|By John Cowan||
|July 16, 2009 10:00 AM EDT||
My watered down translation of Long Tail theory is simply the notion that the aggregate sum of stuff buyers take in small, infrequent quantities will invariably outstrip the aggregate sum of the most popular counterparts.
Research evidence is beginning to corroborate what we saw some three years ago: There is a Long Tail in Cloud Computing. Consider some well accepted research points from IDC and others of late:
- The Cloud Computing market will hit USD $42 Billion by 2012
- Of that, more than 50% will comprise business process applications (the stuff we all use daily to run companies big and small)
So, I can infer then that some $20 Billion will comprise the 2012 feed bag from which all the little cloud computing piggies will line up at the trough to consume. Not a bad market, from 10,000 feet away. But here's the thing. The cloud computing market is already becoming pretty full. I mean rush hour commuter train full and it will get even more crowded in the coming few years. $20 Billion doesn't last long when you have a litany of players stepping up to the plate, and with the recent moves made by Oracle, Microsoft, EDS and other big time shops, the groovy young open source outfits that are all the rage now could very well be fighting over table scraps by 2012 (um, what's your exit strategy?). Table scraps in a $20 Billion market? Imagine that. Welcome to the hysteria of cloud computing.
So where is the refuge for agile boots trappers like 6fusion and the fraternity of cloud junkies in 2009?
There is another little research stat that is important, but that you won't find on any other cloud computing blog: IDC estimates that the net spending on IT services within the SMB space to eclipse USD $160 Billion by 2012.
Wait a sec. Hold the phone. How can SMB's spend that much money on IT services, yet the business apps the cloud industry is going to cuts it own throat to grab will only comprise some $20B? That's a pretty big gap, doncha think?
Herein lies the Long Tail of cloud computing.
Whilst the present day cloud computing vendors flock to gobble up the web based applications that made Web 2.0 more popular than a Rolling Stones reunion tour, the bigger market is all those business applications that automate processes and make the average SMB take flight. "Rubbish!" says the average pimple-faced freshman-drop-out-turned-internet-entrepreneur. The world is going to run on web services! Legacy apps are passé and unsexy. They are a dying breed, ready for the IT graveyard.
Maybe. But the research says not for the foreseeable future.
Here is what I don't think cloud computing companies ‘get' today: Technology is made to fit business; business is not made to fit technology. This point was nicely driven home recently by VMware's Dan Chu. In his blog post, Dan delivered a nice little kidney shot to the Google-ites. Here is my favorite line: "Customers are looking to match their IT platform to their business needs, not the inverse. The Google approach calls for a least common denominator set of non integrated cloud services that everyone squeezes into. Customers want the flexibility and breadth of solutions that exist today along with the efficiency of the cloud." I couldn't agree more, Dano. And I'll take that one step further. Real businesses are a made up of a collection of processes and procedures, which technology typically augments to make things faster or easier. So, unless what you are peddling can plug into Reality 1.0, I wouldn't want to the guy whose paycheck depends on widespread adoption.
Of course, Chu sounds like a kool-aid-drinking evangelist too. He just belongs to a different cult. But if you look to the school of product management, a field that suffers from a little less myopia, you will get the same type of message. In his concise post-mortem on The Demise of Cassatt, Saeed Khan illustrates a critical axiom that I think a lot of cloud service providers either ignore or don't understand: "Nobody, and I mean nobody, gets up in the morning and thinks, "I'm willing to change everything about how my business operates because a vendor has a really great product that could save me money."" In my opinion, that's why there is such a discrepancy between what the SMB market is going to spend and how much the cloud computing market for business applications will be worth, now and in the future.
It stands to reason then that the Long Tail of cloud computing could very well be the operation of critical business applications that are not sexy Web 2.0 apps or otherwise qualify as ‘way cool'. Is it possible the purveyors of cloud computing are missing untapped potential of harvesting less of more?
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