Welcome!

@BigDataExpo Authors: Elizabeth White, Gopala Krishna Behara, Sridhar Chalasani, Tirumala Khandrika, Patrick MeLampy

Related Topics: @CloudExpo, Java IoT, Microsoft Cloud, Linux Containers, Containers Expo Blog, @BigDataExpo

@CloudExpo: Article

Henry Ford & Bezos’s Law Signal It's Time to Ditch the Datacenter [#Cloud]

Total Cost of Infrastructure Ownership (TCIO) dramatically favors Cloud

Editor's note:  An abridged version of this post ran last week on the Gigaom blog.

With an ear to the ground and an eye on the sky, Gigaom's Barb Darrow chronicles the competitive factors shaping the bumpy journey that is cloud computing among the superpowers (AWS in fight of its life as customers like Dropbox ponder hybrid clouds and Google pricing). Wherever you stand on the debate over which cloud giant will reign supreme, it's clear the economic forces shaping the market are evolving quickly.

Now comes new cloud computing data based on Total Cost of Infrastructure (TCOI) proving cloud providers are innovating and reducing costs in areas beyond hardware. The result is a more compelling case for cloud as a far cheaper platform than a build-your-own datacenter. Further, the economic gap advantage favoring the cloud provider platform will widen over time.

In many ways, cloud computing is bringing to the enterprise world what Henry Ford did for cars. Ford developed and designed a method for manufacturing that steadily reduced the cost of manufacturing the Model T, thus lowering the price of his car. The result was a decline in the number of US auto manufacturers from more than 200 in the 1920s to just eight in 1940.  This astounding 96% reduction in manufacturers over 20 years foreshadows what could happen to enterprises running their own data centers in the not too distant future.

If you're still with me, here's why.

Previously, I posited that the future of cloud computing is the availability of more computing power at a much lower cost. This we call Bezos's law, defined as, "the history of cloud, a unit of computing power price is reduced by 50 percent approximately every three years."

Bezos's law measures the cost of a given unit of cloud computing over a period of time, as compared to Moore's Law, which we know is, "the number of transistors on integrated circuits over a period of time."

Bezos's law is a measure of the rate of change of Total Cost of Infrastructure Ownership (TCIO), while Moore's law measures the rate of change of CPU, a small fraction of the cost of a datacenter or cloud.

Why is TCIO so relevant?

The team from IBM SoftLayer commissioned McKinsey to do a study around TCIO.  The comprehensive analysis slide (below) highlights the following about total costs:

  • 30% for Labor
  • 35% for Hardware
  • 55% for Hardware and Facilities

Screenshot 2014-07-09 03.30.51.png

When considering the rate of Bezos's law in light of IBM's analysis, it is clear that cloud providers are innovating and reducing costs in areas beyond hardware.

There are obvious drivers ensuring the compounding trend line as described in Bezos's law will continue for many decades.

  • Scale: Amazon, Google, IBM and Microsoft are everyday adding huge amounts of capacity capable of running most Fortune 1,000 companies.
  • Innovation: The cloud market is competitive with innovative approaches and services being brought to market quickly.
  • Competition & Price Transparency: While the base IaaS service varies among providers, they are close enough for customers to easily compare offerings

Let's assume on average the Fortune 5000 each have seven datacenters for a total of 35,000.

Bezos's law will drive (think Henry Ford - Model T) a similar titanic shift form datacenter to cloud, which will result in 90% reduction (approximately 30,000) in enterprise owned and operated datacenters by 2030.

This is of course obvious given the Gartner prognostication about the future size of the cloud market (Gartner: Public cloud services to hit $131B by 2017).  There is likely to be new businesses dedicated to repurposing datacenters to retirement homes or new fangled dance clubs.

Just as people first thought automobiles were toys, early critics said the cloud would only be for limited use -- test/dev environments and spiky workloads. Now consensus is that the cloud can be for almost all applications. Early cars were expensive and unreliable, but the evidence reveals a compelling reduction in TCIO that put the whole country on wheels. It may be the end of the road for the datacenter, but the economic forces shaping the cloud signal it's the beginning of a better idea for the enterprise.

More Stories By Greg O'Connor

Greg O'Connor is President & CEO of AppZero. Pioneering the Virtual Application Appliance approach to simplifying application-lifecycle management, he is responsible for translating Appzero's vision into strategic business objectives and financial results.

O'Connor has over 25 years of management and technical experience in the computer industry. He was founder and president of Sonic Software, acquired in 2005 by Progress Software (PRGS). There he grew the company from concept to over $40 million in revenue.

At Sonic, he evangelized and created the Enterprise Service Bus (ESB) product category, which is generally accepted today as the foundation for Service Oriented Architecture (SOA). Follow him on Twitter @gregoryjoconnor.

@BigDataExpo Stories
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Things are changing so quickly in IoT that it would take a wizard to predict which ecosystem will gain the most traction. In order for IoT to reach its potential, smart devices must be able to work together. Today, there are a slew of interoperability standards being promoted by big names to make this happen: HomeKit, Brillo and Alljoyn. In his session at @ThingsExpo, Adam Justice, vice president and general manager of Grid Connect, will review what happens when smart devices don’t work togethe...
SYS-CON Events announced today that Dataloop.IO, an innovator in cloud IT-monitoring whose products help organizations save time and money, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Dataloop.IO is an emerging software company on the cutting edge of major IT-infrastructure trends including cloud computing and microservices. The company, founded in the UK but now based in San Fran...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
SYS-CON Events announced today that Addteq will exhibit at SYS-CON's @DevOpsSummit at Cloud Expo New York, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Addteq is one of the top 10 Platinum Atlassian Experts who specialize in DevOps, custom and continuous integration, automation, plugin development, and consulting for midsize and global firms. Addteq firmly believes that automation is essential for successful software releases. Addteq centers its products an...
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain.
In his session at @ThingsExpo, Sudarshan Krishnamurthi, a Senior Manager, Business Strategy, at Cisco Systems, will discuss how IT and operational technology (OT) work together, as opposed to being in separate siloes as once was traditional. Attendees will learn how to fully leverage the power of IoT in their organization by bringing the two sides together and bridging the communication gap. He will also look at what good leadership must entail in order to accomplish this, and how IT managers ca...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
TechTarget storage websites are the best online information resource for news, tips and expert advice for the storage, backup and disaster recovery markets. By creating abundant, high-quality editorial content across more than 140 highly targeted technology-specific websites, TechTarget attracts and nurtures communities of technology buyers researching their companies' information technology needs. By understanding these buyers' content consumption behaviors, TechTarget creates the purchase inte...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
SYS-CON Events announced today that Cloud Academy will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud computing technologies. Ge...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry’s single source for the cloud. Fusion’s advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Have you ever noticed how some IT people seem to lead successful, rewarding, and satisfying lives and careers, while others struggle? IT author and speaker Don Crawley uncovered the five principles that successful IT people use to build satisfying lives and careers and he shares them in this fast-paced, thought-provoking webinar. You'll learn the importance of striking a balance with technical skills and people skills, challenge your pre-existing ideas about IT customer service, and gain new in...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this ca...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...