Welcome!

Agile Computing Authors: Yeshim Deniz, Elizabeth White, Stackify Blog, Pat Romanski, Shelly Palmer

Related Topics: @CloudExpo, Agile Computing, @DXWorldExpo

@CloudExpo: Blog Post

Has the Cloud Become Too Big to Fail? By @EFeatherston | @CloudExpo #Cloud

The big three continue to provide new innovations and features that provide tremendous business value

In a recent weekend edition of the #CIOChat tweetchat, the question was raised about what the CIO's role would look like in five years. The discussion focused on many different areas. One area was that the CIO would become more of a service broker, as more and more applications move to the cloud. The responsibility discussion becomes less about controlling / owning iron / hardware / space, which has been the traditional area of CIO responsibilities. This prompted a secondary question from me: Has the cloud industry reached the point where it is too big to fail? Granted none of the big players in the cloud show any signs of financial trouble, but there was a time when the auto industry and the banking industry could say the same. Have we reached that tipping point? Has the cloud industry become too big to fail and, if it has, what is the impact?

Cloud landscape, huge growth coupled with upheaval
There is no doubt that the cloud industry is growing. Spending in the Infrastructure as a Service (IaaS) space continues with double digit growth. Gartner expects a 32.8 percent growth from 2014 to 2015, which translates to over $16B. They also predict a compound annual growth rate (CAGR) of 29.1% forecasted from 2014 to 2019. While speaking at a Gartner conference in Sydney last spring, Gartner Vice President and Analyst Lydia Leong discussed how the IaaS marketplace is rapidly consolidating around a small number of market leaders. "The sky is not falling - customers are getting great value out of cloud IaaS - but the competitive landscape is shifting," Ms. Leong said.

A key challenge for the competitors is the significant investment in resources (hardware, physical space, staffing) that is needed to be competitive in this space. Hewlett-Packard's recent departure from the public cloud was the first high profile vendor to leave the competition. Fortunately, while HP is a large vendor, they were late to the game in the public cloud space. They had trouble getting traction against the three 800lb gorillas (Microsoft, Amazon, and Google). HP had already been scaling back their public cloud push, and provided existing cloud customers with tight integration and migration services to the Microsoft and Amazon platforms. Their exit made people sit up and take notice. Being a large company does not guarantee success in this space.

The rule of three
About a decade ago, I read ‘The Rule of Three: Surviving and Thriving In Competitive Markets.' The authors, Jagdish Sheth and Rajendra Sisodia, discuss how mature markets and industries tend to evolve into two major segments: generalists who service the largest portion of the customer base, and specialists who provide niche capabilities for customers at both the high and low end of the markets. They describe the space in the middle as ‘the ditch.' Anyone caught in ‘the ditch' will either be swallowed up or fall by the wayside (HP, for example, fell in the ditch). In the generalist category, the authors suggest that eventually three players will dominate the space, controlling a large percentage of the business. I am sure we can all think of examples of this scenario, whether it be the auto industry, financial, or retail. The upheaval in the cloud space that Gartner refers to is coalescing into a version of this model. In the generalist segment, I doubt anyone would argue, the cloud has its big three: Microsoft, Amazon, and Google. The big three have a combined capacity that far exceeds the total capacity of the other 12 competitors combined.

Back to the question
Has the cloud become too big to fail? What would the risks and challenges be if a major cloud vendor were to stumble? What are the considerations? One of my colleagues, Zach Slayton, VP of Digital Technology Solutions at Collaborative Consulting, had this to say: "If one major vendor has a significant stumble and there is flight from that vendor to one of the other gorillas, can they handle the scale? It would be a high class problem for the receiving vendors but likely a problem nonetheless." Besides just the capacity issue, there are other potential risks and impacts. Each vendor has their own custom features and offerings. This is the classic vendor lock-in scenario, but with a twist. In the past, you still owned and controlled the hardware. In the public cloud that is not the case. The migration and transition costs to another vendor and/or platform would be significant. Resources, code migration, re-platforming, testing, validation testing, data migration, all would be costly and time-consuming. Then there is the potential domino effect in both directions. On one side, similar to the auto industry concerns, the various vendors and suppliers (both hardware and software) for a failed cloud vendor could be impacted financially with lost sales, outstanding billings, etc. On the consumer side, businesses that rely on the services of companies hosted in the failed cloud vendor are at risk of service interruption while the providers find alternatives.

My answer: yes, but no, the sky is not falling
I do think the cloud is too big to fail. If for some unforeseeable reason one of the big three were to stumble, I think there would be government intervention, similar to the auto and financial industries to mitigate the risk and potential damage. The impact of not intervening would be huge across the board, globally and economically.

That being said, there is no sign of any problems that would lead to the public cloud industry failing. As I quoted Lydia Leong earlier, the sky is not falling; the cloud is providing tremendous value to its customers. The big three continue to provide new innovations and features that provide tremendous business value. As technologists, part of our job is to understand potential risks inherent in technology, and to think about worst case scenarios. The cloud is a ubiquitous part of our lives, both on a personal and business level. It is a critical component in continued business innovation and growth and is not going anywhere. Don't let the fear of the sky falling prevent you from moving forward to leverage the reward and benefits the cloud can bring your business .

This post is brought to you by Cloud for Tomorrow.

More Stories By Ed Featherston

Ed Featherston is VP, Principal Architect at Cloud Technology Partners. He brings 35 years of technology experience in designing, building, and implementing large complex solutions. He has significant expertise in systems integration, Internet/intranet, and cloud technologies. He has delivered projects in various industries, including financial services, pharmacy, government and retail.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
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...
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
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...
BnkToTheFuture.com is the largest online investment platform for investing in FinTech, Bitcoin and Blockchain companies. We believe the future of finance looks very different from the past and we aim to invest and provide trading opportunities for qualifying investors that want to build a portfolio in the sector in compliance with international financial regulations.
Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.
Leading companies, from the Global Fortune 500 to the smallest companies, are adopting hybrid cloud as the path to business advantage. Hybrid cloud depends on cloud services and on-premises infrastructure working in unison. Successful implementations require new levels of data mobility, enabled by an automated and seamless flow across on-premises and cloud resources. In his general session at 21st Cloud Expo, Greg Tevis, an IBM Storage Software Technical Strategist and Customer Solution Architec...
Imagine if you will, a retail floor so densely packed with sensors that they can pick up the movements of insects scurrying across a store aisle. Or a component of a piece of factory equipment so well-instrumented that its digital twin provides resolution down to the micrometer.
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, discussed some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he covered some of the best practices for structured team migration an...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
We are given a desktop platform with Java 8 or Java 9 installed and seek to find a way to deploy high-performance Java applications that use Java 3D and/or Jogl without having to run an installer. We are subject to the constraint that the applications be signed and deployed so that they can be run in a trusted environment (i.e., outside of the sandbox). Further, we seek to do this in a way that does not depend on bundling a JRE with our applications, as this makes downloads and installations rat...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lead...
Digital Transformation (DX) is not a "one-size-fits all" strategy. Each organization needs to develop its own unique, long-term DX plan. It must do so by realizing that we now live in a data-driven age, and that technologies such as Cloud Computing, Big Data, the IoT, Cognitive Computing, and Blockchain are only tools. In her general session at 21st Cloud Expo, Rebecca Wanta explained how the strategy must focus on DX and include a commitment from top management to create great IT jobs, monitor ...
"Cloud Academy is an enterprise training platform for the cloud, specifically public clouds. We offer guided learning experiences on AWS, Azure, Google Cloud and all the surrounding methodologies and technologies that you need to know and your teams need to know in order to leverage the full benefits of the cloud," explained Alex Brower, VP of Marketing at Cloud Academy, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clar...
The IoT Will Grow: In what might be the most obvious prediction of the decade, the IoT will continue to expand next year, with more and more devices coming online every single day. What isn’t so obvious about this prediction: where that growth will occur. The retail, healthcare, and industrial/supply chain industries will likely see the greatest growth. Forrester Research has predicted the IoT will become “the backbone” of customer value as it continues to grow. It is no surprise that retail is ...