of the summer we will have some compelling data on whether the ARM server will deliver on its performance and energy efficiency promises. It’s not a slam dunk guaranteed win – Intel has been steadily ratcheting up its energy efficiency, and the latest generation of x86 server from HP, IBM, Dell, and others show promise of much better throughput per watt than their predecessors. Add to that the demonstration of a Xeon-based system by Sea Micro (ironically now owned by AMD) that delivered Xeon CPUs at a 10 W per CPU power overhead, an unheard of efficiency.
In the latest evolution of its Linux push, IBM has added to its non-x86 Linux server line with the introduction of new dedicated Power 7 rack and blade servers that only run Linux. “Hah!” you say. “Power already runs Linux, and quite well according to IBM.” This is indeed true, but when you look at the price/performance of Linux on standard Power, the picture is not quite as advantageous, with the higher cost of Power servers compared to x86 servers offsetting much if not all of the performance advantage.
Enter the new Flex System p24L (Linux) Compute Node blade for the new PureFlex system and the IBM PowerLinuxTM 7R2 rack server. Both are dedicated Linux-only systems with 2 Power 7 6/8 core, 4 threads/core processors, and are shipped with unlimited licenses for IBM’s PowerVM hypervisor. Most importantly, these systems, in exchange for the limitation that they will run only Linux, are priced competitively with similarly configured x86 systems from major competitors, and IBM is betting on the improvement in performance, shown by IBM-supplied benchmarks, to overcome any resistance to running Linux on a non-x86 system. Note that this is a different proposition than Linux running on an IFL in a zSeries, since the mainframe is usually not the entry for the customer — IBM typically sells to customers with existing mainframe, whereas with Power Linux they will also be attempting to sell to net new customers as well as established accounts.
In the last couple of weeks, I finally put a couple of pieces together . . . the tech industry is pushing hard, down two parallel tracks, toward much more resource-efficient computing architectures.
Track 1: Integrated systems. Computer suppliers are putting hardware components (including compute, network, and storage) together with middleware and application software in pre-integrated packages. The manufacturers will do assembly and testing of these systems in their factories, rather than on the customer's site. And they will tailor the system — to a greater or lesser degree, depending on the system — to the characteristics of the workload(s) it will be running.
The idea is to use general-purpose components (microprocessors, memory, network buses, and the like) to create special-purpose systems on a mass-customization basis. This trend has been evident for a while in the Oracle Exadata and Cisco UCS systems; IBM's Pure systems introductions push it even further into pre-configured applications and systems management.
Track 2. Modular data centers. Now, zoom out from individual computing systems to aggregations of those systems into data centers. And again, assemble as much of the componentry as possible in the factory rather than on-site. Vendors like Schneider, Emerson, and the systems shops like IBM and HP are creating a design approach and infrastructure systems that will allow data centers to be designed in modular fashion, with much of the equipment like air handling and power trucked to the customer's site, set up in the parking lot, and quickly turned on.
Vodafone agreed to acquire Cable & Wireless Worldwide (CWW) for 1.04 billion pounds in cash, valuing CWW at three times EBITDA. The deal propels Vodafone to the second largest telco in the UK with revenues of GBP6.97 billion, behind BT with revenues of GBP15.6 billion. From a financial perspective, the deal has a limited impact, accounting for only 3% of Vodafone’s 2011 EBITDA. However, given BT’s lack of a mobile division, Vodafone, becomes the leading integrated telco in the UK, offering fixed and mobile operations. The deal is expected to complete in Q3 2012.
The main focus of the deal is on CWW’s UK fixed-line network and CWW’s business customer base, both of which Vodafone aims to add to its UK mobile network. CWW provides managed voice, data, hosting, and IP-based services and applications. The deal boosts Vodafone’s enterprise offering, both in terms of access and transport infrastructure and also in terms of customer base. CWW is a major global infrastructure player: Its international cable network spans 425,000 km in length, covering 150 countries. In the UK, CWW operates a 20,500 km fiber network. Moreover, CWW has about 6,000 business customers. The future of CWW’s non-UK assets remains uncertain. In our view they do provide true value for Vodafone, strengthening its global network infrastructure. Vodafone will provide further details regarding these non-UK assets later in the year.
Over the last couple of years, IBM, despite having a rich internal technology ecosystem and a number of competitive blade and CI offerings, has not had a comprehensive integrated offering to challenge HP’s CloudSystem Matrix and Cisco’s UCS. This past week IBM effectively silenced its critics and jumped to the head of the CI queue with the announcement of two products, PureFlex and PureApplication, the results of a massive multi-year engineering investment in blade hardware, systems management, networking, and storage integration. Based on a new modular blade architecture and new management architecture, the two products are really more of a continuum of a product defined by the level of software rather than two separate technology offerings.
PureFlex is the base product, consisting of the new hardware (which despite having the same number of blades as the existing HS blade products, is in fact a totally new piece of hardware), which integrates both BNT-based networking as well as a new object-based management architecture which can manage up to four chassis and provide a powerful setoff optimization, installation, and self-diagnostic functions for the hardware and software stack up to and including the OS images and VMs. In addition IBM appears to have integrated the complete suite of Open Fabric Manager and Virtual Fabric for remapping MAC/WWN UIDs and managing VM networking connections, and storage integration via the embedded V7000 storage unit, which serves as both a storage pool and an aggregation point for virtualizing external storage. The laundry list of features and functions is too long to itemize here, but PureFlex, especially with its hypervisor-neutrality and IBM’s Cloud FastStart option, is a complete platform for an enterprise private cloud or a horizontal VM compute farm, however you choose to label a shared VM utility.
The US economy continues to show improvement – for example, today’s news that new jobless claims were near a four-year low. As the economy outlook has improved, so, too, have prospects for the US tech market. In our updated Forrester forecast for US tech purchases, "US Tech Market Outlook For 2012 To 2013: Improving Economic Prospects Create Upside Potential," we now project growth of 7.5% in 2012 and 8.3% in 2013 for business and government purchases of information technology goods and services (without telecom services). Including telecom services, business and government spending on information and communications technology (ICT) will increase by 7.1% in 2012 and 7.4% in 2013.
The lead tech growth category will shift from computer equipment in 2011 to software in 2012 and 2013, with and IT consulting and systems integration services playing a strong supporting role. Following strong growth of 9.6% in 2011, computer equipment purchases will slow to 4.5% in 2012, as the lingering effects of Thailand's 2011 floods hurt parts supply in the first half and the prospect of Windows 8 dampens Wintel PC sales until the fall. Apple Macs and iPad tablets will post strong growth in the corporate market, though, and server and storage should grow in the mid-single digits.
Last week it was Dell’s turn to tout its new wares, as it pulled back the curtain on its 12th-eneration servers and associated infrastructure. I’m still digging through all the details, but at first glance it looks like Dell has been listening to a lot of the same customer input as HP, and as a result their messages (and very likely the value delivered) are in many ways similar. Among the highlights of Dell’s messaging are:
Faster provisioning with next-gen agentless intelligent controllers — Dell’s version is iDRAC7, and in conjunction with its LifeCyle Controller firmware, Dell makes many of the same claims as HP, including faster time to provision and maintain new servers, automatic firmware updates, and many fewer administrative steps, resulting in opex savings.
Intelligent storage tiering and aggressive use of flash memory, under the aegis of Dell’s “Fluid Storage” architecture, introduced last year.
A high-profile positioning for its Virtual Network architecture, building on its acquisition of Force10 Networks last year. With HP and now Dell aiming for more of the network budget in the data center, it’s not hard to understand why Cisco was so aggressive in pursuing its piece of the server opportunity — any pretense of civil coexistence in the world of enterprise networks is gone, and the only mutual interest holding the vendors together is their customers’ demand that they continue to play well together.
Corporate CIOs should not ignore the network-centric nature of cloud-based solutions when developing their cloud strategies and choosing their cloud providers. And end users should understand what role(s) telcos are likely to play in the evolution of the wider cloud marketplace.
Like many IT suppliers, telcos view cloud computing as a big opportunity to grow their business. Cloud computing will dramatically affect telcos — but not by generating significant additional revenues. Instead, cloud computing will alter the role of telcos in the value chain irreversibly, putting their control over usage metering and billing at risk. Alarm bells should ring for telcos as Google, Amazon, et al. put their own billing and payment relationships with customers in place.
Telcos must defend their revenue collection role at all costs; failure to do so will accelerate their decline to invisible utility status. At the same time, cloud computing offers telcos a chance to become more than bitpipe providers. Cloud solutions will increasingly be delivered by ecosystems of providers that include telcos, software, hardware, network equipment vendors, and OTT providers.
Telcos have a chance to leverage their network and financial assets to grow into the role of ecosystem manager. To start on this path, telcos will provide cloud-based solutions that are adjacent to communication services they already provide (like home area networking and machine-to-machine solutions), such as connected healthcare and smart grid solutions. Expanding from this beachhead into a broader role in cloud solutions markets is a tricky path that only some telcos will successfully navigate.
We are analyzing the potential role of telcos in cloud computing markets in the research report Telcos as Cloud Rainmakers.
At its recent financial analyst day, AMD indicated that it intended to differentiate itself by creating products that were advantaged in niche markets, with specific mention, among other segments, of servers, and to generally shake up the trench warfare that has had it on the losing side of its lifelong battle with Intel (my interpretation, not AMD management’s words). Today, at least for the server side of the business AMD made a move that can potentially offer it visibility and differentiation by acquiring innovative server startup SeaMicro.
SeaMicro has attracted our attention since its appearance (blog post 1, blog post 2), with its innovative architecture that dramatically reduces power and improves density by sharing components like I/O adapters, disks, and even BIOS over a proprietary fabric. The irony here is that SeaMicro came to market with a tight alignment with Intel, who at one point even introduced a special dual-core packaging of its Atom CPU to allow SeaMicro to improve its density and power efficiency. Most recently SeaMicro and Intel announced a new model that featured Xeon CPUs to address the more mainstream segments that were not for SeaMicro’s original Atom-based offering.